How to Think Like a Billion-Dollar Trader

Billion-Dollar stock traders exhibit a number of common personality traits and practiced skills. They are able to read and understand a company, from its inner workings to its fundamental principles. In addition, successful market traders are able to examine the current market and foresee coming trends so that they are more quickly act.

However, none of these abilities is as imperative as traders’ abilities to withhold their own emotions and maintain professional discipline.

The Mindset of a Trader

The stock market is a tough arena, even for experienced traders. These traders quickly buy and sell stocks on extremely short notice in order to capitalize on the current market. This fast-paced environment and demand for quick decisions can really rattle day traders. Those with the highest level of calm and professional distance are typically most successful. These individuals are able to create a trading plan, stick to it, and manage their wins and losses without letting their personal emotions cloud their judgment.

Fear Awareness

In the ever-changing world of the stock market, traders watch their screens as the values of stocks rise and fall with each passing minute. These screens can change to pulsating red at a moment’s notice, a sure sign that a particular stock is taking a nosedive. For some traders, the moment that their screens cut to scarlet leads to immediate fear and the need to liquidate their holdings. This is an over-reaction and a sign of fear. Such over-reactions and fear typically lead to unavoidable losses, and these traders are less successful. Fear is a natural reaction to a problematic situation, especially one involving large sums of money. When expensive stocks take a dip in value, it is unsurprising that these traders feel their business is threatened, and they react irrationally in protection of their assets.

Successful traders are able to take a professional step back from this situation, reassess their options, and make the most logical decisions without being influenced by emotions. These professionals can foresee their possible emotions and reactions and take steps to maintain their trades. This is not easy for most people, but a certain detachment is necessary to make the best profit decisions.

Avoid Greed

Equally as detrimental as fear is the greed for more profit and more success. Traders that experience a winning run in the market are often tempted to hold on too long, until their positions and potential returns are greatly diminished. It can be very difficult to suddenly walk away from a valuable and successful investment. This is another reason that a trade plan is necessary. Successful traders are able to develop their plans based on logical business decisions rather than emotional attachments or sudden instincts.

Photo by Barta IV