How to be a trader? Five characteristics to succeed in the market
It is common to have doubts about how to be a trader. After all, what is it that you really need to have and do? Those who decide to trade on the financial market need to come with some very specific characteristics since they will determine if you will succeed or not in this environment.
It was thinking along these lines that we came up with 5 characteristics that are essential to find in a trader. Do you want to know what they are and if you have them? Continue reading the article below!
Want to be a trader?
If you are here, it is most likely because you want to start off on the right foot in the stock market. Or you are already trading but still are not sure how to act and are looking for ways to optimize your transactions.
We understand the difficulties that a person faces when entering the financial market, and it was thinking about this that we identified the main characteristics that you need to succeed in this environment.
Oh, and it is always important to be clear that there are some very common reasons that lead most people not to profit on the stock market. The main one is because they do not understand that to be a part of this world you need to have a routine and develop well defined characteristics.
To be a trader is to have a profession, though a different one from others due to its particularities and unique opportunities, but still with the same or even more dedication as you had while preparing for your career.
Considering this, we have identified the fundamental characteristics that a trader needs to have for you to know what you need to develop along your path to victory.
1. Get to know your profile on the market
Everyone has an investor profile. Some are more conservative while others are more open to the possibilities of loss in favor of greater gains. That famous “risk vs. return” that you must have already heard about.
The fact is, however, that nobody is born prepared to deal with the market’s consequences. There is no profile ready for this. People are born ready only to make money 100% of the time.
… While at the same time recognizing your personality.
It is important to know that every trader, no matter how good he or she is, is going to have to deal with trades that will bring a loss. Now, only the best succeed at stabilizing this balance and earn more than lose.
Not everyone deals well with this reality. Because of that, they activate a loss mechanism when they see themselves trapped, causing them to make hasty decisions in the middle of the transactions. The result is one you already know: the possibility of a loss now becomes real.
For this reason, identify your profile — it is the first step to find out if the life of a trader is one for you. Take into consideration the characteristics that you have and the amount of time that you have to spend.
In the same way, those who can better understand this relationship and take more risks have the right profile to become a day trader.
So, try to identify what are your characteristics and try not to deviate very far from it since this issue is linked primarily to two aspects: your financial capacity to invest and your appetite for risk. All of this has a direct influence on the way you deal with the equities.
Also don’t forget that this interferes on the types of analyses that you decide to adopt. What does this mean? That if you reached the conclusion that being an investor has more to do with your profile, while at the same time, to use the fundamentalist analysis becomes the best choice. And so forth.
Choosing your profile on the market affects all your transactions on it. Learn more about yourself and make a decision!
2. Stay thirsty for knowledge
Some traders have greater natural talent to operate, while others need greater efforts and seek information to achieve success in their movements. However, in both cases, the development is fundamental, above even instinct.
A high performance trader should never be satisfied with the knowledge that he or she already has about the activity. It is essential to always seek to develop, making effort toward improvement and to continue acquiring technical baggage. To combine this attitude with experience can bring good results.
Comparisons are never very good, but always remember about when you dedicated yourself to learn your profession and all the effort it took to acquire knowledge. How do you become a doctor? By always studying! How do you become a trader? By always studying!
Furthermore, the financial market world is directly linked to the news and how it impacts stock performance. A good trader needs to be constantly attentive to everything that is going on, especially in the political and economic scenarios.
Agility and taking decisions in a dynamic way are fundamental at different moments. This ends up saving investments and decisions of sudden drops or causing them to result in even higher yields. To be alert to these possibilities, it is important to keep in touch during the whole day.
3. Have discipline
Not having discipline leaves you at the mercy of impulses and to spin out of control. The unpredictability of behavior during a trade is what you should fear the most because it is precisely what can bring you down.
We know that nobody is naturally disciplined at all times and in every situation. But realize that the ideal is that you can easily stay in line. Why?
It is essential that you wake up early after having had a good night’s rest. This means that waking up at 6 in the morning after having slept only 5 hours and thinking that you are going to be able to get through the day well just because you’re sipping coffee…is not going to cut it.
Why wake up early? As was said in the second characteristic, to learn about what is happening in the country and in the world is essential before you begin trading. Use this time to get up-to-date.
Understand that to establish a methodology before trading that is extremely disciplined is the most basic component to recognize the good opportunities.
This also includes having the discipline to exit at the best time. You know when that is because, after all, you have studied for that. Don’t hesitate — take the decision and do it!
At the end of the day, independently of a profit or a loss, sit down in a quiet place and analyze what were your mistakes and where you can still improve. There is always something to improve, right?
Did I convince you that being a disciplined person is essential for becoming a trader? Consider whether this is a characteristic that you can add to your life.
4. Evolve your mindset
Losses are common for anyone who works with day trade and a good trader needs to be prepared to absorb and deal with bad moments. Despite how competent and attentive you are, it is inevitable that these things will happen.
It is the trader’s job to always be ready to minimize these potential losses, save initial investments, and ensure that the situation does not get worse. This is a very important characteristic in the long term.
You don’t have the ability to control the market, but you can control what you do in it. Remember that you are not on the sidelines in this game, but in the thick and thin of it, acting without hesitation, closing your trades so that you have more profit than loss. When you cease to be the protagonist, you lose control of the game.
Finally, the fear of losing money, making wrong assessments, or that you got into the market at a bad time, end up hindering your trades. To deal with the mental game so as not to despair at different market moments is extremely important.
5. Understand the risks
To invest without risks is virtually impossible, even if ever so small. Every action presupposes negative possibilities, so it is essential that the trader knows exactly what can happen if things don’t go as planned.
Decision-making is the big difference at this time. Take risks and understand that they are necessary for reaching higher gains. This is exactly what makes a trader change levels on the market.
Be aware of the risks that you are taking with a trade. Ask yourself if there is sufficient potential in the market’s movement that is worth the risk. Take note of how the tendency is behaving at that moment.
You should ask yourself these questions to help you act according to each situation instead of hesitating and losing control.
Are you familiar with the stop functions? Well, they are there for a reason! Here it is important to put loss thresholds in place for each trade. And as incredible as it may seem, it is good to set limits on gains as well. You may have a large amount and soon after return everything back to the market.
How about your next step be to get to know the essential tools for optimizing your trades? They will help you on your journey as a trader. Check them out!
Written by Nelogica — Advanced tools for high performance trading.
