There lived a guy in a city aged 28. He wanted to share his life with someone. He wanted to get married and lead a happy life.
But he faced one recurring problem.
He will find a woman to his liking and develop a friendship with her. Only to find a couple of days later that the woman didn’t wish to continue her relationship with him.
He got stuck in a vicious cycle of finding a woman, and then after a few days of friendship, that woman leaving from his life. The pattern was so clear that he wanted to break this cycle.
He consulted with one of his friends to give him a solution.
His friend told him that every woman left him immediately is that of his peculiar quality “of not being honest.”
Yes, this guy used to lie a lot.
Every woman wants a man she wants to live with, to have the innate quality of being an honest guy. But, since he is not honest, he finds himself in a position with no partner in his life.
Like this guy, a trader wanted to become successful traders without developing the qualities required. And like the woman who rejects the guy for not having the quality she wants, trading success also leaves these traders when they don’t have the essential qualities.
This article will discuss three qualities of a successful trader that you need to develop to become a consistently profitable trader.
These qualities are not optional. They are mandatory, meaning you’ve to build these qualities so that “Trading Success” can happily have a relationship with you on an ongoing basis.
Quality 1: Long term Commitment
Trading is a mysterious profession. Every day, thousands of people open trading accounts across the brokerage firms, intending to earn money from their trading accounts. Only a few people make it.
Was it luck? Or was it based on a fluke? Or hard work?
All matters to an extent, but the traders who become consistently profitable traders are the ones who have committed themselves.
Regardless of the successful trader, you come across from whichever part of the world, you’ll see that they have this phrase running in their mind right from the start.
“It doesn’t matter how much time it takes to become a successful trader; I’ll invest that time and will become a successful trader.”
Some traders achieve success in a matter of years, and some may take decades. It differs from person to person. However, as long as the person is committed to a mental statement like above, it’s highly unlikely that he will fail. He is already mentally prepared to achieve trading success, and nothing can stop him from reaching his goal of becoming a successful trader.
So, if you’re struggling to become a profitable trader, then commit yourself first that you’re going to play this game for a very long period of a minimum of 10 years.
Can’t I become a successful trader overnight?
Today, we live in a world of instant gratification. We want everything to happen soon and within a fraction of seconds. We find it difficult to wait for things to unfold and take tiny steps to achieve our goal.
A trader, especially a new trader, needs to understand that it will take time to
The majority of the traders fail in the first couple of months because they don’t see the factors mentioned above to be dealt with once they start their trading journey.
They approach trading at the angle of “How can I make a few thousand this week so that it will help me to pay my bills?”
This attitude is a short-sighted attitude. The goal is to make money and not worry about the future.
Successful traders approach trading from a long-term commitment point of view. They aren’t interested in making a killing in one trade and going on a vacation.
Instead, they are into this profession to take the trades without fear, manage the risks, and deal with frustrations that come along when their plan does not go well as expected.
They know they need to gain these mental skills to stay as a successful trader. Achieving success is easy, but sustaining is the difficult part.
Success can happen by luck, but sustaining success year after year requires an enormous amount of discipline, patience, and trust in oneself. If you give enough time, they all become part of you.
The time it takes to become a successful trader doesn’t matter.
Because if you understand that on the other side of committed ten years, you are going to get a lot of rewards like a life of freedom, enough money, no office politics, and being your own boss. Then you’ve to be more prepared to invest that much amount of time than anybody else.
All profitable traders are committed to trading for the long haul.
They are not looking to earn money on Monday and spend it on Friday. Instead, they see this as a business, and they pull out money from their accounts monthly or quarterly. Also, they keep re-investing most of the money back into the business itself.
This point takes us to the next quality a trader needs to have — thinking like a Business Owner.
Quality 2: Thinking Like a Business Owner
A business owner is someone who owns a business. It’s a straightforward definition.
But many new traders fail to see themselves as business owners. Instead, they see themselves as someone who is an employee. An employee works for a salary, but a business owner works to earn a profit.
There is a big difference in the mindset involved here. And If you want to become a successful trader, you need to see yourself as a business owner.
Why is seeing yourself as a business owner is essential?
Because a business has an income, expenses and when you deduct the expenses from your income, you get a profit. So the reason all businesses exist today is that of two reasons.
So, as a trader, your task is to see your trading business as follows:
If you develop a business owner mindset, you’ll see your profits as your income and your losses as your expenses.
A slight shift in defining losses can vastly affect your trading results.
For example, suppose you are looking to get into the Airline business, and you are worried about how you’ll fill the fuel tank of your airplanes. In that case, you shouldn’t be in the business. Instead, your thinking has to be on how I can sell more tickets to earn income, which will pay for the expenses.
It’s the same in trading. If you are constantly worried about losses as something taking your money away from your account, you’ll never be able to trade to the best of your ability. Instead, it would be best if you learned to see your losing trades as the cost of doing business.
Your focus should be to maximize the income from profitable trades so that they can pay for the losing trades.
Your mental environment should see the profit and loss as
Income from profitable trades = Rs.50,000
Expenses from losing trades = Rs.25,000
Net Profit = Rs. 25,000
And not this way
Profit = Rs.50,000
Losses = Rs.25,000
Net Income = Rs.25,000
In the first scenario, you are training yourself to see losing trades as “expenses.” In business, expenses will occur, and it’s impossible to run a business without “expenses.”
In the second scenario, you will see your losses as taking your money from your trading account. And that’s the reason why it becomes challenging to take a trade after a few losing trades.
It becomes easy to take the 4th trade after three consecutive losses if you see those losses as “expenses—the cost of doing business.” And there is one last quality, which is the essential quality of all successful traders. It’s the quality of executing the trading plan consistently.
Quality 3: Executing the Plan
Tajmahal is one of the most beautiful places to visit in India. However, the construction of Tajmahal took nearly 22 years to complete. Yes, it’s a mind-boggling 22 years.
Day in and day out, the entire team was executing the plan they’d devised.
Without the daily execution of the plan, Tajmahal wouldn’t be there.
It’s the same thing with trading success.
If you want to become a consistently profitable trader, you need to execute your trading plan consistently.
You can have a great trading method with an excellent win rate. But that’s of no use if you cannot take your next trade since your last few trades were a loser.
What does “executing the plan” mean?
Let’s say it’s Wednesday 2 pm, and so far, you didn’t get any trades as per your trading method. And your last two days, Monday and Tuesday, also you didn’t get any trades. So, it’s been three days since you didn’t get a trade.
Suppose you deviate from this plan of not controlling yourself and taking a trade based on your emotions? In that case, you are not executing your trading plan, which you were supposed to do.
If your trading method had given only one trade for that entire week, and you have taken only one trade. In that case, you can pat yourself back because you’ve followed your plan and resisted the temptation to trade when there is no signal to take the trade.
That’s the power of having a plan. When you have a plan, you can compare yourself with whether or not you’ve adhered to the plan. Without a plan, you will be trading just here and there, and it’s difficult for you to achieve trading success.
How do you develop a trading plan?
All consistently profitable traders have a trading plan with them. If you want to become one of them, you need to work out a trading plan. Your trading plan should comprise these elements.
It will take time to come up with a plan. But without the plan, you will become one among the people in the 95% crowd who lose money to the successful traders who have those plans in place for them.
What’s the one thing you can do today?
Commit yourself long-term to this profession for a minimum of 10 years. It will take time to develop the qualities and mental skills to emerge as a consistently successful trader. However, once you’re mentally prepared for the long term, you can confidently handle both good and bad times.