Much to the surprise of many, it’s sometimes the simplest advice that helps them turn a corner and become a better trader. For example, maybe it’s as easy as “Be selective” when choosing set-ups; or “Manage risk” to stay safe in volatile markets; or just “Have confidence” to remain active and consistent despite the inevitable ups and downs traders face. Little words often carry immense value, mind you, and there are two words in particular that I’d like for you to consider today:
Powerful advice, indeed, but it’s more common in life than among those striving to become a better trader. Humility, though, is a trading skill all its own, and one that’s worth cultivating, just the same way you will your analysis skills and overall trading strategy.
Here’s why it pays to be—and stay—humble throughout your trading pursuits, and some specific instances where the quick, two-word reminder to “Be humble” might be just the thing you need, and right when you need it most.
When asked about the unique qualities that make successful traders, many will answer things like poise, patience, confidence, or market knowledge. Humility is typically left out altogether, but make no mistake, every good trader has it.
They are humble because they are quick to admit whenever they’re wrong and willing to be stopped out of losing trades. Humble because they know profits are earned, not given, and they take swift action to protect trades that are working in their favour. And humble because they don’t feel entitled to instant success in the markets, and are committed instead to trading for success over the long term.
Losing traders and the overwhelming majority who fail tend to learn humility the hard way. They get humbled by the markets as they face persistent struggles. Many even blow up their first trading account, and while there’s nothing more humbling than that, some traders have reported that the experience was grounding and a major turning point that actually made them a better trader. So whether it’s by choice, or by force, that traders learn to be humble, it’s always in their best interests nonetheless.
New traders or those struggling early on, however, need not wait for disastrous results before embracing the need for more humility in their trading. Here are some important instances when the best self-talk you can have is a calm reminder to yourself to “Be humble” in the face of some unique trading challenges:
When Learning to Trade: In plenty of other endeavours, a little knowledge goes a long way, but the process of learning to trade never really stops, as newfound knowledge and experience awaits with each new trade and trading day. As a result, new traders must be humble and accept that they don’t know the intricacies of the markets, or may only have sufficient knowledge of one or two chart patterns and set-ups. Perhaps they even admit that they aren’t (yet) very experienced or proficient at trading. Be humble and realistic in matching your trading strategy to your capabilities and you’ll be a better trader for it.
Amid Losing Trades: For some traders, the hardest part about losing trades is coming to terms with being “wrong” about the markets. Not willing to accept that fact, too many move their stops to allow more room for the trade to turn back in their favour, but that usually only adds to the severity of the loss. Be humble in the face of losing trades, and don’t let prior expectations about winning percentage or P&L guide your decision making. Accept losses and minimize their damage to be a better trader and more consistent and profitable than those who win and lose big each time.
During Winning Streaks: Emotion and exhilaration start running high whenever trades start going your way. And at those times, it’s easy to get complacent with risk, overconfident about set-ups, and more likely to overtrade in hopes of racking up big profits. It’s not consistent with human nature to impart a warning at those times, but a reminder to “Be humble” even during high times might be just the thing to avoid undue mistakes that can kill the momentum.
Trading advice and education doesn’t have to be complex to be effective! Come see how the simple, sensible methods that make up the Lazy Trader methodology can help you become a better trader. Get on a proper path to successful trading and click below to start your no-risk test drive today!