If you’ve ever witnessed good traders in action before, then you probably noticed the confidence and certainty with which they planned and executed trades. It’s almost like they were born to trade the markets, which begs an important and popular question: Are some people more likely than others to become good traders?
Take those who dedicate their careers to certain fields like finance, education, or business, for example. Are those individuals better equipped to trade successfully than, say, creative types or those who work in the service industry?
To my knowledge, no definitive research findings exist on this particular subject, but my experience is that nobody is really “born to trade.” Instead, good traders continually develop their strategy and approach over time. Are there common traits among good traders? Sure, but for those among us who don’t come from financial backgrounds, don’t have an IQ on par with the world’s great thinkers, and can’t debate economic and monetary policy like an Oxford scholar, rest assured that your success in the markets is just as possible (and probable) as theirs.
Here’s why there’s no single, certain path to successful trading, as well as four habits that are rather common among good traders who come from all sorts of backgrounds, professions, and life circumstances.
Good Traders Come in All Shapes and Sizes
The infamous “Turtle Trader” Experiment of the 1980’s actually helped illustrate that “ordinary” people could learn to become good traders if only they followed closely and consistently a proven set of trading rules to guide their decisions. Legend has it that the Turtle Traders, a group of little more than two dozen beginning traders, applied the Turtle Trading method they were taught by its legendary founder, Richard Dennis, and reportedly earned $175 million in profit in only five years! And while this particular method—due to its propensity for generating big losses—is not for the faint of heart, the experiment’s real lesson is the still true today: Anyone who can correctly apply a proven trading methodology can achieve success trading the markets.
Good Traders Can Learn Good Habits
We’re all “born” with certain personality traits that help define who we are as people, and often, what sort of traders we are early on. Some, like patience, aversion to risk, and a short memory when it comes to processing negative outcomes, will help in the markets. While others, like a short temper, a penchant for breaking the rules, or having short focus, won’t. Good traders, though, tend to possess the following skills and/or personality traits, whether they are inherent to them, or whether they’re learned, say, through their education or job experience, from a mentor, or even from taking their lumps in the markets early on:
Decisiveness despite incomplete/imperfect information
Good traders act swiftly and confidently with regard to trade decisions, even when there’s imperfect or incomplete analysis to go on. Good traders assess the information that’s available at the time—factors like the market’s trend, the existence of support/resistance, and the technical pattern(s) in play—and make informed choices. It’s a lot like a doctor making a diagnosis, a similarity that has led many to wonder whether doctors have a natural edge if ever they decide to take up trading.
Discipline and Precision
We’re writing constantly about the need to obey the rules and guidelines set forth by your trading strategy, and to repeat your methodology exactly over and over again. We’ve even discussed implementing a reward/punishment system to enforce desired trading behaviours. Extreme discipline and precision are skills that military personnel and athletes use to their benefit, and good traders will do the same.
Penchant for Problem Solving and Detail
Much like engineers are ready, willing, and able to study processes and inner workings in order to diagnose and fix problems, there will be many instances when good traders will deconstruct, adjust, and re-assemble their strategy and its components. Perhaps it’s to help tighten risk, better scale in or out of trades, or find a hidden cause behind a series of negative outcomes.
Accountability & Responsible Ownership
Good traders must act like the CEO and appointed leader of their organization. That means being proactive about continually monitoring and improving processes and end results, working to understand every facet of the how the “business” functions, and ultimately, being accountable for its success or failure. It’s a big job, but as a self-directed trader, you’re the one in charge of your business. Good traders will be quick to embrace that role.
The Lazy Trader is a publishing brand dedicated putting the fun back into finance, presenting powerful wealth creation strategies for a better world.
You May Also Like...
How To Use The News To Guide Your Trading The key to successful trading is to use as much information as possible to inform your trades. That means conducting in-depth research into all areas of the market that could affect the asset that you are interested in trading. One…
How to Choose the Best Forex Broker? One of the most responsible parts of Forex trading is choosing an appropriate broker for you. It seems a little complicated, especially for beginners. But the task will be easier if you know some general criteria that are the same…
How Can Economic Data Help Traders Succeed In The FX Market? The Forex market is the world's biggest financial market. It is driven in part by economic data. As time goes by, more and more people become interested in Forex trading. There are several reasons behind that. One of the main…
Why Free Trading Is (Nearly) Free Robinhood has grabbed novice investors with their offer of free trading. Unfortunately nothing is truly free in life, but it can be cheaper! Indeed, free trading made a foreign portfolio investment possible. Historically buying foreign listed shares was prohibitively expensive.…
The infamous “Turtle Trader” Experiment of the 1980’s actually helped illustrate that “ordinary” people could learn to become good traders if only they followed closely and consistently a proven set of trading rules to guide their decisions. Legend has it that the Turtle Traders, a group of little more than two dozen beginning traders, applied the Turtle Trading method they were taught by its legendary founder, Richard Dennis, and reportedly earned $175 million in profit in only five years! And while this particular method—due to its propensity for generating big losses—is not for the faint of heart, the experiment’s real lesson is the still true today: Anyone who can correctly apply a proven trading methodology can achieve success trading the markets.
We’re all “born” with certain personality traits that help define who we are as people, and often, what sort of traders we are early on. Some, like patience, aversion to risk, and a short memory when it comes to processing negative outcomes, will help in the markets. While others, like a short temper, a penchant for breaking the rules, or having short focus, won’t. Good traders, though, tend to possess the following skills and/or personality traits, whether they are inherent to them, or whether they’re learned, say, through their education or job experience, from a mentor, or even from taking their lumps in the markets early on:
