Swing trading is not just about finding a strategy, practicing it, and then making oodles of money. swing traders develop certain traits, which in turn allow them to implement a strategy effectively, in all market conditions. When someone starts trading, it’s unlikely they will possess all these traits. They may be strong in one, two, three or four of them, but need to work on the other traits. That’s good news. It means successful traders aren’t born; they develop, through arduous work focused on these traits:
Discipline is a key trait every trader needs. The market gives you infinite opportunities to trade. You can trade thousands of different products, every second of the day, yet very few of those seconds provide great trading opportunities. If a strategy provides about 5 trades a day, and stop losses and targets are automatically set for each trade, then there are only about 5 seconds of actual trading activity during the course of the day. Every other second is a chance to mess up those 5 trades, taking more trades than you should, getting distracted or skipping trades, prematurely exiting the trades you are in, or holding trades too long.
That doesn’t mean your trades only last 5 seconds see How Long to Hold a Day Trade; 5 seconds of activity means it only takes one second to place an entry order, and then you need to sit on your hands again. If you adjust your stops and targets, this may take another second. The bottom line though is that your actual trading time is minuscule each day, even if you’re an active day trader. The rest of the time you need to sit there, disciplined, waiting for trade signals. When a trade signal occurs, you need to act without hesitation, in accordance with your trading plan.
Traders require the discipline to do nothing when there are no opportunities present but must still stay alert for potential opportunities. Then, they need the discipline to act instantaneously when trading opportunities occur. Once in a trade, traders require discipline to follow their trade plan.
Patience is related to discipline. As discussed above, swing trading (and trading of all types) requires a lot of waiting. When a trader is entering or exiting the market at inopportune times, they will often say “My timing is off.” One could also say “My patience is off.” Jumping into, or out of, trades too early or too late is a rampant problem among new traders. They simply haven’t developed their patience enough to wait for the great entry and exit. This goes hand in hand with discipline, and you need to be patient until there is a call to action, then you need to have enough discipline to act without hesitation.
Traders require patience in waiting for their ideal entry and exit points (based on their strategy), but when the moment calls for it, they need to act swiftly. There is a constant seesaw between prolonged periods of patience, followed by split-seconds of action, which are then followed by patience, and so on.
You will never see two trading days that are exactly alike. This poses a problem when someone only looks at textbook examples of a strategy. When they go to implement it, everything looks different than it did in the example. Maybe there is more volatility, less volatility, a stronger (or weaker) trend or a range.
Successful traders implement their strategies in all types of market conditions and know when they shouldn’t use their strategies (for example, during a range if they use a trend following strategy). This requires mental flexibility. A trader must be able to look at the price action of each day and determine the best way to implement (or not implement) their strategies, based on the conditions that are present that day.
Traders must be able to implement their strategies in real-time, in all market conditions, and/or know when to stay away. Not adapting to current market conditions will often result in a swift drawdown of capital.
Initially, you’ll likely get some help with your trading, whether it’s from reading articles or books, watching trading videos, or receiving mentoring. Ultimately, though, it’s you who will place your trades and determine your own success.
Eventually, traders must develop a sense of independence, no longer relying on others. Most traders choose this path because they find it to be the most profitable. Once you have a trading method that works for you, you don’t want other people’s opinions. You do what works for you, and that is that.
Other traders must learn independence the hard way. They bounce from mentor to mentor, or trading book to trading book, always feeling like they are missing something. Or the service they subscribe to shuts down, and now they have no idea how to trade because they relied too heavily on someone else. If you develop independence, taking responsibility early on for your own education, profits, and losses, you won’t have these problems down the road.
Independence isn’t taking on the world alone. Get help whenever you need it. Independence is just developing a trading style that works for you (whether someone else helps you or not). Independence is about working to build your own personal toolbox, so you can remedy your own trading, instead of relying on others (who may not always be there when you need them).
If you are just beginning your trading journey, start developing your independence now. Take the information others offer, analyze it for yourself, make it your own and master it. That way you don’t need to rely on them anymore.
The Final Word on swing Trading Traits
Most Swing traders aren’t born with all these traits, rather they possess a few, and must work rigorously on the others. You can learn these traits, which is a positive thing because it means successful swing trading is determined by you, and not necessarily your genes. Some of us are prone to certain weakness, but we can offset these with strengths which can help us mitigate the damage of our weaker qualities.
Take a personal inventory of what qualities you need to work on, and what your strengths are. Ideally, take this inventory based on trading experience, since trading tends to expose vulnerabilities and strengths we didn’t know we had. The personal inventory requires looking at your discipline, patience, adaptability, mental-toughness, independence and forward-thinking.
I hope you have learned something from today’s lesson, if you have any question and opinions please leave them in the comment section below: