Most people go into trading because of the profits it may bring.
But as your beginner’s luck runs out and starts heading into a losing streak…
You start spiraling into a state of frustration and confusion, craving for a strategy that can produce all the profits you ever wanted.
In the end, you ask yourself…
“Can I succeed in this trading business?”
“Is everything that I’ve done worth it?”
Well…
Now, you might think that succeeding in trading is a hill you can never climb.
But what the statistics don’t tell you is that not all of those who failed are quitters.
That’s why in the next 5 minutes…
I am going to share with you 5 essential characteristics you must operate into to fast-track your progress towards the 24% of profitable traders.
Let’s get started!
1. You Must Take Responsibility
Refusing to take responsibility for your trading decisions and beliefs means that you are giving up the power to change.
When you give up the power to change, you lose the ability to change your results.
So, if you wish to make that first step of taking responsibility, the first thing you should do is to…
Control your initial response to a situation
Instead of embracing the problem at first thought, find, and embrace solutions.
Let’s say you have a stock that moved +50% without you.
Your initial response would probably something like…
“I shouldn’t have followed that group admin’s stock tip!”
“It’s my broker’s fault, s*#@!”
Instead, exercise proper breathing first and ask yourself…
“How can I re-enter this market without breaking my rules?”
“Is this stock still worth being on my watch list?”
See the difference?
Now, I know how painful it is to miss trading opportunities…
But controlling your initial response to a situation not only saves your trading capital but your mental capital as well.
Read on…
2. You Must Think Independently
Dependent traders crave the opinions of others on whether they should enter or exit a trade.
If trading without a plan is already disastrous, what more if you let others define how your plan should be!
Always remember that the only best stock trading strategy out there is the best one for you.
So to give you perspective…
There are a lot of profitable trading strategies that work differently
Looking at the chart, losing 80% of the time will still net you profit in the end if you get rewarded 5 times your initial risk on winning trades:
Of course, I’m not telling you to lose 80% of the time, but looking at the chart…
You must determine whether or not you are the kind of trader who is:
- comfortable winning more trades but offer fewer rewards (high win rate, low risk to reward)
- more patient in achieving bigger rewards but can handle losing streaks (low win rate, high risk to reward)
Choosing A or B is something only you must choose, so never let anybody define how you should trade.
Own your process!
Got it?
Then let’s move on…
3. You Must Know Your Stock Trading Strategy Intimately
One of the things that hold people back to become a profitable trader is when they have unrealistic expectations of the strategy they are using.
So, here’s an example of a systematic stock trading strategy backtested from 1990 to 2018:
Number of trades: 710
Winning rate: 48.5%
Average Annual Return: 12.77%
Maximum drawdown: 41.73%
Source: TradingwithRayner
There are better systems out there, but this system beats the 32-year average annual return of the PSEi which is 7.50%
Now, the first thing to analyze is…
The strength and weakness of your strategy
Not only you should know when your strategy works, but also when it doesn’t work.
As you can see, this market thrives on long-term trends and lost only 5 out of the 28 years the strategy has been tested.
However, you must take note that this strategy does not work well on Financial Crises:
The next thing you must identify is…
The worst-case scenario of your strategy
Now, what would you’ve done if you have experienced a 4-6 month losing streak?
Or lose 22.6% of capital in just a month?
Would you start tweaking your indicator settings, add new indicators, or pull out your capital and hop into a new system just because you are not “satisfied” with the results?
A worse-cast scenario is never easy to accept, but identifying it plays a crucial part in choosing a strategy
If you do not have the conviction to stick with your system through hard times, then you won’t thrive long enough to experience consistent returns:
So, the next time you encounter a strategy that promises huge returns…
Always determine what its maximum risk and average reward are, and think independently whether or not you can accept the risk, reward, and the concept of the strategy.
Next…
4. You Must Execute Consistently
As a human being, you will miss some trading opportunities and miss checking your charts.
This is why you must develop not only habits but a system to put your habits into action consistently.
So, what you must do is to…
Have a trading routine
One thing you must know first is that your trading business by any means should not damage your relationships or hinder other responsibilities
Overall, your trading routine should at least have the following:
- analyzing charts/building your watch list
• reviewing your trading journal
• executing trades
• a fixed time where you must execute your routine
With that said, you must…
Track your trading habits
You can add more habits if you wish, but tally what you’ve accomplished by the end of the week/month and see how you perform.
If you have barely accomplished half, then make adjustments or improvements to your trading habits.
Remember, consistent results can only be achieved by consistent actions.
And finally…
5. You Must Grow Continuously
If you think that there’s nothing else to learn as a profitable trader or you feel that you are not growing, it’s either your trading business is dying or you are not growing fast enough.
In able to grow continuously, a couple of things you can do is to…
Feed your mind with contents that ONLY help you improve what you have
Instead of trying to add more knowledge into your “toolbox,” choose to improve the tools you already have and how to use them effectively.
If you are looking for direction in trading, then the TradingwithRayner Show will help you out.
If you are a price action trader, then Your Trading Coach has one of the best content for it.
But if you are new to trading, then Investa Learn will help.
Again, choose contents that’ll only help on what you have and where you are now.
Have a trading circle that helps your growth
You don’t need to look for traders who trade the same as you.
But what you do need is to be with independent thinkers who can give you wisdom and direction in trading (instead of hype and tips on which stocks to buy).
Because being around with disciplined traders and high-performance traders open your mind to new possibilities on how you can improve your own.
Overall…
The best trading groups I know not only support you in your trading but also produce a huge impact on your life outside of trading.
Putting Things Into Perspective
Trading is a journey worth going through for a lifetime.
What’s important is not just the money you can potentially make (or lose), but the meaningful relationships you build and the person you become in the process.
Overall, these 5 characteristics must be practiced in harmony as it is crucial not only to your trading success but the longevity of that success you have or will achieve.
As the saying goes, “success requires maintenance.”
With that said…
What else can you add to these 5 things?
Let me hear your thoughts in the comments below!
Contributor: Jet Toyco
Investagrams Username: @Jet_Toyco
About the Contributor:
Jet Toyco is a private executive trading coach and a systematic trading portfolio fund manager at TradingwithRayner.
He is also a public helper of the trading community that is always open to questions anytime to give the knowledge people deserve at no cost, and no hype.
