6 Traits You Need to Develop as a Day Trader
BY
CORY MITCHELL
Updated April 30, 2020
Day trading is not just about finding a strategy, practicing it, and then making oodles of money. Day traders develop certain traits, which in turn allow them to implement a strategy effectively, in all market conditions. When someone starts trading, it's unlikely they will possess all these traits. They may be strong in one, two, three, or even four of them, but might need to work on the other traits. That's good news. It means
successful traders aren't born; they develop through arduous work that includes these traits.
1. Day Trader Discipline
Discipline is a key trait every trader needs. The market gives you infinite opportunities to trade. You can trade thousands of different products every second of the day, yet very few of those seconds provide great trading opportunities. If a strategy provides about five trades a day, and
stop losses and targets are automatically set for each trade. There are only about five seconds of actual trading activity during the day. Every other second is a chance to mess up those five trades, taking more trades than you should, getting distracted or skipping trades, prematurely exiting the trades you are in, or holding trades too long.
That doesn't mean your trades only last five seconds. Five seconds of activity means it only takes one second to place an entry order, and then you need to sit on your hands again. If you adjust your stops and targets, this may take another second.
The bottom line, though, is that your actual trading time is minuscule each day, even if you're an active day trader. The rest of the time, you need to sit there, disciplined, waiting for trade signals. When a trade signal occurs, you need to act without hesitation, following your
trading plan.
Traders require the discipline to do nothing when there are no opportunities present but must still stay alert for potential opportunities. Then, they need the discipline to act instantaneously when trading opportunities occur. Once in a trade, traders require discipline to follow their trade plans.
2. Patience
Patience is related to discipline. As discussed above, day trading (and trading of all types) requires a lot of waiting. When a trader is entering or exiting the market at inopportune times, they will often say, "
My timing is off." One could also say, "My
patience is off." Jumping into, or out of, trades too early or too late is a rampant problem among new traders.
They simply haven't developed their patience enough to wait for the great entry and exit. This trait goes hand in hand with discipline, and you need to be patient until there is a call to action, then you need to have enough discipline to act without hesitation.
Traders require patience in waiting for their ideal entry and exit points—based on their strategy—but when the moment calls for it, they need to act swiftly. There is a constant seesaw between prolonged periods of patience, followed by split-seconds of action, which are then followed by patience, and so on.
3. Adaptability
You will never see two trading days that are exactly alike. This constant difference poses a problem when someone only looks at textbook examples of a strategy. When they go to implement it, everything looks different than it did in the example. Maybe there is more volatility, less volatility, a stronger (or weaker) trend, or a range.
Successful traders implement their strategies in all types of market conditions and know when they shouldn't use their strategies—for example, during a range if they use a trend following strategy. This need for quick changes requires mental flexibility. A trader must be able to look at the
price action of each day and determine the best way to implement (or not implement) their strategies, based on the conditions that are present that day.
Traders must be able to implement their strategies in real-time, in all market conditions, and know when to stay away. Not adapting to current market conditions will often result in a swift drawdown of capital.
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