However, this line of work isn’t for everyone. Successful day traders need to be self-motivated, disciplined, levelheaded and financially independent. If you’re thinking about pursuing a career in day trading, compare your own personality profile against this list of key characteristics and personality traits.
1. Personal independence: Since day traders work from home, they need to be motivated to work for their own financial and personal betterment. If you thrive in a regimented office setting, you might struggle with the self-starting nature of this business.
2. Decisiveness: The market can change in a matter of seconds, so good day traders need to be vigilant, quick-witted and decisive. Talented day traders draw on past experiences to read new situations quickly and react appropriately. There’s little room for second-guessing here.
3. Persistence and discipline: Since day traders don’t have hard-nosed bosses telling them what to do at all times, they need to stay on task during trading sessions and commit to intensive after-hours research and preparation sessions. Once they settle upon a profitable strategy, they stick with it until it no longer works.
4. Interest and inclination: Good day traders exhibit enthusiasm for the financial markets long before they decide to go into business for themselves. If you’re naturally inclined to follow stocks, bonds, commodities and other securities, you’ll fit in as a day trader. If you’re not particularly interested in finance or business, you may struggle out of the gate.
5. Experience and familiarity: Traders who are naturally inclined to follow the markets begin with a sizable advantage, but there’s also something to be said for hard-won experience. If you’ve ever worked in a financial capacity, you’ll have an instinctive fluency with the forces that drive the market’s movements. Better yet, you’ll be familiar with the trading platforms and systems that modern traders use.
6. Open-mindedness: The best day traders persistently pursue profitable trading strategies, but few if any find success immediately. Before you get into your short-term trading groove, you must be willing to try multiple strategies in succession. You’ll improve by sticking with what works and discarding what doesn’t.
7. Familiarity with technology: You don’t have to be a programming whiz, but short-term trading demands at least some familiarity with advanced trading and computing systems. More importantly, it requires a willingness to try out new platforms and systems as they become available.
8. Financial independence: Day traders don’t have to be fabulously wealthy. However, they do need to have an adequate financial safety net that allows them to trade with money that they can afford to lose. If you’re living paycheck to paycheck, build up some savings before beginning your day trading adventure. Once you start, keep an additional reserve in the event that you decide to move on.
9. Personal support: While day traders need to be self-motivated, disciplined and rational, they’re rarely total loners. Since their day-to-day existence is so stressful, the most successful traders tend to have strong networks of family and friends to keep them in touch with the outside world. Most are also avid hobbyists who spend their free time on fulfilling projects or adventures.