In 1989, the book 7 Habits of Highly Effective People by Stephen Covey was published, which was popular worldwide and sold a total of 15 million copies. There is no doubt that people are interested in taking a few simple steps to make a big difference. As for the market, however, it is difficult to easily make changes, given its inherent unpredictability. During figuring out what makes an efficient trader, I refer to the common characteristics of some successful investors I know and financial giants in history. Lots of successful investors share some common qualities, although there is no fixed standard to measure market success.
1. Efficient traders are disciplined.
Some investors prefer technical analysis, while others make investment based on fundamentals. Whatever your method is, none is permanent but only discipline is essential. For example, in terms of stop-loss orders, what matters is to form discipline and adhere to it for a long time, not that a 15% stop loss is much better than a 12% stop loss.
2. Efficient traders are punctual.
They have been used to the strict timeliness of market opening and closing, and bonds paying interest at a fixed time. They don't delay paying bills or deferring credit card payments because they know that time is precious and valuable.
3. Efficient traders think in terms of percentage and probability.
A good trader knows that a strong 100-dollar stock is more likely to double than a weak 1-dollar one, and a 50-point rise or fall of Dow Jones Industrial Average index is not important, even though many experts are eager to find reasons for the ups and downs of market. When limiting risk, percentage is also a key point to consider. For example, a stock that has fallen 25% needs a 33% -rise to reach the breakeven point.
4. Efficient traders are humble about returns.
The market is not an ATM. It is known to traders that profits are irregular, and it is normal to gain today and lose tomorrow. However, when one of our positions soars, we may also become overconfident and risky. Efficient investors know that every investment is not completely reliable, so they can keep a cool head between profit and loss.
5. Efficient traders are skeptics.
We often hear and see all kinds of "rich overnight" stories and so-called "secrets" leading to amazing wealth. However, there is no Holy Grail at all, and even if it does exist, why would anyone sell it in a $ 24.99 book? Efficient traders are natural skeptics who question various assumptions, acting on objective evidence without superstition or blindly obedience.
6. Efficient traders live outside the market.
People can easily become obsessed when it comes to money. This is especially true in markets, which are now almost completely open to everyone, with tons of leverages almost 24-hour a day. When markets are volatile and investors are highly anxious, it's easy to confuse self-worth with the net worth of account. The danger comes when one brings emotion into the trade, trying to recoup losses by increasing positions or making irrational decisions. Other hobbies can help keep our eyes wide open, even the famous trader Jesse Livermore goes fishing from time to time.
7. Efficient traders focus on fund management.
An annoying little secret is that the outcome of the market is more about how you invest than what you invest. From online stocks to crude oil, the bull market comes and goes, just like the changing seasons. Experienced traders will maintain a fixed initial position, and then follow the golden rule of cutting off losing positions and letting profitable positions run, in order to survive and grow in any market environment.
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