Traits of a successful trader

Investing and trading are two very different attempts at profiting from the financial markets. Investing aims to gradually build wealth through the purchasing of a portfolio of stocks, baskets of stocks, mutual funds, bonds or other investment instruments, over an extended period of time. Trading on the other hand, involves high frequency of purchasing and selling of a certain stocks, commodities, currency pairs or other instruments to generate returns. Traders seldom hold on to their positions.

In this article, we will not be arguing about which discipline, investing or trading suits our readers more. Instead, we talked to some profitable stay home traders to find out the key to their success, which allows them to give up their day job to trade full-time

Below are some of the traits demonstrated by them to allow them to be good at what they are doing.

Enough savings and a back up plan

Before starting out with anything, it is important to ensure sustainability while embarking on a full-time trading path. Most such traders have accumulated a reasonable amount of savings through their years in the workforce. Some even had the support of a working spouse.

This is aside from the amount of money which they are going to trade with. It is important to have the discipline to ensure that money from their trading pot and their savings pot are not used interchangeably.

Knowing what works

Here’s how most traders wannabe started out. They know of someone or read an online post of someone making a lot of money out of trading. They start trading and make a little profit out of their demo account and believe it is time they start live trading.

You see, most free courses given out by forex companies or by bloggers tend to exhibit only profitable trades. What is sometime missed out is the fact that while these people may be profitable trading on their own, they are never 100% correct. Certain method that was taught to you might only work on a certain product or currency pair for a limited period of time. When the dynamic of the particular market changes, the probability of the method working changes as well.

A particular trader we talked to did numerous backtesting of his intraday strategies using past years data. After which, he will test it on the current market to ensure the profitability. Once he is certain that the method is able to make profit, he sticks to the plan, constantly reviewing and changing his strategy if need be.

Softwares such as Forextester 2 allows user to do so, at a fee of a few hundred dollars. This might be a good investment but only if you are serious about trading. Of course, what comes after would be hours of hard work to find the optimal strategy that suits your risk preference.

Knowledge is power

Always be educated. Knowledge of what affects the market is important.

An example will be that during this period of time, the United States Non Farm Payrolls having noticeable impact on the US currency. You can always head to websites such as Forexfactory to get a heads up on upcoming announcements. That being said, holding positions during big announcements is usually not recommended.

Read also: https://dollarsandsense.sg/what-i-learnt-after-losing-sg2000-in-forex-in-one-night/

Educating oneself with the happenings in the market helps us to understand the market’s reaction to a certain news. Having the different possibilities played out in our mind and think of how the market will react to it. An example will be if The Federal Open Market Committee (FOMC) decides a rate hike, what can we expect will happen to the US currency. Such questions should have been answered fundamentally in case of it happening, one will know how to react to it.

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