One of amateur traders' most frequently asked questions is, "Is trading easy?"
According to unofficial estimates, more than 80% of traders fail and eventually quit.
Although consistent profit booking is not a common phenomenon, specific classic rules that successful traders vouch for could help one keep a laser focus on profitability.
One of the keys to trading success lies in identifying strategies that could win more money than they lose.
Most traders often fail due to a lack of discipline, poor strategies and an inability to adapt to evolving market conditions.
It is observed that the consistently profitable traders display specific rare traits that separate them from the commoners.
Below are nine approaches that long-time pro traders generally follow to stay on the winning streak:
These could be referred to as keys that could help a struggling trader break away from the herd of wannabe traders, join the professional minority, and boost the odds for long-term prosperity.
First things first!
Discipline helps a trader stay focused, and successful professional traders imbibe trading discipline as a way of life.
A trader can't be taught discipline in a seminar or webinar. Moreover, no expensive trading software can substitute discipline in trading.
Discipline makes a trader confident in their trading approach, helps them stick to the strategy, and avoid panic even in times of inevitable losing streaks.
A disciplined trader complements the trading journey with a well-known, rewarded, secure, and trusted platform provider.
A reputed trading platform enables a trader to execute trading strategies from anywhere and anytime seamlessly. A good platform also offers real-time market signals to help the trader identify opportunities.
Further, a well-versed trading platform could help the trader automate the trades so that the orders can be placed offline.
It is best considered to have a journal encompassing the trading journey.
A successful trader can streamline the trading plan weekly or monthly, as timely review helps remove the existing inefficiencies in the trading process.
The journal helps a trader be aware of the open positions and could give a systematic direction as to where the trading journey is headed and avoid sudden pitfalls.
A trader at the top of the game knows that placing any order without getting the facts right would not help maintain the winning streak.
The professional trader is well aware of the macroeconomic conditions and the financial markets they are invested in and keeps upskilling to stay ahead of the curve.
Learning new technologies and advanced technical tools helps the trader to adapt to the evolving trends in online trading.
When a trader is not disciplined and well-informed, a tendency to stick to a trading strategy gets difficult and often results in panic.
Moreover, obsessively watching the portfolio could induce fear and affect trading decisions.
Obsession-led fear could, more often than not, result in panic selling when markets are at lows and heightens losses. However, sticking to a well-thought plan boosts trading confidence, keeping fear at bay.
"Bulls make money, bears make money, pigs get slaughtered" is an old investment adage warning against being unreasonably greedy.
As pigs typically eat a lot, the "pigs get slaughtered" metaphor describes the investors who accept too much risk to generate huge short-term returns quickly.
The inconsistent pig approach involves making rash decisions without due diligence, primarily resulting in bulk loss of capital. This approach makes the trader eventually quit.
Veteran traders know what they do and are confident in their trading strategy, which helps them avoid useless banter and chatter across the media.
The approach is simple and fact-driven, which helps them to stick to the plan, keeping emotions like FOMO or the Fear of Missing Out at a safe distance.
Being unaffected by the noise contributes significantly to success. The wise trader understands that "all that glitters is not gold" and deep dives to test if the water is safe.
The pros of trading are aware that not all trades can result in profits. They understand the uncertain element playing in the background and accept losses gracefully if the trade goes in the other direction.
Global financial markets are tricky, and prudent traders take calculated risks. Only risking the amount one can afford to lose holds the key. Wise traders use stop-loss to minimize the risk element and put a cap on the otherwise heightened losses.
A pro trader closely watches for early signs that signal a change in market conditions and adapts the trade accordingly.
Rebalancing helps a trader avoid the trap of unlimited losses and could help generate returns with tactful decisions.
Further, with time, evaluating the risk-return dynamics and changing the portfolio to tailor it according to the current income, debt, and other commitments, helps a trader mindfully place the orders.
Success in trading is considered an arduous task.
Although success is not for the majority, a minority of traders that imbibe discipline, consistency, patience, and upskilling are seen to taste success.
Experience is a great teacher. The nine rules mentioned above are just a few traits that help traders get things right and must not be considered exhaustive.