Description: Here is the list of traits shown by all the successful traders. They acquire and develop these traits through their time in the market.
Trading, you will know as you progress, is more of an art than a skill. Each trader charts their path, deriving inspiration from those who have walked the path before them. There is no trading tip to give you success in your investment journey as much as the insights from a successful trader. The knowledge acquired from investing over the years and the experience make them a gold mine of recommendation.
When you closely observe, most successful traders are characterised by some traits that set them apart. These traits enable them to formulate an effective strategy in all markets. A successful trader may have some or all of these traits:
- Risk Management:
Traders make good use of derivatives and forwards to hedge their risks. They are deft at playing with sophisticated financial instruments to maximise their returns and minimise their losses. Furthermore, they trade in equities and debt instruments to have the right balance. Likewise, they use a margin trading facility to take an exposure with a lesser contribution. They put stop-loss orders to good use and benefit significantly in controlling their losses. Once you know the risks are covered, you can focus on maximising gains.
- Not afraid of losses:
When Rudyard Kipling said, ‘If you can meet with triumph and Disaster—and treat those two impostors just the same, little did he know his words would have varied implications. Successful traders are not scared of losses. They win some and lose some. However, the number of wins should be more than the number of losses for you to sustain. When you are not afraid of losses, it reflects in your trading strategy, and then you focus on making your wins much more significant than your losses.
Winning does not just comprise gaining but also controlling the potential losses. It will always be a combination of two or more steps ahead and one step back when you trade. Your experience, knowledge and discipline will ensure that the step ahead is much more significant and impactful than those taken back.
- Realistic approach:
Winning does not mean that you earn profits by being right most of the time; instead, what makes a successful trader is when he can make money even by being right 20%-25% of the time.
The trading tip to be right always or most of the time is non-existent. But there is hardly any strategy that is as rewarding as patience. Developing a successful trading strategy takes time. There is always a risk in trading, which needs to be controlled. Successful traders have a good mix of equity and derivatives in their basket and some great tools for investing like stop loss and Multilateral Trading Facility(MTF).
While formulating a trading strategy, understand the worst-case scenario, and determine how you can cover it. The critical point in your effort to run is how quickly you gather yourself and are back on track. Having this realistic approach is what makes successful traders.
Initially, you may rely on external guidance and support to initiate trading, but eventually, it is you who has the power to determine your success. With experience, successful traders rely on none but themselves to have a winning strategy— an amalgamation of all the strategies that may have worked for them and may be unique to them.
Independence does not imply not needing help. Instead, it means developing a style that works for you and is unique to you—and that becomes your art.
Summing it up, successful traders certainly trade differently, but the good news is that they are made, not born. They acquire and develop these traits through their time in the market. They grow through their trading journey, regardless of wins or losses.