If you are reading this blogpost, either you are considering becoming a full-time trader or you have already started your journey and want to improve your performance.
Wherever you are in your trading journey, you probably know or have experienced that trading is NOT AN EASY JOB. It requires a lot of effort, knowledge and practice to be a successful trader.
Though full-time trading is a hard job, it’s easier for some people for the skills they have.
You may wonder if you can learn how to trade successfully or can make a living from trading.
I believe the answer is YES!
YOU are even able to be a GREAT TRADER.
No matter what background knowledge you have ( I know this from my own experience), what your degree, gender or age is, or in which market you trading ( Stock Market or Forex) you can be a profitable trader , IF and ONLY IF you are willing enough to be and try hard for it.
What people usually don’t know is that there are a lot of skills that they need to learn in order to be a successful stock market or Forex trader.
In this blogpost I talk about some of the skills that I personally found critical for becoming a successful trader.
If you don’t have these skills yet or you have only a couple of them, don’t worry about it. You can work on them and improve them one by one. As you improve these skills even with small steps, you start seeing the better results.
What traders usually do after not getting a favorable result from trading is questioning their strategy and focusing on improving their method of trading.
They try to perfect their trading plan and learn every single technical indicator in the world.
Don’t get me wrong! Strategy has an important role in your success, but it is not the only and the most important element of trading.
There are very powerful skills that can help your performance improve dramatically.
Now let’s talk about these powerful skills …
#1- SELF DISCIPLINE
If you trade for a living, you are your ONE AND ONLY BOSS. Full time trading is a self-employed job. IT’S A BUSINESS.
You are your own supervisor and manager. Basically, it is ONLY you!
You don’t need to be worried about your boss requests, project deadlines, making another person happy and being afraid of getting fired if you have drawdowns in your performance.
As good as it sounds, there is the other side of it. You don’t need to put in a lot of effort to make someone else happy, but you still have a boss and that is YOU!
You are the person who must question your actions, evaluate your efforts and analyze your results. You are building a business up from zero BY YOURSELF and you need to take this job seriously.
In order to manage this type of job and do all these analysis and evaluations, you need to be a self-disciplined person or practice self-discipline to some acceptable extent.
Since there is not any external power to force you to do your job, there is no supervisor to define all the tasks for you, you must do it all.
So, self-discipline is a critical skill in this business.
Self-discipline also is crucial when you are developing you trading system and having your trading journal. You need to be committed to your tasks despite all the disappointments and discouragements.
Self-discipline helps you to be your own wise supervisor, realize where you should put more effort, teach yourself and define all the tasks for yourself.
#2- TIME- MANAGEMENT
As I said earlier, trading is a job where you are your own supervisor. As a full-time trader, you must train yourself and should know how much time you need to spend on training and learning all those skills.
Although the markets open and close at specific hours, you need some other time outside the business hours to analyze the charts, evaluate the stock or currency pair you want to trade and evaluate your performance.
All those tasks along with other parts of your personal life need to be managed for not getting out of balance.
You also don’t have a boss to ask for a vacation and you are the person who should realize when is the time to take some days off. So, time management skills will help you to become a better trader, learn faster and get more consistent results. It also helps that your full-time trading becomes a more work-life balance job.
#3- CONSISTENCY
If you want to be a successful trader, it’s a MUST to have a trading system or plan.
In order to establish a trading plan, either if you learned it from someone else or creating a new one for yourself, you must test it first.
Testing a system means you act upon a specific plan enough times to prove that it WORKS FOR YOU! So, you need to be consistent in your trading system.
The hard part of it is that since we people act emotionally a lot of time, being consistent is very hard.
Even after you established a specific trading plan and proved it for yourself, you need to learn how to stick to your own rules.
It may sound easy; you set some rules and you stick to them in different situations. However, if you have even a little experience in trading or have read traders’ stories you know it’s NOT EASY.
IT IS SIMPLE BUT NOT EASY!
Why is that? Because we are human. Our life companion, our mind, talks all the time; it never remains quiet and it’s like a nonstop radio.
What does it do? It prevents you from acting upon your system. It compares you with others all the time. It is the source of all the disappointment, fearful, greedy, scary and tiresome thoughts.
How many times have you traded a stock without rational thinking? How many times have you held a stock even after getting lower than your stop loss to prove you were right?
How many times have you sold your winning trade too soon because of fear of losing what you have already earned? Why have you done all these?
People call it emotional trading, but it’s our MIND that justifies our action against our established rules. You have done these because your mind generated al that emotion and thoughts and you have acted based on them rather than your plan.
Consistency means sticking to your own rules no matter what you feel or what your mind says.
So being consistent in your way of trading is a privilege in this kind of job where you are facing a ton of thoughts and emotions all the time.
#4 – PATIENCE
“The market is a device for transferring money from the impatient to the patient.”
warren buffet
Trading like other self-build businesses takes time. As a matter of fact, becoming good at any profession takes time.
You will have tons of painful nights. You will need to skip some of the party invitations, fun times and instead focus on building your business while not getting any results out of it at the beginning.
You need to be patient to reach consistent profitable trading. One common mistake that traders make when not seeing favorable results is either giving up trading totally or changing their strategy and trading plan.
Well you need to give yourself and your plan enough time and then decide about it. No matter how great your strategy is, you will face loss and failure.
The distinction between good and bad traders is not that good traders always win or win most of the time. But it is how they respond to their losing trades. That even if they fail, they don’t give up. They try again and again; they remain patient to see the results.
#5 – HUMILITY
Ego is one of your biggest obstacles on the way to be a successful trader. For some traders it really causes pain. Especially when they start getting some good results.
What happens is that you go higher and higher from the ladder of pride and you feel that you are an important person now. You can beat the market now! That’s the time you should expect a great fall from this ladder.
Yes, you are an important person but like the others. Not more or less. Not more than the market.
Sentences like “I am right most of the time”, “ I prove that I am better than most of the people in the market”, “ I hold the stock despite its direction to prove I was right” are not a good signal.
Be mindful when you start thinking like that.
The problem with ego is, you will focus on being right not making money. But this is not the point of the trading career. It’s finally a career. You need to make money!
If you focus on proving being right rather than making money, you cannot make rational decisions. You will take the market’s behavior personally. But don’t forget that market doesn’t move based on your thoughts. And you are not competing with the market or any other person.
So being humble and focusing on making good decision rather than proving how right you are, help you achieve your goal easier and faster.
#6- MINDFULNESS
Last but not the least is mindfulness. Mindfulness is the practice of living in the moment and fully experiencing the current moment without any judgment.
As a trader you will decide in the moment. Sometimes you will have just a second to make a very critical decision that can cause you to win or loose thousands of dollars.
On the other hand, you have your mind talking all the time. Making all these important decisions with such a high level of noise (mind talking; nonstop radio) is very difficult.
You need to be focused. The focus should be on your own trading system and plan which you prepared ahead of time.
But how can we stay focused and not distracted with our emotions and thoughts?
Mindfulness is the solution. If you can observe your thoughts and emotions without JUDGEMENT, they will not affect your decisions or at least not that MUCH.
This should be a whole new blogpost or even a couple of blog posts to explain how mindfulness works in critical situations.
But overall, you need to learn to observe (without judgment) your thoughts and emotions and not act upon them.
Just let them come and go. Have a deep breath and wait for them to stay for a while and go. When they are gone then decide.
You can practice mindfulness any time of the day in any activity to learn how to be mindful in critical situations.
COUPLE OF BOOKS RECOMMENDATION
As you probably know already, to be successful in this career you should study a lot and read other peoples’ stories. Studying other successful traders’ experiences will help you in many ways.
It help you become more familiar with great traders’ mistakes and avoid doing the same mistakes. It also give you a motivation to not give up as you see how other people overcome their dark days.
I highly recommend read the ” Market Wizards” by Jack D. Schwager if you haven’t already or read it couple of times. That’s a GREAT BOOK! I personally try to reread portions of the book once a while since it really had a great impact on my trading performance.
“Trading in the Zone” by Mark Douglas is one of the greatest book about mindset and psychology of trading . That’s a must read for every trader I believe.
It is highly recommended to read the book if you want to get familiar with fundamentals of trading, psychology and specifically emotion on the effectiveness of your trading systems.
I also recommend Mark Minervini’s books ” Think and Trade like a Champion” and ” Trade like a Stock Market Wizard“. Those are a complete guide for active traders and it’s like a textbook that you need to study many times not just read them.
And the list of books goes on.
Please keep in mind that there is never an ending for learning and training . Wherever you are in your journey , you need to study more and keep training yourself.
FINAL WORDS
I would like to put more emphasis here on what I’ve said already. That the most of the traders put all their effort to perfecting their trading strategy. Although a good strategy will help you to be a good trader, it is not the only and the most important thing.
There are a bunch of skills that you need to learn or improve to become a successful trader. I talked about six of them that I personally think are very important but there are more than that.
(If there is another skill that you personally found important in your journey, please feel free to share it in the comment section.)
The good thing about these skills is that once you learn them you can apply them in any other part and situation of your life, and they are helpful wherever they are used.
Let me say this again… YOU CAN BE A SUCCESSFUL TRADER and MAKE a LIVING FROM TRADING . You just need to try to decide wisely, train yourself consistently and be patient.
I hope you found this blogpost helpful.
Thank you so much!