The concept of stock trading is simple. You buy a stock at a discounted price and sell it at a higher price for profit. Simple, but it is by no means easy. Veteran traders know that there are so many factors that affect how stock prices move over time. Economics, company performance, institutional buying and selling, politics, news and so much more affect how price behaves. As such, traders have to analyze the market and determine the best time to buy and sell depending on their strategy of choice.
In this post, we’ll outline some of the common traits that all profitable traders have. Emulating excellence is a good basis to build a solid foundation so here are the best practices that most winning traders share.
Clear Expectations
Every veteran trader knows that there is NO shortcut to doubling their portfolio overnight. They understand that sustainable wealth is built over time. This means that patience, discipline, consistency and hard work have to be applied on a daily basis to achieve the desired results.
Having clear expectations in the market means that a trader understands the expected trade outcome depending on the type of strategy used against prevailing market conditions. This means that entries, exits, cutloss and expected return are carefully planned and calculated. There is no room for second guessing.
When a trader has clear expectations, the trade plan is executed with confidence and can thus be repeated again and again.
Being Process Oriented
Consistently profitable traders are process oriented. Being profitable is just a byproduct of handling the PROCESS well. In this context, the PROCESS of trading involves research, daily price charting and analysis, tracking of volume and constant monitoring of key levels. When the process is handled well, the profits naturally come.
Again, traders who are process oriented exhibit patience, discipline, commitment and the eagerness to go the extra mile every day. This is habit forming. If you want to succeed then habits that help you achieve your goals need to be put into place. There are simply no shortcuts when you traverse the road to consistent profitability.
Disciplined Execution
Everything is a gamble if you leave it to chance. In order to repeat winning plays, it has to be built around a sound trade strategy. Consistent profitability happens when a trader is able to follow a strategy with utmost discipline regardless of the current emotions they may feel.
Emotions are the cause of most impulsive mistakes in stock trading. When traders panic or get too greedy, they tend to shrug their strategy aside. This inevitably results to big losses. As such, successful traders live and die by their trade plan. They build and improve upon it over time and they execute it with precision and discipline. When the buy signals show, they buy. When the sell signals show, they sell. When a cutloss signal is triggered, they bite the bullet. It's that simple.
Lifelong Learner
Learning the art of stock trading is never ending. Each trade whether you win or lose holds a goldmine of lessons. To leverage this learning opportunity, winning traders always have a journal wherein all trades are noted and analyzed on a regular basis.
What gets measured gets improved. So, your past performance is a great resource for you to learn and get better. Analyzing past trades helps you understand what works and what does not. It helps you gain insight on common lapses that needs correcting and it shows you the best practices that needs to be nurtured and improved upon. This of course is only possible when a trader journals past trades and reflects daily on it. This is the best edge you can do to achieve explosive progress in a short amount of time.
You Only Lose when you Quit
As a lifelong student of the stock market, I have seen many enthusiastic newbies start strong in the market and quit the moment they encounter a huge loss. In the market as well as everything else in life, mastery is needed to replicate success again and again. No one can achieve sustained profits in the market on their first try. You only attain mastery when you learn from your mistakes and continue to get better over time. So it all boils down to commitment, discipline, patience and the eagerness to work hard while enjoying every minute of it.
I have always regarded success as the ability to consistently remain enthusiastic from failure to failure. This mindset means that each failure is a stepping stone to learn and improve. When you approach stock trading this way, you'll always win in the end. You only lose when you quit.
We hope you loved our posts! To learn more about trade and investment, access the Online Learning section of our website to enjoy our free Learning Module.
Comments