An effective day trader has a strong sense of discipline and organisation. They have to be able to sit down, focus on the task at hand, and log all their trades throughout the day. Day traders spend a lot of time at their computer screen – analysing charts, looking for entry and exit points, etc. Having said that, today’s technology has also empowered day traders a lot more.
While the computer remains the ideal platform from which to work, many brokers provide smartphone platforms as well that are incredibly intuitive and easy to use, thus allowing day traders more freedom and time to make applicable trades. As it is often said, trading is not for everyone. It takes a certain type of personality to deal with the volatility of the markets and the uncertainty of financial returns. It is essential that they enjoy this type of work. If they don’t like it there’s no way they will succeed as a day trader. And this then raises the question; what are the personal traits that suits a day trader?
Discipline is an essential trait for the day trader. The market is awash with opportunities and possibilities by the thousands, yet only a handful of those opportunities can be capitalised on. The discipline of being a day trader is not something that can be mastered overnight. Many would-be traders, often young and idealistic individuals, think they can simply start trading and make massive profits right away. But the truth is quite the contrary – it takes years of hard work and determination to become a successful day trader. In order to mature into one of the truly exceptional top investors on FTSE100 index markets takes time.
Patience and discipline go hand in hand and the former is key in the personality profile of a trader. Everyone wants to make money quick. This is especially true in the trading world, where investors are constantly looking for the next big profit. Unfortunately, it doesn’t always happen that way. Day traders can spend countless hours working on their systems, watching news patterns and timing trades only to end the day with zero gains or even losses. Day traders who are patient will be able to keep their heads up after days like these and stay focused on their overall strategy.
No day of trading is ever the same. The volatility of the market means that a day trader cannot expect consistency – and must thus make allowances for tremendous flexibility. Day trading is the type of investing that requires constant attention to the markets. The ability to keep an eye on the markets and respond quickly to any changes is one of the main requirements of this vocation. These changes can be as small as a stock price fluctuating or as big as news stories about companies releasing earnings reports. Day traders must also have the mental stamina required to deal with a volatile market environment, which can cause portfolio fluctuations of more than 1% in a given day.
Day trading is a mentally demanding and at times, stressful job. It often requires traders to be awake all night looking for opportunities, while also being able to perform well during the day in front of clients or meet with fellow traders. For this reason, mental resilience is key to long-term success as a trader. In addition, a day trader must possess the mental clout to withstand a constant barrage of knocks from the market. Losses are part of trading, so it’s important to constantly be aware of this fact as to avoid despondency. After absorbing a loss, continuing with one’s trading plan or strategy is vital.
Alicia Saville did her degree in psychology at the University of Edinburgh. She is interested in mental health and well-being.