Self-Discipline
Of all the traits you need as a trader, self-discipline is one of the most important. It’s required to implement a strategy effectively and keep you from trading when your plan dictates you shouldn’t. Self-discipline is created and strengthened by excising self-discipline. There is no short-cut, and it isn’t something you have or you don’t. Anyone can create self-discipline by sticking to a plan. Each step of the trading process–from creating your trading plan to executing it and monitoring performance–all require self-discipline because your mind will be constantly distracted by other things. Say and write down how you will trade, then follow through. Practice self-discipline. Using a demo account can be a great way to practice day-trading.
Concentration
While a day trader’s workday is shorter than most other professions, being focused and maintaining concentration is paramount. Each trade requires attention; one mistake can cost much more than a trader ever bargained for. Being slightly off on an entry or stop loss is the difference between a win and a loss; being a second too slow may mean missing a trade. When an opportunity arises it must be seized, but opportunities aren’t occurring all the time. A day trader must be able to focus on the market, without being drawn in when conditions aren’t favorable, and still be able to act in a split second a trade trigger occurs.
Optimism
Believe in your approach. If you don’t believe in your trading system—and that it will produce a profit over the course of days, weeks, months, years—it’s almost impossible to trade the way you intend to. The more you believe in your plan, and are optimistic about its potential, the more likely you are to precisely implement it. If you aren’t optimistic about it, why are you trading it? During the practice stage, you attain a good idea of how your trading plan performs. After seeing repeatable success in your months of practice, your optimism should be at a point where you are confident in what you are doing, and want to follow your plan.
Relaxation
Concentration and optimism must be combined with relaxation. These three create an “in the zone” level of focus. When a trade signal is close at hand, your concentration is heightened. When conditions aren’t favorable for trading, you are more relaxed, giving your mind a break. Throughout the trading day, you move from a state of focus to relaxation, and back again, over and over. The relaxation is required. It doesn’t necessarily mean putting your feet up or distracting yourself with reading emails or watching TV. Instead, simply look away from the screen for a moment, take a few deep breaths, have a stretch or stand up for a few moments. You are aware of what is happening in your market, and watching for trades, but you’re not on high alert. Trying to stay on high alert for the entire time you trade–even if it’s only a couple hours–is exhausting, and may actually cause you to make more mistakes. Take a few minutes every hour for relaxation. Outside of trading, relaxation is important as well. Just as you shouldn’t grind through even a few hours of trading without a breather, you shouldn’t grind through days or weeks without taking some time for yourself. Relaxation recharges your batteries, making all your tasks more enjoyable…which in turn aids in performance. Don’t neglect your health–physical and mental. You stand the best chance of success if you are alert and capable of action when you need to be.
Enjoyment
Enjoy what you do. It seems simple enough, but many people begin trading for the wrong reasons. Trade because you enjoy it; enjoy the challenge and the process of it. If you don’t enjoy the challenge, then you won’t succeed because the challenge will deter you. Every successful trader I know loves the markets and trading. That enjoyment or passion is what drives them to create strategies, stick to them, and relentlessly implement their “edge” so they can continue to do this for a living.
S.C.O.R.E.
Self-discipline, concentration, optimism, relaxation, and enjoyment are states all traders should try to emulate in their trading. They all work together to get you “in the zone;” a peak state where you are most likely to act (or not act) appropriately.
