A trader takes a short-term view of the market. He is a market participant. He trades for a day to few days. They are more interested in volatility and take advantage of volatility in the market. They are neither value investors nor growth investors.
A good trader knows the importance of discipline, patience, and persistence. It is not only about taking a risk and moving suddenly from one trade to another.
Here are some habits that successful traders should possess
- Managing risk optimally
Each trader has a limited capital to trade with. Within that capital, he has to buy, sell, hold and earn the profit. He has to rotate his capital in such a way that he should not miss any opportunity which it comes for purchase, and at the same time, some of his capital is stuck up in the shares that he is holding. He should know, how much from his capital, he can afford to lose in the worst case scenario.
- Be confident and practical
The trader should be confident and optimistic about his trade. Though not overconfident, of course, realistic and reasonable. He should believe in the dictum “There is always the other day to trade profitably”. Successful traders do not attach emotions to any stock. They always go for logic and calculations. They have a strategy for all their trades. They know how many maximum returns they will get in each trade. They have realistic targets.
- Cost matter a lot when you are a trader
Traders should have cost consciousness. That is while trading they should count each any every cost that they incur at each and every step. Like brokerage charges, holding charges, demat account charges, margin (loan) money interest charge etc. A trader ruffles (put into use) his money as often as possible in search of opportunities. Since trading is a continuous process even little increase in cost adds up quite a bit in long run. And after taking all the trouble and tension, if he is not able to generate income more than the bank FD, then there is no use trading.
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- Steadfast and resolute should be your pillars
Great traders are steadfast and resolute to a high degree of their trade. They have to train his mind towards attaining one’s goal. One cannot gain from all trades and conversely one cannot lose in all trades. Winning some and losing some. And this should not shake up the trader. Once the trader has created a plan, he should have due diligence to stand by it.
- Learn from market trends
Everyday market offers new and new things. Hence a trader should be a constant learner. He has to tweak his strategy according to market needs. They try to be in sync with the market trends as far as possible. Though there are traders who take high risk. But they are few in number. It is better to learn from the market instead of blindly doing guesswork.
- Read, learn and research
The successful stock trader use their maximum time for reading and analysis. Reading annual reports of the company, business newspaper, change in government policies, new schemes launched by the government, world news, etc. Learning from past experience, noting down success and failures. Doing their own research and analysis of trends, the effect of news on prevailing market condition.
- Executing trading plan
A trader focuses closely on how he executes his trades. Because a lot of things are involved like using candlestick chart effectively to identify entry and exit points. Purchasing shares in bulk, at one go or purchasing in small amount of pieces at a time. Is the trader over selling/buying because of the direction of the market.
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