What are the secrets of successful prop traders? During your trading journey, you’re likely to have come across certain types of traders – those that just keep on killing the markets. How do they do it? Whether it’s excellent discipline or extreme patience, here at Prop Trader we’ve compiled a few habits that these successful prop traders have in common – and how it got them to where they are today. Here are five simple habits to cultivate in order to help you join the top-ranking traders.
5 Habits of Highly Successful Prop Traders
Trading time, or not?
You have heard of “the trend is your friend” and “never catch a falling knife”, but have you heard of “when in doubt, stay the hell out”? If you haven’t, now you have. It is far better to sit on your hands rather than entering and exiting trades that you’ve analyzed incorrectly. Basically, if there is no trade available to take, or if your trading system and criteria does not agree with a trade, then why enter? It might work, but the chances are you’re just going to end up feeding your equity to the broker. If you do not see a trade, close the chart.
Money is money
Greed is the killer of all things, especially within an industry that buys and sells currencies amounting to billions of dollars each day. So it’s easy to fall into this trap: money is all around us and we all want it. Whatever your reason for needing a payout from your prop firm, do not let it influence your trading style. In other words, when you set a take profit, let the trade run until it hits it. Often what happens is we see price impulse towards our take profit and think it can and should go further – only for the price to form the biggest reversal. Before we know it, we’ve either been stopped out or sitting in major drawdown. You can avoid this by withdrawing your profits as soon as possible, getting rid of the “go big” mentality, and keeping on track.
Follow your system
It takes years to be an overnight success, and in saying that, you need to be in this game for the long haul – especially if you want to absolutely obliterate the markets. During your trading, it is imperative that you follow a trading system – a set of rules and criteria on how you not only approach your trades, but how you execute them too. Make sure you are aware of your prop firm’s drawdown limit. After all, you don’t want any nasty surprises.
Journey to journaling
You want to remain consistent with profits and winning trades just as badly as the next successful prop trader. By keeping a trading journal, you can ensure that. A journal helps you go back and understand why you took a certain trade, what its outcome was and what its next move could be. This will help you keep disciplined as a trader and ultimately improve your trading skills. There is always room for improvement.
Patience is a virtue
Most prop firms will give adequate time in order for you to reach your target and/or pass your challenge and evaluation phases. That being said, take your time, be sure to take the right trades that will pay off in the long run. Risk to reward ratios exist for a reason – don’t be impatient.