Successful prop traders know and understand the financial markets so well that they are able to predict which trades will make money. They’re not just all talk or there to catch the big score. These guys always seem to be on top of their game – and it often has more to do with preparation than finding a strategy that’s right out of a book. Whether you’re new to the trading world or a seasoned pro, there are plenty of things to learn; from trading psychology and beyond. Here are the five biggest things successful prop traders do.
Hustle, discipline & dedication
Successful traders are very disciplined in their approach. They know how to use leverage and work hard to improve their skills daily. They know that most people give up after losing money for a while, but they don’t – they keep working hard until they reach their goals.
These people also have a strong competitive spirit and think like an entrepreneur rather than just an investor or traders. They want to succeed more than anyone else, so they invest more time into their trading than most people would otherwise (e.g., by reading books about trading or watching YouTube forex channels).
Sticking to a system and a process
The best traders will say they’re not in this for quick money. They don’t need to win big to feel satisfied with their day’s work. But what they do need is a system and a process that works. The best traders are the ones who understand how their system works and can repeat it time and time again, even when they make bad decisions or get unlucky.
A profitable prop trader should be able to demonstrate their skill through statistics and data points. Successful prop traders are also good at spotting market trends, especially if they have a long enough history of trading to spot the patterns in price action. This will help them make more accurate predictions about which way the price will move next.
A solid mental outlook on the markets
Successful prop traders can look at the markets calmly and collectedly. They do not get caught up in the hype or get swept away by emotions. They have a solid mental outlook on the markets based on logic and reason, not fear or greed.
Successful prop traders can see situations that other people may not be able to see. They have a keen eye for trends and patterns, which allows them to make informed decisions when trading. A good example is watching how prices move concerning each other over time. The best prop traders will be able to spot where there is potential for price movement and ensure they are ready when it happens.
The more experience you have trading in the markets, the more your mental outlook will improve because you will start seeing things differently. You will also learn to react as quickly as possible when something goes wrong or doesn’t go according to plan.
They understand trading is a game of probabilities and not guarantees
Trading is a game of probabilities and not guarantees. If you think it’s all about making money, then you have no idea what you’re doing. A trader can win on any given trade. The trader must be able to recognize when the odds are in their favor and act accordingly.
The best traders in the world understand this concept and use it to their advantage. They understand that just because something has worked once doesn’t mean it will work again next time. They know that every day brings new profit opportunities, so they don’t get caught up in the excitement of hitting a big move or winning big money on a particular trade because they know that tomorrow might be different than today.
Successful traders also know that there are many ways to make money in this market; some are more efficient than others, depending on your skill set and risk tolerance level. One thing’s for sure: if you want to be successful at trading, you need to learn how to spot those opportunities before they arise because while they may appear at first glance as a sure thing, they’re rarely 100% certain until after the fact.
Taking calculated risks
When starting as a prop trader, getting caught up in the excitement of the markets is easy. There’s so much money to be made that it’s hard not to want to get in on every trade that comes your way.
Taking calculated risks is one of the most important things successful prop traders do. It’s easy to over-trade and lose money when you’re in the market. If you don’t know what you’re doing, it’s too easy for your emotions to get involved, and before you know it, you’re down hundreds of dollars or even thousands.
To make sure that doesn’t happen, you need to be able to assess your risk tolerance and take calculated risks. This can mean taking big positions or small positions. It all depends on how much money you have at stake and how confident you are about the market going forward.
As a general rule of thumb, traders should never put more than 1-2% of their capital into any single trade. The worst thing that can happen is that your results will be mediocre at best and disappointing at worst, so it’s better to err on the side of caution than risk losing all of your capital on an unsuccessful trade! If you’re unsure what the risk-reward ratio should be, then take some time and calculate it yourself.
That’s it for this article, if you enjoyed this one then be sure to check out What are the 3 types of analysis in forex?
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