It’s not easy being a pro trader, but anyone with enough motivation and discipline who wants to learn how to trade can do it. This is because trading is all about your mind. The more you understand why your decisions are being made, the better you’ll be at trading stocks, forex, futures or even cryptocurrencies. For those of us who have little interest in mathematic formulas and advanced charting software, there are now a number of courses available that cover exactly what traders need to know in hours or days – ensuring that you don’t have an excuse not to learn!
It is not easy to become a successful trader, nor is anything else in this world easy. When I started trading back in 2003, I was the complete novice. Any good trader has a solid education, which is sometimes hard to come by. In fact, even though there are thousands of educational materials available for you to study, many of them are simply gibberish. When people refer to “auto trading” know that they mean nothing. It’s hard work and it takes faith in your decisions.
Fortunately for me, back then I had a great mentor who was one of the top traders in the country at that time and who happened to be a brilliant educator.
What makes a pro trader a pro trader?
Besides understanding the market(Which is 33 percent of the job), here are the factors that make a pro trader different:
-Knowing your emotions
Knowing your emotions is crucial in trading. You must be able to distinguish between what is right for you and what is right for the market. If you stick with “trading” it can often become a bad habit, so you need to know when to bail out and when it is time to buy.
An emotional self-check reveals how your emotional self relates to your logical self. To do this, take two sheets of paper and write down both things that make you angry and sad. Next write down the things that make you happy and how you enjoyed them.
Now take both papers and put each on one side of the table. Now think about these questions:
- How do I react when emotions are involved? Do I care what others think or do I follow my own logic?
- Why am I angry / sad / happy? Is it based on my feelings or is it based on facts?
- Do you like what you like, or is it because someone else told you to like it?
- What is your reason for trading – to become better, richer, smarter … or to make everyone else better, richer, smarter?
- Do I act on what others say or my own?
- Do I act out of anger, fear, hate or love?
Getting to know your own mind will give you the advantage over other people. And if you feel like you need a more structured approach, look into guided meditations or start practicing mindfulness to help you become aware when your emotions are taking over.
Trading is just like playing poker. By knowing all of your emotions and how they play out when it comes to trading, you’ll always win. Emotional control is the secret key to every successful trader out there!
-Your mental attitude
A trader’s mentality is a critical factor in trading. Your mind is the only element that you have to control, and thus it determines much of your success as a trader. Shortly, having a mindset of “getting rich” or “making money” does not qualify one to become an effective trader. In fact, as traders we should be aggressive as soon as we begin because this gives us an opportunity to start making money faster. We don’t want to spend our time picking out investments or being comfortable being long or short. You must have the best attitude possible to assume the role of a trader, because if you do not have this mindset, you will never be able to be successful.
-Not being afraid to lose
A trader’s mentality is just as important as what you believe in trading. If you hold on too long, your mind will get scared of losing and start making poor decisions that will lead you to losing money. If this happens, then it’s time to exit and take a break from trading. The more times you get burned for losing money, the better your mental attitude becomes when it comes all of those profits from being successful at trading.
Also, traders need to know that if they ever get burned, they should not get scared and sell-out because what you can learn from losing can be valuable. Do not panic if you lose! Even though it is important to consider your trading history and make sure that you made money every time you traded, it is also very important to learn from your losses and be successful in the future. But remember this: Make sure that every trade was a winner! If it isn’t, stop trading for a while and let your mind heal before trying again.
And never try trading when you are upset or feel like it.
Investment Tips From Warren Buffett
Learn the language… “Markets are efficient, so you shouldn’t pay attention to the news” – Warren Buffett (or another famous investor)
Warren Buffett is not saying that markets are efficient in the sense that they’re 100% efficient – in fact, they’re quite distorted at this point. He’s saying that when people act on information that has already been acted upon, it’s like throwing darts in a haystack where only one idea (the one injected by whoever wrote about something) will ever make it out of the stack. Despite the fact that we all act differently, our emotions generally indicate that something is up. Thus, people pay more attention to what they perceive to be an up market than to a down market.
Buffett says that markets don’t care about breaking news – only the outcomes of the news mean anything. This is true when you look at things in terms of “fundamentals”. The fact that there are 6 different companies making 6 different products for 6 different markets doesn’t make it any more important for us to know which company made which product in what markets.
The funny thing about the market is that it is made up of people, which means that by understanding the way people act, you can understand how the market acts. You should always be trying to learn about the market because there are so many different ways to learn from it. In order to become a successful trader, you have to become a jack of all trades when it comes to this type of knowledge.
Bottom Line
In fact,
“Learning from people’s mistakes is cheaper than learning from your own mistakes.”
Warren Buffett
The best traders don’t make money daily and they don’t make big profits per trade either. They make money from recognizing the points in time when they bought low and sold high. If you can know what to buy at what times and when to sell your positions, then you’re on the right track to becoming a successful trader.
