5 Things Great Traders Don’t Do

I have been trading the Forex market for over 10 years now. I have won and I have lost countless trades. More importantly, I have learnt.

What makes a great trader? I’m sure most would agree that the key barometer boils down to one word: Results.

More specifically, consistent results. A great trader needs to be consistently profitable. Does that mean our trader needs to win every trade? Surely not. But he or she does have to exhibit consistently positive results over time.

 Look at all the “greats” in other fields such as business, sports and entertainment. Some of the names which come to mind include Richard Branson, Michael Jordan and Beyonce. These names pop to mind simply because of two reasons: they are at the top of their game and they exhibit a winning streak.

Trading is no different. When you reach a stage of being consistently profitable over time, you have invariably adopted good habits and thrown off the bad ones. Habits are vitally important. When good habits form – regardless of your chosen industry - you will become successful simply because you do not know any other way.

I wrote this piece to share the 5 things that great traders don’t do on their journey towards consistent profitability.

#1: Great Traders Don’t Risk It All

One of the greatest lessons I have personally gone through is the aftermath of my trading account when I don’t put a stop loss. Not putting a stop loss is a bad habit that many novice traders are guilty of. Some defence statements include: “I need to give the trade some space to breathe” or “the broker is watching my trade.”

Truthfully, none of these claims have any basis. No broker has the time to “watch” your every trade and even if they did, my humble suggestion is to find a different broker that is on your side. When you don't put a stop loss, you run the risk of having your entire account being wiped out or hitting a major drawdown when the market makes a big move.

A 25% drawdown requires a 33% gain to get back to breakeven. A 33% drawdown needs to make 50% gains to get back to breakeven and a 50% drawdown needs a whopping 100% profit to get back to breakeven. As you can see, the bigger the drawdown, the more “Herculean” the effort needed to nurse your account back.

#2: Great Traders Don’t Listen to Opinions

Have you heard the adage – When you want an opinion, you’ll get it?

Everyone has opinions about everything. The markets are no different. Ask 10 people where they think the EUR/USD will go and you are bound to hear a mixed variety of “I think it will go up” and “I think it will go down.”

Great traders never pay any attention to opinions. They pay attention to facts. What’s the difference?

This.

Facts focus on the story. Opinions focus on the story-teller.

Let me give you an example.

Let’s assume that the employment figure for the US (more commonly called the Non-Farm Payrolls) comes in at 245,000. This means that the US employed 245,000 people in the preceding month.

This is a fact, based on the figures released by the US Department of Statistics.

Opinions occur when people/journalists/analysts take these facts and muddle them with their thoughts. Here’s a few examples:

“The employment figure of 245,000 will cause the US dollar to go up”

“The employment figure of 245,000 will cause the US dollar to go down”

“The employment figure of 245,000 will cause EUR/USD to go up”

“The employment figure of 245,000 will cause EUR/USD to go down”

You get the picture. Great traders never worry about opinions. They take the facts, watch how the markets react and trigger their trades accordingly. More importantly, they take 100% responsibility for their actions and never blame anyone else.

#3 – Great Traders Never Stop Learning

All leaders are readers. Traders are no different. They are constantly learning and improving their skills. They never get complacent. Besides acquiring more knowledge, another excellent way of learning is to conduct “post-trade analysis.” Great traders focus on one thing during their post-trade analysis:

Was the trade executed according to plan?

Great traders know that the over-arching secret of successful trading is to focus on the process. Was the entry correct? Was the risk employed correct? Was the stop loss meddled with?

When the trade is executed according to plan, it will only be a matter of time before your account starts exhibiting positive results. Always remember that amateur traders focus on profit. Great traders focus on the process.

#4 – Great Traders Don’t Worry

The mantra of great traders is “Set it and forget it.” That’s a good one to remember. Think about it – your trade is either going to hit your stop loss or your profit target. So if you already know the outcome, what’s the purpose of worrying about the trade in the first place?

Life is full of other worries which demand our attention. Don’t add trading to that list.

#5 – Great Traders Don’t Select Just Any Broker

If you were to narrow down the success of great traders, you would notice that it boils down to two areas: great habits and a solid broker. Both are inseparable. Great habits ensure great trades are taken. A solid broker ensures those trades are executed well.

When searching for a solid broker, focus on 3 things:

• Is the broker regulated?
• Are the funds safe?
• How strong is their suport?

The brokerage world is competitive. Today, more than ever, traders have a plethora of choices when it comes to parterning a broker. However, the three points raised above are important to separate the great brokers from the normal ones. Some of the top brokers in the world take client fund safety to a whole new level. Besides segregated accounts, further options include client fund administration with a Trustee and Trustee liability insurance with globally renowned insurance firms.

Great traders are fully aware of the need to partner with a world-class broker who is committed to safeguard their funds and provide top quality support throughout their trading journey.

These are the top 5 things which great traders don’t do on their journey up the success ladder.

Remember this: the best at anything are the best because they are consistent. Michael Jordan isn’t considered one of the greatest basketball players of all time because he scored 30 points in a game once. It’s because he averaged 30 points per game over his entire career.

When you adopt good trading habits and cast off the bad ones, you give yourself a real chance to be a great trader – one who is consistently profitable over your entire career.

Wayne Ko

Head of Research and Education