Throughout my years mentoring private investors how to trade financial markets profitably, one key question kept on cropping up: what key traits separate the winning minority to the loss-making masses. The answer, however, may surprise you!
Let’s examine the key traits which separate the rookie from the seasoned professional. After all, if you want to be good at anything, the fastest way to do it is by modelling the strategies of those who are already successful at it.
So, apart from the millions they are trading, what key traits differentiate the rookie from the professional.
Attitude:
The rookie trader thinks trading is ‘easy money’ and will focus excessively on the financial result over and above the management and exit of the trade in progress.
The experienced trader will seek to be as objective as possible in their approach with much of their focus being on the trade rather than the money. They will not have an emotional attachment to the outcome and will certainly not fall ‘in love’ with losing trades.
Trading Plan
The rookie trader will simply not have a trading plan. Their plan will be ‘have-a-go’ regardless of the absence of their strategy, will chase trades and jump onto spikes in a feckless frenzy of profit seeking euphoria.
The experienced trader will rigidly plan their trade and trade their plan, according to their rules. All possible outcomes of the trade will be taken into account before the trade is placed and they will only place the trade if all their rules for entry are met.
Trading Style
Rookie traders will have more of a scattergun approach with the inability to stick with one strategy. They will typically adopt several different strategies at the same time and will jump from strategy to strategy in time of drawdown only to miss the winning string of trades. They will thus embark on a vicious circle!
The experienced trader will be as happy to trade as they are staying out of the market. If all of their criteria are not met they will simply not trade. They will put their mouse down and walk away from the computer.
Risk
The rookie will usually risk far more than 1% of their account per trade and will tend to risk later in their ‘game’ in order to recoup losses.
Experienced traders, on the other hand will never risk more than a set percentage (typically between 1-2%) and will never chase losses.
Hopefully by now you are beginning to see a difference in mentalities between the personality models of each type of trader. To create is effort, to copy is genius, the old adage goes. It therefore makes sense to copy what experienced traders do time and again.
But here’s the question – which category do you fall into?
You May Also Like...
Sylvia Marshall: Zero To A Million Sylvia Marshall may have started her career as a TV expert on DIY and home renovation, but when she discovered trading over 30 years ago, everything changed. Realising that women were seriously underrepresented in the trading world, and finding that…
Are You Ready for Trend Investing? Retraining the Human Condition Many traders think that sentiment determines trend investing. They study the greed and fear of others when making their trades. But research shows that this is not the path to high returns. Successful traders eschew the actions of others and…
95% of investors are making these investing mistakes Investment is a labour of love and saving for retirement takes determination, patience and dedication. Many of us slog away for years and years, stashing away money every single month. But the shocking truth is, some simple investing mistakes could…
How Copying Animal Behaviour Can Make You Rich It should be easy to copy animal behaviour. We have all watched the magnificent wildlife documentaries showcasing weird and wonderful animal characteristics. The beautiful diversity of life on this planet in our forests, savannahs, mountains and oceans. But as we…
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...
Sylvia Marshall: Zero To A Million Sylvia Marshall may have started her career as a TV expert on DIY and home renovation, but when she discovered trading over 30 years ago, everything changed. Realising that women were seriously underrepresented in the trading world, and finding that…
Are You Ready for Trend Investing? Retraining the Human Condition Many traders think that sentiment determines trend investing. They study the greed and fear of others when making their trades. But research shows that this is not the path to high returns. Successful traders eschew the actions of others and…
95% of investors are making these investing mistakes Investment is a labour of love and saving for retirement takes determination, patience and dedication. Many of us slog away for years and years, stashing away money every single month. But the shocking truth is, some simple investing mistakes could…
How Copying Animal Behaviour Can Make You Rich It should be easy to copy animal behaviour. We have all watched the magnificent wildlife documentaries showcasing weird and wonderful animal characteristics. The beautiful diversity of life on this planet in our forests, savannahs, mountains and oceans. But as we…
