SEVEN SKILLS THAT YOU NEED TO BECOME A TRADER

1. Domain knowledge

If you are trading currencies, you will need to know all the forex trading terminology and which data is important for which currency pairs. Commodity traders need to know about seasonality and how the industry behind each commodity operates. Stock traders must understand how exchanges operate, what drives stock prices, and the story behind each company.

Whatever instruments you trade, the more you understand about every aspect of that market, the more of an advantage you will have.
To gain this type of knowledge you will need to look beyond the normal websites and other resources traders use. Try to find out which sources of information other participants in each market use.
We are talking here about institutional fund managers, exporters, importers, and resource producers and manufacturers. In many cases, these are the real end-users of a market, and it is crucial to understand how they operate in the market.

2. Understanding of probabilities

When it comes to maths, traders need a little more than basic numerical skills. You don't need to be a mathematics or statistics expert, but you do need to understand probabilities. 

Trading is all about probabilities. Your eventual profit or loss is simply equal to the number of trades X the win rate X the win/loss ratio.

If you cannot determine and calculate those numbers, you will never know if you can expect to be profitable. When you can internalize these concepts, you can begin to think in probabilities. That will allow you to remove emotion from the decision-making process, and you will always have a handle on the amount of risk you are taking. 

3. Curiosity

Okay, this may be more of a trait than a skill, but if you aren’t naturally curious, it’s a trait you will want to develop. Traders who are genuinely interested in the economy, companies, markets, and crowd psychology will be able to find more unique trading ideas.

The more unique trading idea you can generate, the more opportunity you will have to profit.

Here’s a good way to get started. Whenever a price moves in the opposite direction to the way you expected it to move, try to find out why. Try to figure out what you could have known but didn’t. This line of thinking might lead to discoveries that can lead to new ways of generating trading ideas.

4. Mental stamina

As a trader, you cannot let losses or frustration affect your decision-making. Trading will be frustrating at times, especially when you are still learning the ropes. For many, this can be mentally exhausting and lead to fatigue. This is when mistakes and impulsive decisions get made.

Learning to manage stress and take losses in your stride is a core skill for traders. It also helps to have a healthy lifestyle and get enough sleep and exercise. If you struggle to maintain a calm state of mind, it may be worth learning about meditation or stress management exercises.

5. Discipline

The ability to maintain self-discipline follows on from mental stamina. Sticking to your plan and your trading rules is the only way you protect your trading account from impulsive behaviour.

Discipline goes further than trading rules and decision-making, however. You will also need the discipline to prepare properly before the market opens, review your trades at the end of the day, and keep a trading journal.

6. Patience

Many novice traders don’t quite appreciate the time and patience required to become a successful trader. For a start, it takes time and patience to become consistently profitable. However, even when you are profitable, you will still need to be patient. There will be days, weeks, and months when there are few trading opportunities. This is when patience and discipline will be required to stop you from taking marginal trades out of sheer boredom.

7. Self-awareness

Being self-aware will help you grow and improve as a trader. If you can observe your own thinking and behaviour, you will be able to identify your strengths and weaknesses. The best traders can isolate their weaknesses and minimize the damage they can cause. However, perhaps more importantly, the best traders can identify their strengths and build on them.

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