7 Traits of Successful Traders, What It Takes To Become Successful In Trading
BY Chris Andreou|December 20, 2021
A good multi-asset broker will help you with education and tools so you can improve your skills, but you need to have the right traits to become successful in trading.
Data from European brokers shows, that most trading accounts lose money. Right from the start, you need to be aware that the probabilities are stacked against you. One way to avoid becoming another statistic is to study and model the behaviors and traits of successful traders. You need to learn what it takes to increase your chances of success.
The key to become successful in trading has less to do with luck and a lot more to do with hard work and dedication.
In this one, I’ll share 7 traits of successful traders. Hopefully, this will save you the time and frustration of trying to figure it out for yourself.
But just before I begin, here is a quick disclaimer. This article in no way implies that you will become successful in trading, this is just my opinion.
With that being said, let’s get started.
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Successful Traders Are Patient and Outcome Independent
The first trait of successful traders is, they are patient. Successful traders do not chase the market. They wait for setups and signals and once the setup occurs, they enter the trade.
To become a successful trader, you have to be willing to sit out of the market for any duration of time. Just because there is no trading activity happening in your account, this does not mean you are doing something wrong. Successful traders know it is better to miss a few good trades than to take trades that do not fit their plan. They only trade whenever the probabilities are stacked in their favour.
Successful traders also believe in the power of probability and randomness. Because of this, a major trait of successful traders is outcome independence. This means that if they win or lose, or sit on their hands and do nothing, they don’t feel any better or worse for it.
The mental game of trading is challenging enough, but being outcome independent can make trading more fun and less stressful.
How do you become outcome independent? Start by focusing on what you can control; which is yourself, the risk you take and your trading plan. Then just focus on the process of trading instead of the outcome.
Don’t worry about losses or missed opportunities, the market gives plenty.
Practice and Discipline Makes Successful Traders
The next trait involves putting into action your knowledge and actually trading. Trying to become a successful trader without trading is a little like trying to become an Olympic swimmer without ever getting in to the pool.
To be successful, you need to practice and develop discipline by trading in the markets with real money. Trading on demo accounts can only take you so far. It is essential that you take the next step and start trading for real, using real money.
You should also start out small in terms of the amount of money that you risk on each trade. Big losses can be disheartening and lead to depleting your funds and probably make you think about giving up altogether.
Most people in the trading community consider 1% of their trading capital as being a reasonable amount to risk on a trade. This is the simplest and easiest place to start developing discipline.
All successful traders take losses after all, it comes with the territory!
Successful Traders Have the Ability to Control Their Emotions
One of the biggest factors that separates successful traders from average traders is the ability to control their emotions. Some people have an innate ability to stay calm in stressful situations and still make logical decisions, while others cannot.
The ability to control emotions is one of the most important traits of successful traders. If your emotions are in control, then they will not distract you while trading, or motivate you to do the wrong things at the worst time.
When it comes to trading, controlling one’s emotions is one of the most difficult things to do. There are endless ways to make profit or loss in the financial markets, but no matter how good your strategy is, there is only one person who determines whether or not you will win or lose. That is you, and if you make emotional decisions while trading, you will probably lose.
The ability to control emotions is based on an inner strength and self-confidence, it takes time, experience and trading with real money to get there.
Everyone needs help along the way but one thing you can do to help yourself is to think through your strategy and create a trading plan. Then be disciplined and stick to it.
They Are Consistent and Have Trading Routines
Successful traders are consistent and have trading routines to help them survive the long haul. Trading is not a single event; it is a process of methodical actions.
If you are looking to become a successful trader, then you must work on developing the right mind-set, while at the same time learning how to manage your emotions.
There is no limit to how much you can learn about the financial markets, there are many books and videos out there but the key is to take action. Knowing is not enough though, it is the consistent application of the knowledge you have learned and the routines you create for yourself.
The difference between successful traders and unsuccessful ones is that successful traders have a systematic approach to trading and they stick it. Unsuccessful traders either do not have a systematic approach or they don’t follow their approach consistently.
Successful traders keep things simple and by doing so yourself, find that it is much easier to stay focused. When you are disciplined and use a simple trading system, you will find it a lot easier to stick to your trading rules and routines too.
It also becomes a lot easier to see what is working and what is not because you have something to benchmark your progress.
Know Thyself: Strengths, Weaknesses, Fears and Motivations
Many of you may have heard the saying before, “Know Thyself”. It’s a saying that can mean different things to different people but for trading, it can be interpreted to mean; know your strengths, weaknesses, fears and motivations.
In order to succeed, you need to understand what works best for you and your personality. There are many different ways to become successful at trading, simply because there are many different ways to trade. There is no single path that will work for everyone, one trader may find they do well with day trading; the next trader may be better suited to scalping. Another person might prefer trading Forex vs stocks.
The key is finding an approach that fits your personality, trading objectives and risk tolerance. A successful trader knows what they are good at and they also know what they are not so good at.
Being honest with yourself is important if you want to be successful in trading. Trying to tackle everything at once without knowing what you are capable of doing can lead to frustration, confusion and disappointment.
By knowing yourself, you can make smart decisions about how to trade in the markets. Knowing this allows you to focus on your strengths, work on or avoid trading to your weaknesses, and work towards eliminating the self-sabotaging behaviours that even successful traders fall prey to at times.
They Embrace and Manage Risk to Achieve Success
A significant trait of successful traders is their ability to see opportunities and the potential for profit where others only see risk. They accomplish this through education, experience and mastering their own psychology. Successful traders use that to develop their own trading plan that includes all the rules they need to manage risk.
Embracing risk means accepting that any trade could be a winner or a loser. Managing risk means never trading beyond your financial limits and taking steps to protect your capital at all times.
There are many types of risk involved when trading, but the main ones are; risks associated with your trading style, risks associated with your management practices and market risk. The first one, “style risk”, refers to whether or not you are comfortable with the way you trade and if it is a suitable style for you. “Management risk” refers to how well you manage your trades once they have been initiated. “Market risk” is all risks associated with trading in the markets and this is generally something you cannot control.
To become successful in trading, you have to understand your strengths and weaknesses and know what you do best. A useful trait of successful traders is to understand probabilities then make good judgments about which way prices are likely to move based on that.
The only way to get better at managing these risks is to practice doing so. Look at recent trades you have made and think about how you would have approached things differently with the benefit of hindsight. The more you do this, the more likely you are to notice patterns in your behaviour and in the market.
Successful Traders Are Persistent and Learn From Their Mistakes
Successful traders have an attitude and mental toughness that allows them to control their emotions, effectively manage risk and treat trading as a business. Successful traders also have the ability to stick to their trading plan and follow it, even in the face of strong emotional reactions or adversity.
Persistence is one of the most underrated traits of successful traders. Trading is not easy or always profitable and many new traders find themselves losing money then give up within a relatively short period of time. You must be able to ride through the inevitable losing streaks that come with trading. Having the ability to remain persistent despite losses is crucial for long-term success.
Learning from mistakes is another important characteristic of successful traders. They keep at it, learning from their mistakes and improving as they go along. One thing that successful traders do is keep a journal of all their trades. This allows them to review where they have made mistakes or learn what they could have done differently to get better results.
Whether a trader learns from their own mistakes, or from observing other traders’ mistakes, learning from prior experiences will help improve decision-making processes and reduce making similar mistakes in the future.
Get in to the habit of adopting good trading routines, have a plan, keep it simple, be consistent and disciplined. Know your strengths, control your emotions, learn to embrace and manage risk and learn from your mistakes.
This is the kind of stuff that contributes to successful trading and what makes successful traders.
Everyone is looking for the magic bullet or shortcuts when it comes to trading. The truth is that to become successful in trading or any endeavour for that matter, it requires work and dedication.
Traders who have studied the markets for years reach a level of understanding that allows them to make trading decisions with confidence and conviction. They develop a sort of intuition, learned over time and from their mistakes. They have honed their skills, refined their trading plan and focus on its execution.
These successful traders have common traits, which they openly share and I have outlined just 7 here. Trading success depends on many things, such as time management, patience, discipline, and the ability to stay focused on your goal.
Successful traders treat trading like a business: not a hobby, not an occupation, and certainly not a form of gambling. They treat trading as a business to ensure that they take it seriously.
You should too!
Take the first step, become a trader and start trading with a reputable broker.
Risk disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Never deposit more than you are prepared to lose. Professional client’s losses can exceed their deposit. Please see our risk warning policy and seek independent professional advice if you do not fully understand. This information is not directed or intended for distribution to or use by residents of certain countries/jurisdictions including, but not limited to, USA & OFAC. The Company holds the right to alter the aforementioned list of countries at its own discretion.
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