While movies such as Wall Street give the impression that short-term trading is "easy", this is not the case. Successful share traders require several traits to maximise their gains and minimise their losses. In all honesty, these traits are precisely the same for medium or long term traders, but what are they?
Trading plan
While there will be occasions where short-term traders will deal on their "gut feeling", they tend to stick to a trading plan which suits their skills and aims. There are many other options, whether utilising an array of different charts, fundamentals, or even trading ahead of results. It may take some time, but finding a strategy that works for you is crucial.
Losses will happen
With the best will in the world, even the best share traders will, from time to time, experience losses. When this happens, it is crucial that you do not dwell on these trades and instead put them to the back of your mind and look forward. Run your winners but learn to cut your losers, be ruthless!
Discipline
If you have a particular strategy that works for you, stick to it. While you may be tempted to go against your strategy from time to time, this could prove expensive. For many, discipline is perhaps the key to successful trading, but it is a skill that may take many years to perfect.
Never stop learning
You will notice that some of the most successful traders never stop learning. They may have different views from others, they may fundamentally disagree, but they will always look at and appreciate alternative opinions. This is not to say they will change their mind, but they continue to learn and adapt.
Avoid overtrading
Many traders make the mistake of overtrading and effectively trading for the sake of it. If you are always selling one investment to buy another, this may indicate that you are over-trading. While many traders have a natural pull to be fully invested at all times, this can be dangerous.
Stick to what you know
While there is nothing wrong with expanding your knowledge of markets and different sectors, you must stick to what you know while developing this knowledge. For example, many day traders are interested in technology companies, while others may look towards commodity plays. It is crucial to adapt to changing trends and different markets but all within a controlled environment.
Don’t trade on ego alone
When looking at day traders, they will very often come across as confident and dismissive of the opinions of others. However, as we touched on above, successful traders never stop learning, although they may well have an ego. That moment when you believe you know better than the market, go against trends and strategies used in the past may indicate your ego is taking over. Be careful!
Identifying high-quality trading services
We know that many day traders tend to trade on relatively thin margins, which means dealing charges are crucial. So while there may be a tendency to look at the cheapest dealing services available, there is a need to balance dealing charges against the quality and reliability of the service.
GIS UK Ltd is continually investing in new technology, adapting and improving trading platforms while maintaining an extremely competitive edge when it comes to our charging structure. The quality of our dealing services attracts both short-term traders and long-term investors, creating the volumes to continue this strategy.
Summary
Many different factors come into play when considering a career as a share trader. Strategies, personality traits, investment goals, and the need to appreciate quality trading services within competitive charging structures are all essential. So, do you have what it takes?