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Personality Traits of the Successful Day Trader

Your personality could very well be the key to whether you succeed or fail as a day trader. While you may make light of my claim, I urge you to take me seriously. If you have never day traded before and if you think that trader psychology has little to do with success as a day trader, then you have a lot to learn. My goal in writing this book is to help you avoid reinventing the wheel. Please take me seriously.

What are the psychological traits that contribute to success as a day trader? Based on my extensive experiences as a trader and as an observer of other day traders, I consider the following traits to either facilitate success as a day trader and/or to contribute to it:

ж Decisiveness. This is by far the greatest personality trait a day trader can possess. Since day trading often requires split-second decisions, the day trader who hesitates is lost. Hesitation can occur either when placing an order to enter a trade or when placing an order to exit a trade. No matter when it occurs, it has destructive potential. Therefore, if you are not able to make a decision and act upon it promptly, you would do well to develop this trait if you plan to succeed as a day trader.

ж Persistence. A day trader must have persistence. The successful day trader will not allow a string of losses to adversely affect his or her decisions. Rather, the day trader who wants to succeed will follow his or her trading system or method undaunted by a series of losses. We know from system testing and development that even the most potentially profitable trading systems will lose money 5 or even 10 times in a row before a profitable trade is hit. Day trading is no different. Therefore, the day trader who seeks success must have the mental discipline to avoid the insecurity that comes with a series of losses.

ж Confidence. Closely related to persistence and decisiveness is confidence in the trading system or method. The successful day trader must believe that the system he or she is using will be profitable if it is applied with consistency and discipline. While confidence in self and system is clearly a quality that all traders should possess or develop, it is particularly important for the day trader.

ж Imperviousness. To a given extent, a day trader must be able to resist the temptation of news and the opinions of other traders.