Almost anyone can be a trader, but becoming one of the best traders requires more than investment and a three-piece suit. Remember: many people want to join the ranks of seasoned traders and take home the money that comes with that title. Very few of them reach this mark or even come close to it. Consistent and successful traders are as rare as multi-million dollar lottery tickets.
One of the preparatory courses to become a master trader is adequate teaching in fundamental economics, financial markets, and technical analysis. But many educated, knowledgeable, brilliant people cannot be called experienced traders. The critical difference between successful and losing traders lies mainly in the acquisition of six essential skills that experienced traders possess. Master these skills, and you will have a real chance of becoming an expert trader.
Skills 1 – Research and Analysis
The ability to conduct quality research and thorough market analysis is essential to success in trading. Experienced traders develop their skills by thoroughly researching all the information associated with the securities they are trading and then, more highly, being able to determine the likely impact of that info on a particular market.
Experienced traders learn and improve by using both fundamental economic and market information in the form of trades and ongoing price action to adapt and approach the market most effectively. (By “effective,” we mean a favorable risk/reward ratio, high probability of success, and low risk of failure).
Analytical skills are essential because they enable a trader to identify better and exploit trends (or lack thereof) – about the price action on separate charts of various time frames and in the market as a whole.
Skills 2 – Research and Analysis
As you analyze the market and identify patterns and trends, you must also determine what technical trading strategies are needed. We believe that focusing less on the money to be made and more on doing the right things at the right time is the critical approach to developing and improving your analytical skills. Focusing on the market, rather than the cash in your trading account, allows you to make the best and most objective trading decisions in any situation – and THIS will ultimately enable you to make the most intelligent. Most profitable trades. Almost all of the “market wizards. Questioned by Jack Schwager in his famous books on charming trades say that they focus on the market and their trades. Not their account balance. They only care about getting the market right, whether it makes them a dollar or a million dollars.
Skill 3 – Adapting your Market Analysis to Altering Market Conditions
Over time, experienced traders develop trading strategies and techniques they use repeatedly. Over time, each trader collects his trading methods, maneuvers, strategy, and tactics. This is a good thing. You must have your trading style and advantages, such as certain combinations of technical indicators indicating high probability trades.
It’s good to have your own tried and tested trading techniques. It’s even better to become an expert trader if your most ingrained habit is constantly monitoring the market for signs and symptoms that it is changing or finding a new pattern, meaning you must adapt to those changes. You are changing conditions and adjusting your trading strategy accordingly.
Skill 4 – Stay in the Game
No matter the industry, company, or specific profession, everybody faces ups and downs in their career. You will inevitably experience big profits and sometimes significant losses as a full-time trader. Staying in it – staying in the trading game – is an irreplaceable and essential skill that every master trader possesses.
Of course, it’s easy to get excited and want to make a quick trade when your bank account is benefiting from favorable price movements. Human nature encourages us to act a certain way, even if the results are promising. But there will be days when the market completely turns against you. Instead of experiencing the excitement of trading, at such moments, you want to turn off the computer monitor or close the trading platform, walk away, and lick your financial wounds.
A seasoned trader understands that no extreme lasts forever and that sticking with it—for better or worse—is a skill that allows you to learn, grow, and profit.
Good risk management and money management are essential to staying in the game. Always use a stop loss and never take on too much risk in any trade. Don’t take trades unless they have a favorable risk-reward ratio; in other words, if what you’ll earn if you’re right outweighs what you’ll lose if you’re wrong. Why risk a possible loss of $500 when the most you can make, even if your market analysis is entirely correct, is only $100? These numbers are not in your favor. Instead, only taking trades when getting it right means you’ll earn more than being wrong could cost you. Even if there appears to be a good trading opportunity, such as a significant market reverse, if you cannot find a favorable low-risk entry point, pass on the chance and wait for it to materialize where you are—good low-risk entry.
Skills 5 – Discipline and Patience.
Discipline and patience are two skills that are very closely related and that every experienced trader needs in abundance. As we mentioned above, it is crucial to stay in the game as this allows you to experience both the ups and downs, learn from them, and make the necessary adjustments to your trading. An experienced trader must be patient and disciplined to stick with this strategy, especially on losing days.
For example, a patient and disciplined trader knows that the best sessions often follow the worst trading session or day. Remember that the central part of market behavior is its up-and-down fluctuations. Sessions that are flat and have minimal volume can go on for days. Still, a disciplined trader knows that patience is rewarded, so he waits until the market starts making a significant move before getting in and risking his hard-earned money.
Skills 6 – Discipline and Patience.
One of the unlucky traders’ most common mistakes is trading when the market does not offer real profit opportunities. Many traders trade only out of boredom. Such actions almost always cost money.
An experienced trader is only negligent if there are no excellent low-risk profit opportunities throughout the trading session. Professional traders know that the market is open again, and there are always new trading opportunities.
Don’t let markets that appear almost out of nowhere fool you into abandoning good trading discipline and strategy. Be patient, wait, and don’t hesitate to pull the trigger when the opportunity arises and enter the market confident in your trading abilities.
Bonus Skill 7 – Record Keeping
Experienced traders learn from their trading mistakes. Unprofitable traders are rare. Keeping a trading journal is one of the most important habits that helps traders win. Your trading journal records each trade as it occurs: entry point and reason for buying or selling; where you place a stop loss order and a take profit order. What happened in the market after you started trading and how you responded to market actions. Finally. The value of your win/loss.
Keeping a trading journal and reading it regularly is one of the quickest and calmest ways to determine what you are doing right and what you are doing wrong.
In the End
We hope the main idea you take away from this article is that every experienced trader needs to develop the necessary skills to trade successfully (i.e., profitably). Put in the effort required to become a genuinely skilled trader, and the market will compensate you for your hard work.
Becoming a master trader is not easy, but it is possible and worth the effort. If you start working towards it today instead of putting it off until tomorrow. One day. You will be closer to making your financial dreams a reality.
