They are experienced – Probably the most horrifying and worst myth shot out to anyone considering trading for a living is that you will compound millions in an extremely short amount of time. The only true way to make every day profitable comes through experience, and countless hours learning is crucial to longevity of success.
They know the damage they are capable of – Notice I didn’t say potential or profits here. The best traders I know of understand their limits, and seem to focus more on what can go wrong than what can go right. They are not easily convinced of lucrative outcomes, and have a very high sense of self-awareness.
They trade to make money, not to be right – They understand the strengths and possible pitfalls of what it is they do for a living, and use that knowledge to curb their emotional output.
They have an edge and know how to use it – They understand that without it they wouldn’t last long
They have a gameplan, and follow it explicitly – Each trade is planned and opportunities are scouted for before any trading takes place. They steer away from the killer of all killers: overtrading.
They manage risk – Regardless of how much conviction they have on a trade, they will still do what they can to avoid the potential of any losses and understand rule #1 about trading: anything can happen.
They work obsessively – They follow each turn, each piece of info that comes out in regards to their trade, and follow any underlying information relevant to failure or success.
They only access the best information – Information rules in trading, and having some of the best translates to money. Using the wrong information leads to failure.
They think about the trade, not the money behind it – Focusing on money can destroy your means to objectively assess the trade itself.
They are constantly learning – Just when you think you know it all about trading, a new curveball gets thrown your way, not to mention there are continued means and methods to be learned about making money. Even the most highly successful trader I ever knew, a multi-billion dollar portfolio manager, has a team of fundamentalists and technicians come in to train and retrain himself and his traders.
They are active – Activity sparks creativity, a very crucial part of trading.
They have patience – They understand that the money will come, but everything needs to be in place, first.
While day-trading is a great way to make a living when you are consistently profitable, it can also be the worse career choice if you consistently lose. Continue forward with system development, or working towards effective risk management, money management, or mastery of your trading psychology. Trading psychology means the big 3: discipline, confidence and consistency.The trading psychology takes precedence because it is needed to make sure that the other two are followed.
There’s no one formula for trading success, but there are a few common denominators that I’ve tracked in my years of working with traders:
As humans, we are all going to die one day. Death is inevitable, but death in itself is not what measures the person that you are. It is not the amount of time you spend on this earth that will be judged, but the impact that you had on others.
You must eliminate “Human Emotion” as much as possible in this business. It is paramount to success. Unless you are adapt at predicting the future, your mind is a far weaker ally than all the tools in your toolbox.
Each of us has a comfort zone. That area where everything seems to work like we desire, stress is almost non-existent and we can basically move forward with our eyes closed and not worry.