Important Personal Qualities

Many accept that trading is an endeavour between yourself and the market and there are many qualities or character attributes that successful traders have. Which ones are important to your trading success?

Let’s start with Perseverance. As Calvin Coolidge, the 30th President of the United States said in one of my favourite quotes, “The slogan 'Press On' has solved and always will solve the problems of the human race." Other similar terms include perseverance, commitment and determination. For traders, this provides us the ability to continue on in the toughest of times even when everything appears all too much. It is the edge that allows us to climb the walls that are obstacles when everyone else around us, turns away from the wall and does something else.

Another important attribute is humility. All traders enter trades that lose money – you can’t simply get every trade right. You will find the very best traders are very humble and they are the best losers. Successful traders never move stops and accept losing as part and parcel of trading. They are also not afraid to learn from others and admit they don't know everything.

Another one is patience. You are not provided with great trading opportunities every day and the best traders are patient enough to wait long enough for high probability trades to come their way. Financial markets are here to stay – they underpin the corporate arena in every country around the world, so they are not going anywhere. Trading success is not going to happen overnight. For most people, this is a life long endeavour so does it really matter if it takes you a few years to start trading profitably?

How about responsibility? Successful traders make their own trading decisions based on their own analysis and trading plan but more importantly don’t blame anyone or anything else when it doesn’t work out and they lose money in a trade. In a world nowadays where there is a clear trend of people looking for someone else to blame for their own actions, this is probably becoming less obvious. The key is to be an adult and take responsibility for your own actions – you are solely responsible for your own success and failures.

Successful traders are also conservative and very defensive. Even though their primary motivation is to make money (as it is for all of us), they adopt a very defensive mindset and focus not so much on making money, but moreso on protecting the money they have. This means they set and stick to stops and risk very little of their account on any individual trade.

With anything in life, confidence is important – trading is no exception. Confidence in your self and the trading plan you develop. One thing that will help with your confidence is your own knowledge and understanding of the markets, the products you are trading and various tools you use in your decision making. Most importantly however, competence yields confidence. If you are not competent at something, it is highly unlikely that you will be confident doing it.

There are many other attributes that could also be listed here to include emotional control and stability, organizational skills and honesty. There is no doubt that all of these are correct and valuable to possess, however I think there is none more important than discipline.

Discipline is the level of self-control you have. Trading all boils down to decision making and often the decisions that need to be made are difficult. Let’s consider the options we have. For any individual decision, there are often two options available to us. The first option is the decision that will make us feel most comfortable and the one that we really want to take. The second option is the one that follows our trading plan. Most often these will be two very different outcomes.

There is one thing that assists us to take the second option and not the first – discipline. I believe a key separator between successful traders and the rest, is they will act first upon their trading plan and not what they feel like doing. Most traders make the decision that makes them feel the most comfortable whether this is letting a loss continue or to cut a profit short in order to realise some money.

When they feel super-confident about a trade, successful traders don’t allow greed to consume them and commit more money into the trade. They trade according to their trading plan - they adhere to the money management rules in their trading plan.

Here is what happens … we have our mind set on long term successful trading however other things influence our actions/trading decisions like emotions, our short term needs and our present mood. These tend to overpower any long term goals we have, so we will often pursue short term pleasures and by doing so, avoid short term discomfort, at the expense of our longer term goals and rewards. It’s human nature.

Article by Stuart McPhee