There are several articles online that explain the basics of how to become a stock trader in a few easy steps. Nonetheless, while becoming a stock trader is easy, making money off of trading is not. As a matter of fact, stock trading may be one of the easiest ways to incur financial losses.
However, individuals planning to venture into stock trading should not let the thought of potential losses discourage them from undertaking it. Aspiring individuals only have to understand – what makes a good trader? – to ensure that they keep their losses minimal. Abiding by all the characteristics of a successful trader can help an individual become one gradually. Even though the process might be slow, there is a pot of gold at the end.
What Makes a Good Trader?
1. Keeping patience
Patience is one of the key virtues of a successful trader. They do not take up every opportunity that passes their way but wait for the right one. Traders often choose to simply assess a trade without entering, even if it rises steadily. However, they are on constant lookout for the best time when entering will be the most lucrative.
2. Maintaining discipline
Discipline and patience almost go hand in hand. Traders often set a particular set of rules and protocols for trading, which they follow religiously. They never divert from this set system.
For new traders, it can take some time to develop this system that they can follow diligently. With experience and time, discipline will become one of their traits.
3. Creating a plan
Successful traders always have a plan of action that they will implement the next day. They generally take notes on what is trending and also create charts. Doing so helps them gain a better understanding of the market.
4. Not losing hope due to losses
One of the essential traits of a successful trader is not getting demoralised by losses. Traders should always take a step back and make an analysis of what led to the loss – there could be sudden market changes or announcements that may have influenced it.
It is always necessary to learn from mistakes– losses, in this case. It will be beneficial later for efficient financial management.
5. Cutting losses
Following with the above mentioned point, it is also necessary to cut losses. Successful traders always look to make up for the losses they have incurred.
New traders have to understand that they need to make double of what they have lost to become even. They must never waste time brooding over the loss; rather, they should always concentrate on recovering.
6. Open to learning new things
One of the answers to “what makes a good trader?” – is the desire to learn new things. As mentioned above, when coming across a loss, traders analyse what may have caused it. They learn from the past as well as present market conditions, which help to extend their trading prospects.
7. Being an avid reader and researcher
Reading and researching the companies to invest in is one of the essential traits of a good trader. Alongside, it is also necessary to stay abreast of all the microeconomic and macroeconomic events taking place in the country.
8. Keeping records
Successful traders always maintain online trading records. Doing so helps them to avert choices that might lead to a significant loss.
For new traders, it is necessary to imbue a habit of maintaining records for every trade. It is one of the quintessential ways of achieving success.
9. Removing emotional ties
Traders always set aside emotional ties to a particular stock. An inclination towards any one stock may cloud an investor’s judgement. This can eliminate the chance of selling it at the right time or even not entering the trade at the lowest purchase price.
When the question arises – how to become a more disciplined trader? – Individuals should know how to remove any and all emotions when trading.
10. Staying averse to rumours and fake news
One of the greatest qualities of successful traders is that they know how to receive information with a grain of salt. Such news may influence the market, but it can only be momentary. Acting upon them can be detrimental for the investment and lead to significant losses.
Hence, it is advisable to stay averse of such news and undertake decisions only after making a thorough analysis.
11. Showing humility
Along with patience and discipline, humility is another trait that successful traders possess. They never let ego come in the way of their trades. Traders always accept when they are incorrect, letting them avert similar situations in the future.
12. Limiting trades
When questioning – what makes a good trader? – not going overboard with trades is one of the most important answers. Successful traders always limit trades and never overtrade. They never look to enter the market during unfavourable conditions.
13. Evaluating past performance
Before beginning a trade, it is necessary to check the past performance of stocks. Investors can make comprehensive decisions based on the stock’s historical performance.
14. Utilising technology
New traders should assimilate technology and take full advantage of it. A simple, fast internet connection can influence trading performance substantially.
There are also several tools and services that traders require. Having sound knowledge of the same, and choosing one correctly can make a great difference.
15. Trading on the right platform
One of the first steps to trading is to choose the right trading platform. For instance, Groww is one such prominent online platform that new traders can choose, to venture into trading.
One of the last tips for – what does a trader do? – they never give up on their daily lives to sit in front of a monitor. Successful traders know how to maintain a balance between every facet of their life.
Featured image source: blog.wallstreetsurvivor.com