What are the secrets to becoming a ‘Top Trader?’

If you do enjoy it but haven't the time, discipline and patience to be a Top Trader yourself, then become

Peggy ReedThis guest article was written by Peg Reed who is the SVP Business Development of Ayondo.

What makes a successful trader? Are there certain traits and characteristics that can equip one person to make it as a trader that are lacking in those that cannot? And can these skills be taught and learned or they somehow mystically innate?

Having worked in financial markets most of my career, one of the things I have learned is that traders tend to know their minds and are usually unafraid to speak them. Yet, ask traders these questions, whether in the trading pits of New York and London or the homes of their day trading counterparts in the suburbs, and you will probably get a bewildering variety of responses (with some choice language thrown in for good measure).

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Their answers will naturally be subjective and based on traders’ experiences and views; one person’s living legend may be another’s fool, journeyman, also-ran or simply written off as lucky.

Because, just as beauty is in the eye of the beholder, so are the attributes of a good trader. For some, overall profitability may be the defining measure, for others consistency, breadth of successful strategies, adaptability, or, for those who like a maverick, seat-of-the-pants contrarianism or willingness to take big bets (and winning more than you lose). Or it might be something else entirely.

Peggy_Reed, SVP Business Development, Ayondo
Peggy_Reed, SVP Business Development, Ayondo

For my company, being a ‘Top Trader’ has a very specific meaning related to an individual’s performance track record. It means having a strategy that earns them money not just because of the direct profitability of their trades but also because other traders want to become their ‘followers’ in order to profit themselves from their skills and success. It is called Social Trading.

Each of our Top Trader’s followers represents potential additional income; the most popular Top Traders have hundreds of followers and could potentially earn tens of thousands of dollars/pounds from them (depending on the trading volumes of their followers).

Our system depends on followers being able to monitor and measure the strategies and successes of other traders and adopt them as their own within a portfolio. It’s our belief that Social Trading will revolutionise spread betting, CFDs and other forms of trading because it allows people to trade and earn profits by following the Top Traders, rather than needing to actually be one.

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But, to answer the original question of what makes a top trader, I think there are certain characteristics that they tend to share. Whether they are working for the world’s largest investment banks or trading from a mobile phone on the daily commute, in my experience the best traders will always:

  • Set rules and have the discipline to follow them

The most successful traders I have met will always set rules and parameters and stick to them. From never risking too much in a single trade through to how and when to exit a profitable trade, establishing a tried and tested set of rules and having the discipline required to follow them are hallmarks of top traders. We like to assist our traders with their rules-based approach through a default function that means they cannot trade without first having a stop-loss in place!

  • Do their research

Golfer Gary Player’s quote about “the harder I practice the luckier I get” comes to mind – many good traders will have a hatful of stories about how luck has played a part in their success. Don’t be fooled. It’s no coincidence that only the best seem to get lucky so often. Their ‘luck’ is based on rigorous research and hundreds of hours spent getting to know their chosen markets inside out.

  • Develop and follow a strategy

This is a no-brainer for experienced traders but worth mentioning for any novices who may be reading. Without your own strategy – or someone else’s, in the case of Social Trading – you are very unlikely to forge a successful trading career.

  • Keep a trading diary

Whether it’s a battered old notebook or complex series of spreadsheets, the best traders I know are meticulous in recording their trades – what went wrong, what went right and why (if possible). This helps them to review and assess their trading track-record and hone and enhance their strategies

  • Gain experience and appreciate the value of patience, perseverance and learning from mistakes.

I don’t know anyone who became a top trader overnight. I would say it typically takes at least several months to gain the necessary experience, skills and insights in order to become a successful trader.  That means it also takes patience and perseverance. Top traders will have many (sometimes costly) mistakes behind them. The important thing is that they learn from them and become better as a result.

And finally

  • Enjoy yourself

If you don’t enjoy trading/spread betting, then don’t do it. It takes a certain type of person to enjoy taking the risks that it naturally entails.

If you do enjoy it but haven’t the time, discipline and patience to be a Top Trader yourself, then don’t despair – become a follower via Social Trading.

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