Dear friends, today, I would like to make a psychological portrait of a successful trader and find out which character traits every ambitious newbie should have. But at first, I’d like to point to the traits that hold us back and even cause significant harm.
Fear is the oldest and the strongest emotion of mankind. For centuries people have been afraid of natural phenomena, famine, wars, death etc.
So what are people trading on financial markets afraid of? Let’s look at their main fears:
- to lose a deposit;
- to stay out of the market during a strong movement;
- to enter the market without a stop order and face a strong movement against the open position;
- to enter the market with a set stop order that will be broken by the price before it starts moving in the expected direction.
Besides, greed also has a negative influence on trading. Some greedy traders often do the following things:
- use averaging down for a long position or averaging up for a short position to increase current positions and make a real profit several times bigger than the forecast profit;
- do not leave the market, when the price hits the take profit level;
- push back stop orders to avoid their execution if the price starts moving against the deal.
To get rid of fears and greed, you should use any trading strategy with a positive expected value. Becoming a system trader, you will be able to avoid the mentioned problems.
After a series of successful deals, some traders believe that they have conquered the market as all its movements meet their forecasts. If such people are forum users or bloggers, they often impose their views and predict a market movement with 100% confidence. Nevertheless, sooner or later, the price goes against such predictions. These people do not admit their mistakes; they simply do their best to prove that they are right and add to the main position. As a result, the margin call execution reminds traders about the key rule of trading, “The market is always right.”
At the beginning of the career every professional trader has the above-mentioned character traits. However, overcoming these disadvantages, traders start earning more money than they lose.