There are a Few very simple but also very important things that profitable traders do and others don’t.

So, if you are a beginner trader, you are going to get some good amount of value from this article.

So let’s deep dive into it, shall we?

1. They never fight with the markets

One of the most important qualities of a profitable trader is that they are okay being wrong!

The traders who lose the most are those who have a big Ego, for them winning on each and every trade is very important.

By doing this they keep on holding their losing positions, which leads to a big dent in their trading account.

This is because of “Extreme conviction”.

Having confidence in your trading system is necessary to become a profitable trader, but too much conviction on a bet might lead you to take some extreme risk, like holding your losing position or worse, i.e adding to losing position.

I have seen so many traders fall into this trap, where the setup was very compelling. They took the trade, but then it didn’t work out, but they kept holding to it looking for signs of reversal.

But at last, they lost a huge amount of money with a big dent in their psychology, which leads you to go into a fear mindset.

This is one of my favorite quotes from Dan Zanger “Never believe in your stocks, only your stops”.

Whatever the charts might be showing, even if it’s the best of the best setups, if it hits your SL level, just exit!

Don’t get attached to your positions, even if the market reverses again, there is always an option to re-enter right?

If the markets are saying you are wrong, just humbly accept it and move on to the next trade.

2. They never compare themselves with others.

Theodore Roosevelt famously said, “Comparison is the thief of joy.”

He was right.

The problem with most of us is that it’s never about us, it's always about someone or something else.

We always compare ourselves with the guy who has 100k followers on Twitter, the one who is driving a Lambo, the one who has a more beautiful girlfriend, the one who is making Lakhs every day.

You look at that guy and think “ Zindagi ho to Aisi ho” Right?

Well, there are a few problems in comparing ourselves with others:

1. Most of the time we are comparing our behind-the-scenes with everyone else’s highlight reel.

On social media everyone shares the best of their lives, the best trades they took, but no one shares their mistakes, the trades in which they lost money.

Why? Well it looks embarrassing that someone who has a huge following can also go wrong, though not everyone is like that.

But, when we look at their profiles, their lives look so perfect, that you feel bad about your current situation.

Especially in trading, if someone is making more than what you are making, most likely you will feel jealous of him.

But, as I said you should understand that most guys usually don’t show their P&L when they get it wrong, so IMO you should focus on giving your best efforts to improve your trading and not on what others are making/doing.

2. Comparison can be motivating as well as destructive.

When you look at someone else making more money than you, It could be motivating as well as destructive, how?

It could be motivating for some, as they take it as an example of what is the potential in trading, and how much they could make if they keep putting in the effort.

But, it could also be destructive, if one tries to imitate the same performance but with less knowledge and capital, one is bound to make some big mistakes!!

This is one of my favourite quotes :

"Life is an exam that many people fail because they try to copy others, without realizing that everyone has a different paper"

3. They focus on the process, not the results.

“If you focus on the goal and not the process you inevitably compromise, Businessmen who focus on the profits wind up in the hole. For me, profit is what happens when you do everything else right”

~Yvon Chouinard

Most of us are so focused on the results, that we forget to understand the fact that it’s the process that affects the results.

If we just focus on executing our edge perfectly over a long time, then there is a high probability that we will end up making a lot of money.

But once we start focusing just on the results (P&L), the green and the red M2M’s start playing with our mind, and it doesn’t take you long to break your rules, and you end up getting into trouble soon.

We should understand that P&L does not show the truth in the short term.

In the short term, You can do everything wrong and still end up making a lot of money.

And a system with a positive edge can lose money during the same period.

So, by looking at the short-term results, the first scenario is looking better.

But, You should know that a system with positive expectancy is likely to make money in the longer term, so a trader’s job is to just execute his plan and let the probabilities unfold.

When you stop getting affected by the short-term fluctuations in your equity curve, and just solely focus on the execution, that is when you should consider yourselves a good trader.

4. They always hold themselves accountable.

One of the required qualities to become a profitable trader is that one should accept that they are responsible for their results in trading.

The best traders don’t blame their brokers, internet providers, news channels, algos, etc.

They always try to have a contingency plan for everything they do/use in trading.

I also see traders complaining about their small accounts as the reason behind their losses.

IMO it's not, see the problem is it's easy to blame something or someone else than asking yourself some tough questions.

It's hard, right?

You would blame your broker again and again for their glitches, but you won’t change it, why? Because you are comfortable.

Then why were you complaining in the first place?

Nothing is going to change Until you don’t accept that it’s you who is in charge, and you have to take action to get things falling in the right place.

5. They follow the mental model known as the Circle of Competence.

A circle of competence is a set of topic areas that align with a person’s expertise.

It’s basically about finding your area of expertise in whatever you do.

If we take the example of the trading world, there are many ways to make money like:

1. Equity cash trading.

2. Options trading, Option buying, Option selling

3. Directional / Non-directional.

4. Futures

5. Intraday/positional/long term

6. Discretionary / Mechanical trading

So, there are 100’s of opportunities available every day in the market.

But can we catch all of them?

No, right?

But that’s what most traders do, when they get bored or when their system is not giving any signals, they try to do something new, just for fun, right ;)

This is the recipe to lose money in the markets.

Say your area of expertise is cash trading, but now the market is not favorable for your type of trading, and you see the options guys making a lot of money.

So, you say to yourself, Let’s try some options trading. If I can make money in cash, I can make money while trading options too, how hard can it be?

You try the same, and end up losing a good amount of money.

What’s the lesson here?

If you are playing outside your circle of competence, you are just gambling.

To become a successful trader, you need to have a deep understanding of one thing (circle of competence) and then you just have to stay within that circle to keep making money over the long term.

Now, you might have a question, how can one grow if they stop trying new things.

See, you have to understand that the Circle of competence is not static, it’s dynamic, it can become bigger or smaller.

And it can’t be built overnight, it takes a lot of time, hard work, and perseverance to build your circle of competence.

The circle of competence is basically about finding what you know really well, and what you don’t.

So, if something excites you, but it’s out of your circle of competence, start reading about it, do some research, put in some work right, then put in a fraction of your cap into that thing, but just don’t jump and start doing something new every day, that is pure gambling.

While staying inside your Circle of competence, you might feel like you are missing a lot of opportunities, but at the same time, you would also save yourself from making a lot of stupid mistakes.

This is one of my favorite quotes from Charlie Munger “ Risk comes from not knowing what you’re doing”

So, that’s it for today from our side, if you learned something from this article then do share it with your friends over social media.

Thanks for reading.