Characteristics and Personality Traits of a Good Day Trader - dummies

Characteristics and Personality Traits of a Good Day Trader

Part of Day Trading For Canadians For Dummies Cheat Sheet

Day trading is a great career option — for the right person in the right circumstances. Being a successful day trader requires certain personality traits like discipline and decisiveness, as well as a financial cushion and personal support systems to help you through the tough times. Think you have what it takes to go into business for yourself as a day trader? See how many of these characteristics apply to you:

  • Discipline: Day traders maintain strict discipline about how they approach their trading day and what they do during market hours.

  • Independence. Most day traders work at home, alone. If being in charge of your own business and your own trading account sounds exciting, then day trading might be a good career option for you.

  • Quick-wittedness. Day trading is a game of minutes, so a day trader can’t be deliberative or panicky. Traders have to have act quickly when they see a buy or sell opportunity.

  • Decisiveness. Can you make a decision and act on it? Can you assimilate information quickly into a good strategy? If you screw up, do you figure out what you did wrong? If so, you have the basic personality of a good day trader.

  • Persistence. Good day traders are persistent. After they find a strategy that they trust, they stick with it.

  • Tech-savvy. If you like to mess around with programs, don’t mind maintaining your computer, and understand how to set up your hardware efficiency, you’re in good shape for day trading.

  • Interest in the markets. If you watch the business news for fun and have been following the securities business for years, you might be a good candidate for day trading. An understanding of the cycles and systems that drive securities prices will give you a foundation on which you can build.

  • Investing experience. If you’ve invested in the past, you’ll know some of the language and limitations of the markets. And that will give you a base to work from.

  • Knowledge of trading systems. It can take a long time to find a strategy that works enough of the time to make it worth your while. If you’ve taken the time to create and test a good strategy, then you’re ready to go.

  • Can afford to lose money. You shouldn’t be day trading with money you need to live on. Be sure to set aside enough money to cover your living expenses while you get started. And keep a second pot of money, your walk-away fund, so that you’re free to quit day trading and move on to your next adventure if you decide it’s not for you.

  • Has a strong support system. Trading is stressful. The markets gyrate with news events that no one can foresee. Good day traders are psychologically strong. They have people and activities in their lives that help give their brains a break from trading, ranging from regular exercise routines to good friends to hobbies.