A consistent, profitable trader is a product of good trading habits. Working daily to stifle the sly power the markets manifest through self-sabotaging bad trading habits.
If you asked me, there is nothing special or esoteric successful traders hide from the 80% losing traders. We all look at the same charts, have access to the same trading platforms, trade at the exact times. Granted, successful traders have tested strategies and even proprietary trading tools; in the hands of an undisciplined trader, they wouldn’t mean much.
The secret is that they defy the habits of the perk.
They’ve developed positive trading habits by which they approach the trading desk and life in general.
If you are struggling to achieve consistent trading performance, do what successful traders do, practice these good trading habits daily, for they are qualities of a good trader.
Good trading habits of successful traders.
1. Keep a trading journal.
Most average traders find it hard to keep a trading journal. Successful traders don’t break a leg about it. They’ve discovered a trading journal is like a mirror.
A trading journal shows them when they are on track or off the rails.
Only a trading journal will show you what setups work best. What trading strategy works? How micromanaging trades not affects your trade results, how emotions affect you, how news and other fundamentals affect.
Successful traders learn and reverse engineer the best trades with the help of a trading journal.
2. Trade with a strategy.
Successful traders filter the noise of the markets with tested trading strategies.
Not only does a strategy get the most from the markets, but it also tames one in a domain of absolute freedom to do as you please.
2.1 Stick to a strategy until it is clear it no longer profitable.
There is a learning curve to every strategy, and there are trading costs that come along with it. Systems are not 100% profitable all the time.
And in the short term, there will be losses. By being loyal to a trading strategy, traders allow the system to play out over time.
Only when a trader is confident that the strategy is no longer profitable, do they set it aside.
3. Trade different market conditions with other strategies.
Trading strategies that work well in trending markets will fall flat-faced in ranging markets.
The habit of using the right tool for each situation helps successful traders stay profitable.
4. Don’t debate with the markets.
Successful traders know markets are never wrong, and so they reserve their opinions for bar conversations.
At the trading desk, they let general market opinion take precedence. When they are in trades that are going bad, they cut the losses; they don’t think about it twice because they are confident in their strategy.
Which brings us to another habit that’s parallel to the patterns of losing traders.
5. Be impatient with losing trades.
Profitable traders keep losses small, so small that they have more losing trades than winning trades.
6. Be patient with wins.
When the markets go their way, successful traders hold onto trades long enough until the markets signal an apparent reversal.
7. Know and accept the risk before entering a trade.
Unlike losing traders who daydream about the potential gains, successful traders consider how much money they are comfortable and willing to lose before placing trades.
8. A Win or loss, it’s another trading day – attitude.
Neither wins, nor losses rattle successful traders. Losses are planned for, so why worry or leverage up an account to make back the lost money?
9. Know when to stop.
Some days you will make money, others you will lose; know when to stop. The markets will open again tomorrow and the day after tomorrow.
Trying to force trades will only hemorrhage a trading account.
10. Trade with a long term perspective.
A $100 account can grow into a million dollars in 2-5 years if you are a patient and disciplined trader.
But you never hear of such stories because most traders want to make the million dollars today.
Trading with a long term perspective allows you to manage risk, keeps you away from leverage, over-trading, or getting run over by trading emotions.
11. Own up to mistakes, and quickly resolve them.
Without anyone or thing to blame for trading performance, winning traders know when they error and fix the issues ASAP.
The markets always humble the proud, channeling their money into the accounts of traders who are humble to know they couldn’t tame the markets.
Off the trading desk, successful traders know their other life affects trading performance; they, therefore, build a complementary life of extra-curricular activities to help good trading habits flourish.
12. Always learn.
Successful traders are not content with what they already know. They are on an insatiable quest for knowledge. So they read books and articles about trading, the mind, and other subjects that strike their fancy.
They will attend seminars, purchase courses, and listen to other traders gleaning for insight. They are always learning.
They feed the mind and take care of their bodies.
13. Sleep enough.
Sleep is vital for peak trading performance. Your mind is calibrated as you sleep. Less of it will make you susceptible to silly trading habits.
14. Mind your diet.
Not only does a good diet save you from the risk of disease like cancer, but it also serves the body with the resources for optimal performance. God knows how traders need optimal performance.
Sleep goes side by side with exercise. Successful traders have developed the habit of regular exercise. Spare a few minutes each trading day and break a sweat. Exercise helps deal with the stress and pressure of trading, plus it keeps you in good shape in the body and in mind.
16. Practice Mindfulness.
When the markets are raging, it is easy to break all trading rules when the consciousness of what is happening now dissipates.
By practicing mindfulness meditations regularly, you learn to control your mind, which allows you to be present now and read charts for what they are saying and not for what you think they are saying.
How to form good trading habits
The hardest part of developing good trading habits is acknowledging the need for them.
When you know the terrible trading practices, you need to break and the excellent trading practices to replace the bad habits, you are ready to form good trading habits.
Next, read my in-depth guide that will show you How to Break Bad Trading Habits – and How to Form New Trading Habits
In it, I show you how to identify the triggers of bad trading habits and provide a practical methodology backed by science on how to create the conditions you need to form good trading habits.