What Makes The Best Traders Different?
Anyone can trade, but it takes someone different to be a trader. It takes someone with tenacity and patience, someone with confidence but not cockiness. It takes, in other words, someone special to be one of the best traders. The thing is, it’s not something that can be learned in a classroom. There are books, but they’ll only help you get started – they won’t teach you how to be successful. And there are other traders, but since everyone is different it can be tricky to learn from someone else.
The best traders learn as they go – they make mistakes, they pick themselves up and they start all over again if they need to. It’s what makes them stand out. They also do a few other important things…
They Think Before They Leap
Premeditation is the name of the game when it comes to the best traders. There is no guessing, no taking a stab at it, no closing your eyes and pointing at the screen to choose a trade. Everything needs to be planned in advance, as far as that is possible with trading, and that is the only way to enjoy long-lived success.
Some traders – the ones who don’t get very far – think that in order to get started they need to just pick any old trade and see what happens. The problem is, if they lose they might not bother to trade again, and if they win they might believe that guessing in the way to do it. Until they lose and lose big, in which case they’ll give up. So either way, not having a strategy in place, not knowing the entry signals and exit levels, will result in a short term trading ‘career’.
They Are Disciplined
So, so disciplined… The best traders take what they do very seriously, and that means sticking to the plan no matter what. That discipline can sometimes be tested, but for the best traders it never wavers. Never. And most people just can’t do it – it takes an extreme level of concentration and dedication that only the best traders have. This is the discipline that means your strategy is never deviated from, even if it looks a little fragile. It’s the discipline that means you can stop trading for as long as it takes until the right trade comes along. It’s the discipline that means you aren’t constantly staring at the screen or the phone in your hand to see what’s happening in the markets. Can it be learned? Not learned exactly, but you can ‘persuade’ yourself to think in those terms, although it will take much practise and you must be prepared to make some mistakes along the way.
They Can Add Up
Yes, as much as we might not like to admit it, the best traders know that trading is all about the maths. As is everything in life. Maths is more important than even our old teachers might have considered, and when it comes to trading, arithmetic is your friend. Trading is a game of probabilities, not certainties. That can put some people off, but the best traders understand how to use those probabilities to their advantage – and that sets them apart from the others who simply accept that nothing is guaranteed in trading. The excellent traders know that just because they won or lost a trade that result means nothing when it comes to their next trade. They are simply not connected. Many people, however, become emotional or even superstitious, and feel that just because they lost a trade they are ‘bound to’ win the next. Or just because they won a trade they must be on a winning streak. Trust us, there is no such thing
They Are Psychologists
In an amateur kind of way (unless, of course, they actually are psychologists…) that is. But amateur or not, the best traders are able to read people – and the market. And this gives them a major advantage over many of the others involved in the trade. Professional traders can understand how amateur traders work – and then they will do whatever the opposite is. Why? It’s because the market very rarely performs as a newbie would expect it to. So by examining what the newcomers are up to and doing the exact opposite, it’s possible to pre-empt the market.
They Lose
Yes, you read that right. The best traders lose. They have to. Losses are inevitable. But they don’t read too much into them. And they don’t try to avoid them either. Beginners avoid losses like the Wicked Witch of the West avoids water but when they try to do that it all goes horribly wrong. They might trade without a stop loss. They might rush into a trade to make their money back. Whatever it is, there is no way to avoid a loss so it’s important not to try. If and when it happens, just pick yourself up and get on with the next trade. Because there is always a next trade.
Rob Colville aka The Lazy Trader
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