Here are the big primary five keys to becoming and staying a great trader. These are the most important principles I have learned over 30 years in the financial markets and the 30-year veterans I have studied also almost all touch on these five keys in some way.

1. Consistency of execution.

After you have developed a quantified system with an edge you must execute it with consistency in signals and position sizing. You don’t want to see inconsistency in entries and exits. Not taking your entry and missing a big win can be devastating to your profitability more so than ending up with a small loss. Also, not consistently taking your stop loss when triggered can lead to huge losses of capital that set you back in your equity curve and mental state. Irregular position sizing can also lead to wins smaller than they should be and losses far bigger than they should be, whatever your position sizing framework is it needs to be followed consistently. No trading system will work without consistency of execution.

2. Never average down.

One of the biggest reasons traders end up unprofitable is simply because their big losses knock out all their previous gains. What is worse than not taking a stop loss when it’s triggered? Adding to a losing position is even worse. For a trader, adding to a losing position means increasing a bet while already on the wrong side of a move in price action. It is fighting momentum and making a losing trade bigger, it is one of the worst habits to start as eventually it will lead to huge losses when a trend fails to reverse.

Only add to winning positions, never losing ones. Take your stop loss instead of adding more. If you’re on the wrong side of a move don’t stay there, and definitely don’t double down on a bad trade, just get out.

3. You must have confidence in yourself and strategy to trade.

While trading is a game of math, probabilities, charts, and signals it’s also a mind game. Many times a trader’s beliefs will determine their success more than anything else. All traders start out believing it’s possible to make money in the markets. Many want to earn their living one day by trading. However it is perseverance, beliefs, and mental determination that will determine who wins and who just quits.

Shockingly, the majority of millionaire traders lost most of their accounts when they started or they experienced huge drawdowns while learning lessons the hard way. Confidence in your abilities and strategy will keep you in the game long enough to figure it out. Faith in future results will get you through each day. Most problems with trading psychology can be solved through faith in your system and faith in yourself to execute it with discipline.

4. Patience in the markets is an edge.

Traders that make money have the edge of patience, they are patient to wait for their set up, they are patient with letting their winning trades run, and the only thing they don’t have patience with is losing trades as they cut them when proven wrong.

The more patient you are with your system building and learning before you start trading real money the less money you will likely lose in the learning curve. They market isn’t going anywhere, take you time and prepare properly before trading. There is also no need to rush after trades if there is not a clear signal. If you miss one trade there will be plenty more in the markets. Patience slows down action and can lead to better decisions.

5. Passion for trading is an edge.

Becoming a successful trader and maintaining a high level of performance requires a passion for the markets and the game. Passion creates the energy for doing the work to build and maintain a trading system with an edge. Only passion can get you through the losing streaks and drawdowns and keep you focused on getting back to new equity highs.

It takes a lot of mental endurance to stay in the trading game and do the work and take the losses to get to the wins. Only passion can keep you going, people that are lukewarm or are just after quick money will not make it over the long-term, they will move on to new money making ideas that seem easier.

If you’re interested in learning the principles of rich traders you can learn how they think from my book New Trader, Rich Trader here and my other best selling technical trading books on Amazon here.

I have also created trading eCourses on my NewTraderUniversity.com website here. My educational resources can save you both time and money in your trading journey. 

5 Keys To Being a Great Trader. Rules of a 30 year Veteran.
Image created by Holly Burns.