Top 7 Things To Learn From Successful Traders

by Trading 101     Jul 16, 2019

One of the best ways to move from trading 101 to trading 102 is to find someone who’s gone through the experiences before - a mentor of sort. There are many successful traders in the world with decades of experience and many stories to tell of their profits and losses, successes and failures. Many of them readily share their experiences on the internet which is an invaluable resource, so here are 8 things successful traders learned the hard way, in the hopes that others won’t have to.

1.Nothing can predict the future

The market, like most of life, is entirely unpredictable - which is the whole premise of trading in many cases. To many, trading might as well be gambling. If you walk into a casino you can see a hundred people about to lose their whole stack of chips, but there’ll always be the one about to make a profit - and trading is the same. Like life, trading 101 is to try and stack odds in your favor, nothing else.

2. Strategy is unemotional

The amount of new traders that have zero idea about what strategy is, is staggering. So many younger traders are enamoured with the potential personal earnings a trader could make, as perpetuated by pop culture and television. What they don’t know is that TV only shows the 1%, the traders who were outright outliers in many ways - whether they were crooked, geniuses or simply lucky. To be successful you must have a strategy that you follow, no matter how much opportunity cost there might be or how much loss you potentially, maybe, perhaps, could mitigate.

3. Taking the right amount of risks

Some traders play it too safe. Some just go all-in and risk everything. The right way to take on bigger risks is to develop better and better ways to deal with them. Once a trader develops mechanisms to reduce potential risks, decision-making becomes easier. There are technical, strategic and personal ways to better deal with risk.

4. Diversify and be happy

The idea behind diversification is easy, yet readily ignored by certain people. If one trade goes bad then you have another 10 open ones in other markets that can go well. If you just bought a bunch of stock, all from different companies in the same market and the news just came in that the government passed a regulation on that entire industry to regulate trade, you’ll have just wiped out your whole portfolio. Congratulations. People with diverse portfolios last longer and are happier.

5. Not blindly saying yes to opportunities

Never go in on a trade because everyone else is. Say no to opportunities until you understand them properly. As soon as a trade becomes a loss, cut your losses and move on. The drama of trying to mitigate your own loss is going to be less effective than simply gaining profit on those other open trades you have going on. Don’t let your own ego blind you by making you believe that you can jump on any opportunity as long as it sounds good enough.

6. The bad comes with the good

You will have good trades and the more good trades you have, the more you are likely to have a bad trade, especially if you start moving larger quantities of money per trading day - and that’s okay. Just remember to cut your losses when something doesn’t work out and move on. There is no such thing as a trader that didn’t have bad trades.

7. Stay healthy

Day trading is a stressful job and can really take a toll on a trader’s physical, emotional and psychological health. It is imperative that traders take care of themselves after work and during weekends, otherwise they fall into the slippery slope of feeling worse, performing worse as a result, and feeling even worse after - a vicious cycle.

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