November 24

Three Essential Qualities EVERY Trader MUST Have

By Yvan

In this post, we’ll look at three essential qualities that money-making traders have, and we’ll see how you can to develop those qualities.

A few years ago, I met a highly successful trader at a trader’s expo in Europe.

We had a nice conversation about the challenges that traders face in the market, and he told me something that stuck with me to this day.

He said that when we traders step into the market, our number one job is to manage risk whether that risk comes from our own errors or the randomness component inherent to markets.

Institutions typically have supervisors who overlook all trading operations and make sure that all traders stick with their pre-determined risk management parameters.

The issue for us, self-directed retail traders, is that nobody is there behind our back making sure that we are sticking with our risk management parameters.

We retail traders have to develop qualities like discipline and focus so that we can do it ourselves.

The wise trader had a point.

Now, a lot of people confuse discipline with focus because those two qualities often overlap.

But inherently, they’re not the same.

Defining Discipline

Discipline is the act of doing what needs to be done, even if you don’t feel like doing it.

Defining Focus

Focus is when you pay attention to something specific to the exclusion of everything else; it’s the ability to concentrate your effort and direct action towards a specific goal.

Another term for focus is Tunnel vision, which implies that focus can be both a positive and negative.

For instance, we can be focused on things that are unproductive, one-sided, and harmful to our bottom-line.

Or, we can be focused on things that help us progress, learn, see the bright side of things, and achieve our goals faster.

Disciplined traders can control their focus, but without a quality of discernment, they can’t possibly know where to place that focus.

So, let’s bring in a third important quality: wisdom

Defining Wisdom

Simply put, wisdom is a deep consideration and integration of knowledge and experience in decision-making.

Wisdom encompasses much more than that, but this definition is good enough for now. (I’ll make sure to write more about wisdom in future posts)

Now, focus, discipline, and wisdom are all important because they are foundational in producing a consistently positive performance in the market.

If you don’t have discipline, you can’t expect to consistently manage risk. You are going to be at the mercy of volatile emotions, and your trading performance will reflect that.

If you can’t focus, then, you are, by definition, scatter-brained, and the result of this is that nothing significant can get achieved – you’ll jump from one strategy to the other, and you’ll get lost in the noise.

If you don’t have wisdom, you won’t know where to place your focus to begin with; hence, you won’t stick to a winning strategy through good and bad.

So, discipline, focus, and wisdom are absolutely crucial to making everything you do as a trader fit together, thereby attaining your goals much faster.

Again, we, retail traders, are on our own. If we don’t develop the qualities stated above, then success in this field will be hardly achievable.

Below, I offer five short and simple steps that will help you build all three.

1. Learn to Meditate

Meditation is something all traders, irrespective of style, should do because there isn’t a better exercise out there to help you build discipline, focus, and wisdom on purpose.

The very nature of meditation lends itself to deeper focus and discipline in the mind.

It can help you become more aware of your urges.

Meditation also helps you tune into the wisdom that’s already there within you by opening your eyes to how things really are, thereby increasing your clarity of mind.

So, learn to meditate. I can’t stress this enough.

2. Turn off Distractions

When trading, put aside your cell phone, close your internet browser, turn off your t.v or turn the volume down, and put away any other potential objects of distraction.

When you’re not trading, deactivate market news and trading account notifications on your phone, so that you don’t obsess that much over the market.

Do your best to clear those different distractions as they may throw off your mojo.

3. Create an Environment for Focused Work

Try as best as you can to create a work environment that will hold you in a place of focus and discipline.

Sometimes, this can simply mean a tidy, clean and well-organized workspace. But, I understand that this doesn’t work for everyone.

It’s important to find what works for you.

And if you’re in a noisy environment and have no other options, then, I would suggest that you invest in some nice headphones, like the Beats Studio 3 by Dr. Dre.

Headphones like that both cut down the noise but also serve as a deterrent from people bothering you.

And if you want to listen to music while trading, I would suggest the classical or coffee shop genre, preferably with no lyrics as this will facilitate concentration.

4. Set a Time for Trading

There’s a myth out there that traders should stay in front of their screens from the opening bell to the closing bell. But this is just that: a myth. And it’s one that’s potentially damaging to your trading performance and your wellbeing.

Your ability to stay focused and be disciplined is limited. That’s why you have to cap the amount of time you spend trading.

Personally, I’m only there in front of my computers for the first 2 hours of the session. If there’s a trade within that window, I’ll take it. If not, I’ll come back the next day. But, usually, during that period, I’m super focused.

Forcing trades, trying to catch everything that moves, or even obsessing over every tick just spells disaster. Don’t go there.

5. Make Sure Your Primary Needs Are Met

The final step is to make sure that you’re well-rested, well-fed, well-hydrated, at peace with yourself, and, as much as possible, under little to no financial pressure.

As a market participant, you want to act in a rational, thoughtful manner.

But, the logical executive part of our brain responsible for that is very sensitive to little things, and it doesn’t take much to impair our judgment.

So, make sure you understand that. Eat a granola bar, drink some water, and check how you’re feeling before any risky decisions in the market.


I hope you found this article helpful.

Here’s a quick recap:

  • Institutional traders have supervisors who overlook all trading operations and help them stick with their pre-determined risk management parameters. Self-directed retail traders don’t.
  • Retail traders should develop discipline, focus, and wisdom. In fact, those are essential qualities that all traders should develop.
  • How: Learn to meditate; turn off distractions; create an environment for focused work; set a time for trading; make sure your primary needs are met.

At times, trading can be very frustrating but armed with these three essential qualities, I can guarantee that you’ll get to your trading goals much faster.


Share The Full Post

Take it Further with The Trading Psychology Mastery Course

"The course has impacted positively my trading by bringing awareness to my monkey mind habits during live trading. The awareness is impacting my life in general where I am making better choices. i would recommend it highly to every trader I know." ―Mandeep Gill