To become a successful trader, you need to understand the common pitfalls and learn to avoid them. If you study successful traders, you will see a pattern of desirable characteristics in them. The same holds true for unsuccessful traders too. Here is a comparison between the qualities of successful vs unsuccessful traders.
Read the article and find how many of these qualities you have got.
Traits Of An Unsuccessful Trader
#1 You Have No Defined Trading Strategy
You make a trading decision based on gut-feeling and keep making the same mistakes due to lack of discipline and an organized trading plan.
#2 You Feel Drawn To Open Positions
Due to an emotional attachment, you hold profitable trades until they turn into losses and then unwisely wait for it to become profitable again. You take rash decisions when the market takes temporary unfavorable turns.
#3 You Are Too Emotional
Your mood is influenced by market impulses and price movements. You often jump into the market with disregard for the necessary research and tend to lose more than you’re comfortable to admit.
#4 You Let Your Focus Wander
Successful trading requires undivided attention and focus to read and evaluate a market effectively. Unsuccessful traders give into distractions.
#5 You Are Not Open To New Ideas
Markets are always changing. There is always a new idea out there that will help you to improve your results. You think you already know enough and aren’t willing to learn anything new. Since you are not open to new ideas, you are unable to change along with the market, and ends up losing consistently.
Traits Of A Successful Trader
#1 You Have An Effective Trading Plan
You have a well-formulated trading strategy for every market condition and you always keep a record of your previous profits and losses
#2 You Understand Risk
You manage your risk effectively on every trade. You calculate the loss you are willing to incur on a single trade. You do not gamble and take unnecessary risks. Instead, you make well-informed choices that almost always prove to be right.
#3 You Control Your Emotions
You never become emotional before, during, or after a trade. You’ve performed your research and feel confident enough to follow the rules – your own rules. A successful trader is proactive and not just reactive.
#4 You Learn From Your Losses
Every trader loses money at some point. You accept this truth without panicking. You use the losses incurred as a learning opportunity and improves your strategy and finetune it to reduce risk.
#5 You Broaden Your Learning Scope
You do not stick to just one aspect of trading. Instead, you are committed to learning about options, futures, stocks, and forex as that will help you to become a better overall trader. This helps you to understand how all the markets work together and affect each other to help make the most appropriate trade decisions for your portfolio. The more you learn the better equipped you are for any trading situation.