Key Attributes Of Successful Investors
Regardless if they trade stocks, futures, options or all three, there are certain characteristics that all successful traders possess. These attributes are very important for any trader to acquire if he or she wants to make this a business for the long haul and continually bring in profits.
The first characteristic and probably the most important is discipline. It is absolutely paramount that a trader has full control of their emotion and state of mind to be successful at trading. Discipline allows the trader to be more objective and enhances their capacity to identify an opportunity. In addition, it will provide the trader with the necessary confidence to not to take action because many times traders feel they must always be involved in the markets. Knowing when to stay out is as important as knowing when to take advantage of an opportunity. This all requires self-control, discipline, and the capacity to pull the trigger at the appropriate time.
Next a good trader needs to be persistent. This means a trader should never take losses personally. Instead a quality trader will attempt to learn from prior mistakes and persist in developing successful trades. This is a fine line however because although it is important to learn from mistakes and admit when you are wrong, it is also important to know when not to quit. This type of mentality is also vital when searching for a trading methodology best suited to your style.
Patience is another critical attribute. Many times the trader must wait for the right opportunity versus acting on the wrong ones. Since there are many incorrect actions one can take in the market it is important to wait for the right opportunities. Many traders are fearful of missing something if they are not always in the market. The patient trader has confidence in waiting for the correct opportunity to present itself.
Another key attribute a good trader must possess is independent type thinking. In fact most successful people in any business are independent thinkers. This often requires going against the crowd and establishing a point of view different from the norm. This can be uncomfortable for many people. As a trader, it is important to filter out opinions from friends, associates, and brokers. Trading strategies and the actual execution of trades involves a singleness of purpose and firm resolve. That is why it is so essential for a good trader to develop independent thinking and avoid the herd mentality.
Contrary type thinking is also an important characteristic. People have a hard time going against the crowd. Cultivating the art of contrary thinking allows the trader to take actions that oppose the majority. The reason this is so important is because generally the majority is wrong and public losses are commonplace. So it is essential to be able to evaluate what the crowd is thinking and have the courage to take an independent approach into the market. Contrary opinion will also help the trader avoid being trapped when the public takes hold of a market and panics. A good trader will take advantage of the emotional extremes in the market and profit from them.
A good trader also must be truthful with ones self and requires them to make an assessment of their strengths and weaknesses. This is not often easy and is rarely done by most traders. However, its really required for achieving success as a trader. A good trader must continually engage in a process of self-reflection. Learning to take an honest inventory of yourself will enable you to accentuate your strengths and work on the weaknesses that make you vulnerable in the market.
An accomplished trader must be able to act quickly and flawlessly execute their trading plan. There is a clear and important distinction between developing a sense of urgency and acting impulsively. A good trader wants to constantly pay attention and be poised to take action without being too spontaneous or whimsical. The market can move very fast at times so it is important that a trader does not feel overwhelmed by indecision and fear. Otherwise the trader gets a sense of paralysis where no action will be taken. It is not enough to be in the right place at the right time you must also be able to take action.
These key attributes have to be part of a trader's skill set if they want to be successful over the long term. I encourage you to refer to this checklist and continually try to improve in all these areas. The effort should be well rewarded in the form of future trading profits.
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"We are what we repeatedly do. Excellence, therefore, is not an act, but a habit." - Aristotle
