Learn how engaging a mentor can help you identify strengths and weaknesses and develop a unique approach to trading.
The number one question I get asked when it comes to the stock market is: “What does it take to be a good trader?” There’s no single right answer to this question, but in my mind, the most important trait of a successful trader is the ability to honestly assess strengths and weaknesses. Then he or she trades in a style that complements strengths and minimizes weaknesses.
Sometimes this happens organically, but often it doesn’t. Instead, this discovery process usually requires self-reflection, experimentation, and experience in order to find a combination that lends itself to success.
The first area I suggest traders focus on is patience. For example, are you patient in finding trade opportunities, or do you constantly need a stream of ideas to consider? How about trade management? Do you have the patience to manage a position to give it room to move, or do you need the conclusion—whether positive or negative—to happen quickly?
If you find that patience is a strength, then you might be better suited applying a swing trading style, where it takes time for setups to present themselves and for trades to reach conclusions. However, if patience is not your strong suit, you might be better off pursuing day trading, where each day offers multiple opportunities and trades are closed daily.
Not all strengths and weaknesses are related to personality traits. These qualities can also be related to the realities of your life, such as how much time you have to devote to markets and trading.
Specifically, are you a full-time trader? Is it your job to track and analyze the markets, or do you have a “day job” that limits the time you can spend trading?
A full-time trader may spend 40 or 60 hours each week following markets, an engagement level that offers more flexibility in trading approaches and lends itself to being more active. A part-time trader who can devote only a few hours per week to the markets needs to be more selective in trade choices and overall strategy.
The key to any self-assessment is to be brutally honest and understand that what you think your strengths and weaknesses are and what they really are may be two completely different things. If you aren’t objective in identifying these good and bad traits, you might end up trading in a style that’s the complete opposite of the way you should be trading.
The importance of this last point cannot be overemphasized. It’s incredibly difficult to analyze our own strengths and weaknesses without bias. This is why it’s often beneficial to engage a trading mentor. An experienced, impartial third party can objectively evaluate your trading and help you to align it with both your character traits and the external factors in your life.
Do Not Sell or Share My Personal Information
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2023 Charles Schwab & Co. Inc. All rights reserved.