Even the most successful traders do not win on each of their trade entries. What it means is that you will also lose money, before maturing into a seasoned trader. By studying the distinguishing traits of those who are making money on trading literally everyday, you can learn a lot of things.
It still does not mean that they do not lose money, but they have learnt to manage the wins and losses with different trade strategies. Studying them can possibly cut a year or 2 from your learning curve.
Traits of Professional Traders
Planned approach - They have planned their trading strategy in advance.
They know -
- The entry cues
- Their risk per trade in dollars
- Trade management techniques
- Money Management
- Their exit plan
Stick to a premeditated approach - Each move you make should be according to your strategies. Without proper planning, you can easily stumble into pitfalls like overtrading, mismanaging trades, not taking in profits when you should, taking too much risks, etc.
Professionals are aware that discipline in trading is extremely necessary. You will need to maintain total control, while continuing to sharpen your trading edge. To a certain extent, it should not matter, if you win or lose. Try not to get influenced by panic outbreaks, and try to stay out of trades, when the charts show spiky conditions.
Know the math - Trading success is thinking about the deals in probabilities, instead of certainties. Professionals do get too consumed with the result of just one trade. Rather, they focus on a series of trades. Amateurs get affected with a single trading result, which in turn influences their next trade. Their emotions let them down.
Understand market psychology - Professional traders understand the market, and also the psychology of other traders. They monitor themselves stringently and follow their plans. They act logically with complete detachment from emotional impulses.
Never try to evade losses - Professional traders take losses as the part of trading game. Amateurs try to evade losses and do terrible things like hedging trades, or shuffling the stop losses to make back the cash they just lost. The more you make an attempt to avoid losses, the bigger they will possible become.
Self-educate - Successful trading needs no college education or training. There are professional traders, who are college dropouts, but they have self educated themselves through reading, learning, and getting trained from effective sources. Now they know to read the charts and identify the price action.
Some differences between amateur and pros:
- Successful traders actually enjoy the thrills of trading. Amateurs see it as a way to earn money.
- Pros know how to manage the risks, while amateur traders get into the panic mode and make more mistakes.
Success does not come to you overnight. You will need to be disciplined and patient.
Source by Rajesh B Sanghvi