- Relative strength index (RSI)
- Understanding Candlesticks
- Important Chart Types
- Support and resistance
- Types of Trends
- Bollinger Bands
- Qualities of a super trader
- Risk Management
- Moving averages
- Volume indicator
- Breakouts & Breakdowns
- Identifying trends
- Supertrend indicator
- Contingent liabilities
- Volume, realisation, and revenues explained
- Understanding debt
- Exceptional Items
- PE Ratio
- Outstanding Share Capital
- Book value
- Share Buyback
- Stock Splits
- Understanding Rights Issue
- Bonus Shares
- Technical Analysis
- Various types of Market Participants
- The Basics of Stock Market Analysis
- What is Sensex and Nifty?
- What Is The Stock Market?
- Basics of Investment
- Asset Allocation
- How to Analyze a Balance Sheet?
- Industry Analysis
- Ratio Analysis
- What is share market?
- Stock market guide for beginners
- Share market investment tips
- How does the stock market work?
- What is NSE and BSE?
- Benefits of equity investment
- What are the types of share trading orders?
- What is a circuit breaker?
- Risk management while investing in the share market
- What is an IPO in the share market?
- Show all articles
Qualities of a super trader
Want to know some of the qualities that can make you a super trader? Watch our engaging and easy-to-understand video from the #LearnWithUpstox series to learn more about the qualities of a Super Trader and how to incorporate them.
Welcome back to a new blog of ‘Learn with Upstox’. This series is for educational purposes for fundamental, technical and more things regarding the stock market. This blog will discuss the qualities of a Super trader. The psychology quadrant has a huge role in the success of a trader or his failure. I will give you five points here, some may seem common sense to you, but they will help you a lot in your trading style.
- Focus on the process, not on the profits.
If you focus more on the input rather than the output, that is, if you focus more on the process rather than the profits, you will be more successful. Whether we look at a successful athlete, a successful singer or successful youtubers, why are they successful? Is it because their focus is success or they focus on their skill and craft? If I have to pass an IIT exam successfully, focus on success can lead me to temples to pray, or other methods to get there or I can focus on studying hard.
Let’s take a trading example. We want to buy a trade, we are getting a breakout like say 200 EMA and now the stock is stable, now we should initiate a buy, call or go long. Let’s say, we bought a trade worth Rs. 1,00,000. Now, the fear sets in, what will happen, will I succeed? For most, the next step after buying a trade is looking at their Upstox demat account panel, to follow the profits. 1,000, 1.5, 2, 3…feels good. And the second there is a red candle on the chart, the anxiety sets in, trying to figure out the right time to sell. By doing this, all you are achieving is high Blood pressure(BP). Does this make any sense? Instead of focusing on the demat or P&L, try focusing on the charts. It will make a huge difference in your trading style. Next time you buy a stock, close your Upstox demat panel and only focus on the charts and do not make decisions like pulling out early, being fearful, or stressing. Focus on the process, not the profits. If you do this it will make an immense difference in your life. Focusing on the process means educating yourself on the ins and outs of the trade. This way you won’t have to be dependent on mentors, tips, signal providers, news channels. Education through blogs like these will help you be independent and smart about your decisions.
- Inculcate discipline.
This is not the discipline that you’ve heard all your life. This isn’t about using focus to do something hard. By discipline, I mean, doing the right thing, even when it isn’t easy to do. Now, why would anyone want to do the wrong thing? No one does, but the fact of the matter is that we are human. Humans run on emotions. Discipline is one of the most important characteristics of a successful trader. It means that I have to first plan the trade, and have a strategy of what and how. Then I have to trade the plan, which means I have to execute my strategy as per the plan. If you stick to this simple rule, with discipline, which means no new plans, no new decisions, which is very human in the moment, have patience which is very important, then you will become a successful trader. Discipline is a trait that isn’t borne overnight, but requires a lot of practice. Practice makes perfect.
- Accepting Losses.
No one ever mentions this but this is as important as any other point. One must learn to accept his losses. Everyone wants to make profits, so how do you accept your losses peacefully? We are all traders here, and some of us may have the rare win rate of 80% but nobody in this world has a win rate of 100%. The best are in the 65 – 75 bracket. Hence, losses are an inevitable part of any trading career. You cannot avoid it, but you can learn to manage it. If you check out our risk management blog, you will learn more about the relationship between risk and reward. Always keep your rewards higher than your risks. For this there is the RRR (Risk-Reward Ratio) to set the balance.
That sounds easy, but you also have to learn to manage your psychology. Losses feel bad. But feeling bad can lead to panicked decisions, wrong decisions. This can only lead to more loss. So, avoid the most common problem and start accepting the loss when it is small. Leave the loss of the day behind. Forget about it. Start the next day afresh at zero, not under the pretence of making that loss back. Hold the winners long, cut the losers short.
You can have big profit, small profit, breakeven, small loss, big loss. By just taking big loss out of the mix, you can mitigate small loss with small profit and breakeven, which leaves you with a big profit. Use risk management and loss acceptance to do this.
- Maintain a trading journal.
While everyone has heard of a trading journal, nobody knows how to maintain one. Trading journal is a shortcut to a trader’s self-development. For this you do not need a lot of seminars or training. Whenever you trade, when the market opens in the morning, it is like you are a different person. What is the difference? First recognise the person you become. Am I a very cautious person, or do I tend to be risky, and mainly why?
All you have to do in your journal is note down what you did and why you did it. Note down your trades and the reason behind them in whichever form you want. You will write the quantity you bought, the time you bought it at, if the breakout failed, why did it fail, was your mood upset at the time of making the decision. On weekends, compare your notes through profits and losses and see where the difference lies. Increase what is working, decrease what is not working, and therein lies the success. In a month’s time you will realise that at least 80% of your patterns are repetitive. So, a trading journal will help you avoid repeated mistakes.
- Maintain a balance in life.
As funny as this point sounds, trading is very stressful, even as you sit in one position for hours looking at one screen. It is a high stress business. In a trader’s life, the most important asset is himself or herself. The same goes for me. If I am smart, I will make better decisions. Nobody can even play cricket well or perform in anything under stress. You have to be in a good mood to trade. If you don’t control your stress, losses are inevitable.
For example, if two people were given six hours to cut down a tree, one finishes in 3 hours. As he is leaving, he tells the other one to spare an hour to sharpen his axe on a rock. The other refuses and says he doesn’t have the time. He doesn’t realize his folly. In trading, the axe is your mind. Workout and meditation helps a great deal.
I hope these points help make you great traders, because as simple as they sound, they are actually very effective. Do let us know in the comments below if these help change your trading life.