Want to trade more successfully? Develop these 5 healthy habits

Trading in the financial markets can be exhilarating and potentially profitable. However, becoming a successful trader requires discipline, dedication, patience and more. It’s unrealistic to think you’ll make money from every trade, and you have to understand that all trading carries risk. That being said, with the right mindset, trading can be a great hobby or even a full-time job if you really want to immerse yourself.

Whether you’re a beginner trader or have some experience under your belt, incorporating certain practices into your trading routine can significantly increase your chances of success.

Written in collaboration with IG, Singapore’s No. 1 CFD/FX broker¹, this article takes a look at five healthy habits traders can develop to become more successful. Many people say it takes 21 days to form a new habit or break an old one– so remember to be consistent in applying them.

1. Have a plan

One of the most important things a trader can do is to create a well-defined trading plan. A trading plan serves as your roadmap, outlining your goals, strategies, risk tolerance and money management principles.

Here are some pointers you can adopt before you start trading:

1. Take the time to develop a comprehensive plan that aligns with your trading objectives
2. Clearly define your entry and exit points
3. Set realistic profit targets
4. Determine acceptable levels of risk

Remember, a well-crafted plan helps you maintain focus and discipline during market fluctuations. Without a trading plan, these fluctuations can feel like an emotional rollercoaster.

2. Stick to your plan

While having a trading plan is crucial, following it consistently is equally important. Successful traders understand the significance of discipline and self-control when it comes to executing their strategies. It can be tempting to deviate from your plan due to market excitement or fear of missing out (FOMO), but impulsive decisions often lead to poor outcomes. Stick to your predetermined rules, even if the market appears unpredictable or your emotions run high. By adhering to your plan, you can help reduce the likelihood of impulsive, irrational decision-making that you could regret later.

3. Remain clinical, not emotional

Emotions can be a trader’s worst enemy. Greed, fear, and overconfidence have the potential to cloud judgment and lead to expensive mistakes. Successful traders work on developing an ability to remain objective and make decisions based on facts and analysis rather than emotions. Take the time to educate yourself about market dynamics, study technical and fundamental indicators, and learn from those more experienced than yourself. As the saying goes, knowledge is power – and the more you know about how markets work, the easier it can be to approach trading with a clinical perspective.

4. Control the risk

In trading, nothing is more important than risk management. Successful traders understand the importance of preserving capital and limiting losses. Before you open any position, determine the appropriate size based on your risk tolerance and the market conditions. Consider using a stop-loss to automatically exit a trade if it reaches your predetermined level of loss. By controlling risk, you ensure that no single trade can overly jeopardise your overall trading plan.

5. Adapt intelligently

The financial markets are constantly moving, and successful traders must have the ability to adapt intelligently to changing market conditions. Monitor market trends, stay updated with relevant news and events, and be open to adjusting your strategies when necessary. Flexibility is key in trading – you don’t want to get stuck repeatedly doing something that doesn’t work. Continually assess your trading performance, identify areas for improvement, and adapt your methods accordingly.

One final note – be patient. Learning a new skill takes time and effort, and trading is no different. Don’t expect to be wildly successful from the outset. Dedicate yourself to the process, learn as much as you can, practise on a demo account and remember – good things come to those who work!

¹ By total number of client relationships. Investment Trends 2022 Singapore Leverage Trading Report

Losses can exceed deposits. Refer to Risk Disclosure Statement and Risk Fact Sheet at IG.com/sg.  Issued by IG Asia Pte Ltd (Co. Reg. No. 200510021K). This advertisement has not been reviewed by the MAS.