Key Habits of Successful Traders

It was all a bit touch-and-go there with Bitcoin last week. Only to be back at ATH this week.

Markets can be volatile. There is no avoiding it. The best we can do is develop habits of successful traders. Whether the market is bullish or bearish, there are steps we can all take to ensure we are on the right trajectory towards building richer lives. Let me summarise them for you.

Trading with a plan. Sure, you may have some short run successes winging it but the day of reckoning always comes. Always trade with a plan: plan of attack for each position, including position size, entry point, stop-loss and take-profit exit. Whilst you can be flexible with your take profit, you should never really adjust your stop-loss.

Maintaining technical analysis. Even if you are not a technical analysis junkie, you should really know the key technical levels for what you are trading. For instance, the key Fibonacci retracement levels, where moving averages are, where short and long term trend lines are and the most recent major highs and lows.

Taking Profits and Stop Losses. As the saying goes: bulls and bears each get a seat at the table, but pigs get slaughtered. Be sure to take profit from time to time. Everyone loses money trading, what makes you seriously lose money is not having a stop loss. Can’t stress this one enough.

Watching legacy markets. We talk about institutional investors increasingly being interested in the space and the bullish implications for bitcoin. That’s all well and good but let’s take a second to just digest that: institutional investors are entering the space. When you trade, and look into your screen, imagine a mirror, and all other traders looking back at you. Except now, imagine hedge funds and asset managers. It is worth taking time to understand some of what happens in legacy markets as it will allow you to understand what drives the behaviour of the new entrants into our market.

Looking ahead. Think of trading as a game of chess. You need to think several steps ahead of other players. Consider how much the market has or has not priced in an expected outcome. Also consider what may happen if the outcome does not materialise. While everyone is scratching their heads thinking what to do next, you will have already established a game plan.

Keeping emotions in check. This isn’t about being right or wrong. It’s about making money. Do not cling to a losing position or wait for the market to take you out of a trade. React logically and quickly to cut a loss making trade, in line with your trading plan.

Being all over the news. A lot of what we cover in the Market Briefing section can move the market. As well as carrying out technical analysis, a successful trader will keep an eye out of news events and the latest developments in the space.

And there we have it. If you can make a bit of progress towards each of these habits each day, you will soon see the benefits. Good luck.