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Eight traits of a professional trader

Traders come from a variety of backgrounds, but typically share a core set of characteristics that enable them to thrive. Here are eight common traits of a professional trader.

1. Future-focused

Paul Tudor Jones famously analysed graphs of the 1929 Wall Street Crash before shorting the market in 1987. But historic data is only useful as it is applied in the present. Professional traders are constantly plotting their next move against the market. This means creating a robust trading plan, with clearly defined strategies for entering and exiting trades.

2. Disciplined

Control over emotion is crucial to a career in trading. Fear and greed can cause early exits, holding on too long, or even missing an opportunity entirely. Discipline means sticking to a trading plan and booking profits and losses in accordance with it.

3. Adaptable

Discipline shouldn’t mean inflexibility. Trading strategies are crucial, but they should be adjustable over time as market realities change. Successful traders have a plan but are adaptable enough to thrive amid volatility.

4. Self-aware

Knowing one’s strengths and weaknesses is a hallmark of success in most professions – but the stakes are never much higher than on a trading floor. A self-aware trader can recognise their weaknesses and mitigate against them. Equally, being aware of your strengths helps you maximise your returns.

5. Accepting

Jesse Livermore made history when he netted $100 million after betting on the 1929 Wall Street Crash. Nevertheless, his luck ran out and he was bankrupt just five years later. This is an extreme example, but losses are inevitable in trading. Success in the long term means not only mitigating against losses but being able to tolerate them psychologically.

6. Knowledgeable

It’s not necessary to have a university degree, but you should strive to know all you can about the securities you trade. Successful traders devour market data and keep calendars of economic releases and key political developments.

7. Independent

Following the herd may pay off for a while, but eventually you might just follow them off a cliff. Being able to count on your own judgement allows for quick, decisive trades. Successful traders trust and depend on themselves.

8. Manages risk

The best traders can not only spot opportunity but also hedge against the chance they could be wrong. There are several ways this can be achieved, from setting Stop Loss orders to simply having a sufficiently diversified portfolio. Consistent but modest trades ensure that you can never lose too much, while taking an offsetting position can provide a degree of insurance to individual trades.

Published: 26 September 2019

You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.

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