What makes a great trader?

Trading can be difficult to understand, regardless of what form it takes. Contracts for Difference (CFD), forex (FX) and stocks and shares all come with their own complexities and require different skills to master. Yet some attributes are common to all forms of trading and help to show the characteristics, behaviour and expertise required to make a success – and, ultimately, money – from this.

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One of the first things some of the more successful traders do is busy themselves with studying in order to understand the world of trading. For example, it’s essential for them to have all the facts on the different sectors before committing themselves to a specific style.

Whether you’re reading books, watching videos or learning from a professional, it’s important to ensure you’re completely clued up before you start getting yourself into trading – and this is a continuous process. Making yourself a voracious reader of anything and everything relating to your specialism to learn top tips – and from the mistakes of others.

Discipline is key

When it comes to making decisions in trading, it’s important to have discipline. TheBalance notes this as a key trait for every trader, reflecting the fact that it’s easy to be swayed, let your emotions get the better of you or lose faith completely in your strategy.

It is vital to only work within your means, stick by a strategy that you’re comfortable with and understand that wins and losses can happen in the short term.

If you’re not yet confident enough in your strategy – perhaps because you’re just starting out as a trader –  it may be worth trying out your assumptions first with a demo account.

Looking forward and not allowing yourself to focus too much on a bad trade is a necessity. Markets are ever-changing, so ensuring that you can bounce back from a bad step is important to building yourself up as a trader. In fact, one of the key aspects of trading is forward thinking, so planning your next move is essential.

Intuition and luck

Trading writer Jack Schwager told CFA Institute that, in his opinion, a trader is someone who is likely to go both short and long, rather than only going for something which will have an immediate increase in price. He explained that trading is all about changing your position and adjusting yourself. However, he noted that there isn’t a simple way to create a great trader. Markets change, so life is never going to be easy. Yet traders with experience develop the intuition needed to be able to adapt to the times.

Although there are some traits which will help you when it comes to trading, it’s always going to be a challenge. Trading includes a lot of luck (although you can earn your own luck) – as well as knowing when to cash out and when to take a risk. Stock markets can plunge at any time, and a stock that has been working for you for years could drop and cost a large sum of money – so it remains essential to constantly learn and develop an intuition that will serve you well.