Stock trading isn’t for everyone—it takes a particular kind of mindset to be able to deal with the level of risk involved, and the need for patience, discipline, and quick thinking
These two character traits are essential if you want to make a success of stock trading. It’s not enough to be mostly disciplined or a bit persistent; these are two traits that you should aim for all of the time. This doesn’t mean, of course, you need to spend all your time trading or learning about trading. What it means it’s that you’re committed to creating a plan and following it through, committed to learning, and committed to improving your performance.
You will suffer losses. Every trader does; in fact, even successful traders may lose more than half the time. Successful trading doesn’t mean you have to win on every trade, it just means you win more than you lose.
The important thing is that you’re willing to learn from your mistakes, learn from your losses, and be willing to get better. When you suffer a loss, study it, figure out what went wrong, and if possible, aim to refine your strategy in order to reduce your risk.
In stock trading, being proactive is about acting with intent, based on experience and knowledge, rather than acting blindly on instinct or a gut feeling. No matter what’s going on, always take the time to make sure you’re calm and collected when you’re making trading decisions. Don’t let emotion get in the way, even on a bad trading day. Getting irritated or anxious just means you’re more likely to make a mistake.
It’s important that you’re able to act rather than simply react, but a certain degree of caution is necessary too. Nobody can afford to get complacent about trading, no matter how many wins you’ve racked up, and regardless of the size of your bankroll. If you ever get to the point where you start to feel you’re invincible—that you can do no wrong—you’re likely to start getting careless, and that’s bound to lead you into problems.
It’s always important to keep up-to-date with the news, both in the trading world and the world at large, and it’s important to learn about how successful traders are working their magic. But that doesn’t mean you should copy exactly what someone else is doing. It’s important to learn what works for you, rather than copy what works for someone else.
As a new trader it’s fine to start out with someone else’s rough strategy, but over time you should be aiming to refine and modify that strategy so that it suits your own needs and personality. What does that mean, exactly? Simply that your strategy should reflect what kind of traits are dominant in your personality. If you’re drawn to a fast-paced environment where things are changing on a daily basis, short-term trading, where you’re buying a stock and selling it the same day or week, might be a great option for you. On the other hand, if you prefer a slower pace, with more time to contemplate your trades thoroughly, try out a long-term strategy.
