Are you a Successful trader or losing trader ?

Are you a Successful trader or losing trader ?

It is clearly evident from the trading results that there are significant differences between a losing trader and successful traders. The difference lies in the thought process.

While the losing trader actually treats the market as a place to make quick money with a lot of thrill and excitement, for the successful trader the market is nothing more than a place to make real money with discipline and hard work, and yes, most of the times it is very boring. So the first and foremost difference lies in goals.

Successful or professional traders always have a solid trading plan. They know the exact trigger of a trade or what would make them initiate a trade. As long as that trigger doesn’t materialize, they are not going to place any money or trade for trade’s sake. They know the markets may go nowhere and consolidate for a long time after a big trending move and that is the time to stay away from the markets. In that kind of market, the choppy moves are great dangers and the chances of false moves, false trade signals cropping up and losing money are much higher.

The losing traders are impatient and they see every move in the market as a missed opportunity if they don’t remain invested all the time. They can’t differentiate between the trending and consolidation phase of the markets and that result in the choppy phase sucking in whatever money thay might have made in the trending phase.

All successful traders have detailed records of all their trades which the losing traders, most of the time, aren’t even aware of. Not only the records keep the trader alert about not repeating mistakes but may also provide technical pointers about the current condition of the market.

The successful traders ascertain risk by R, where R=risk/reward and not by percentages like the losing traders. If there is Rs. 5 risk in a trade which makes the trader a profit of Rs. 15, then it is seen as a 3R trade. It helps to see each trade as an individual one with its own risk profile.

There are many differences between a losing trader and a successful trader but only a few can be discussed here. One of the biggest differences is to develop the ability to decide when to go with the herd mentality and when to go contrarian. While following the herd may be beneficial during a huge trending move, going to other side may be much more profitable when the trend is exhausted.

Leave a Reply

Your email address will not be published. Required fields are marked *