Trading is a performance-based profession. You’re pitting your wits and skills against the market, which essentially means you’re competing with other traders. Human beings are creatures of habit, and it’s those habits that create the results you get in your personal life and professional life. Here are ten habits that can lead to being a consistently profitable trader.
Be a perpetual student
As with any other profession, you must engage in continuing education if you’re to remain relevant in the trading world. Rules and regulations, technology, and who is trading and how are constantly changing, and you must keep up with it all. You must continue to learn. No one knows everything about trading.
Be flexible
One of the most challenging aspects of trading is that you never know what’s going to happen from one moment to the next. A famous saying among traders is, “The market can do anything at any time.”
Look at the market and consider all the next moves the market can make. Don't guess what the market may do, nor predict what the market may do. Keep a flexible mind so you're never surprised, and you're always ready for any eventuality, knowing that “the market can do anything at any time.”
One of the foundational principles of Darwin’s theory of evolution supports this idea — “the survival of the fittest.” Some interpret this to mean the survival of the “adaptable,” meaning when the environment changes, it’s those who can adapt to it that will survive. This is certainly important in the markets. As they change, you must be flexible enough to change with them.
Be part of a trading community
Trading is an isolating experience for many who trade alone in their homes or offices. If you’re able to be self-disciplined and focus when alone, then it can be an advantage. If you need other people around to provide accountability and keep you alert, then it’s a disadvantage.
If you fit into the latter category, you may want to become part of a trading firm, or at the very least, join an online trading chat room.
One of the most enjoyable ways to participate in a trading community is to join a local trading club where traders congregate once a week. Often, such meetings will have a headline speaker, a question-and-answer session, informal discussion, and sometimes even socializing afterward.
Have realistic expectations
Like many money-making endeavors, a lot of hype surrounds the world of trading, especially on the Internet. Individuals and companies are always trying to sell the latest e-book, course, magic indicator, or forex robot with outrageous claims of instant and enormous profits.
Be disciplined
Money is very emotional for most people, and it’s easy to get caught up in the emotions of fear or greed. Day traders especially can get overconfident and overly ambitious, which leads to overtrading and treating electronic trading like a video game.
Profitable traders are masters of self-control. They trade less than you probably think.
Work on your mindset
A lot of traders do one to two hours of preparation every morning before the market opens. They look over news that came out overnight, and they examine what the markets did in other countries while the U.S. markets were closed.
Choose whatever routine works best for you, as long as you’re calm and focused before you begin your trading.
Go to work as a professional
Some day traders don’t do any preparation before the markets open. They roll out of bed just minutes before the open, go into their home office in their pajamas, and start trading.
Although that may work for some, prepare yourself as if you’re going to work — because you are! Prepare yourself as though you are going to a public office, rather than a private home office to put you in the right state of mind for behaving as a professional, being alert, and treating your trading like a business.
Review your performance and apply what you learn
After each trading day, review your daily trade log. Tally your mistakes, the difference in your net profits for the day if you didn’t make any mistakes, and then summarize it on your weekly chart. Print out your charts, and mark every place you entered and exited a trade.
Then, each morning before you begin trading, review your daily logs from the last several days, and also review your weekly and monthly logs to remind yourself of the lessons you’ve learned from the mistakes you made. Also review your printed charts.
You want to keep that all very fresh in your mind so you don’t make the same mistakes in the future.
Focus on trading mastery
Trading is a challenging profession. You can’t just show up, punch the clock, and earn an hourly wage for being there. You don’t get paid for your time. You get paid for your results and only your results.
In addition, you’re trading in the same markets that some of the brightest minds in the world are trading. Wherever there’s a lot of money to be made, there you’ll find some of the smartest, sharpest people in the world. That’s certainly true of the trading world.
You can’t take trading lightly. Your goal can’t be to become a “good” trader or to just make enough to live on. That level of motivation won’t be enough to succeed against the stiff competition. You must be completely devoted to mastering the art and science of trading. That’s the level you must aim for if you want to be successful.
Lead a balanced life
Trading is a lot of fun. You can make a lot of money trading. Trading is intellectually stimulating. When you become skilled, there’s a state of “flow” that you experience, similar to a runner’s high.
Although focusing on trading mastery is important, you must counterbalance that with not getting so intoxicated with trading that you sacrifice your health, your family, and other interests. In fact, leading a balanced life will actually help you be a better trader. For example:
Having a good, loving family life will help you enjoy a good state of mind and put you in a good emotional place.
Eating well, having good nutrition, exercising, and taking care of your body will also help with your trading. Physical discomfort, sluggishness, and illness are all distractions that can hurt your trading performance.
Maintaining a good spiritual life will also keep you balanced and help you avoid the temptation of greed.
Choose a charity in which you strongly believe and commit to donate a certain percentage of your profits to that charity. This can serve as a motivator on the spiritual level to help you maintain discipline and succeed in your trading profession.
