The habits of successful traders are mostly unglamorous: regular time set aside to learn, a focus on trading well rather than on money, steady practice, and an honest record of progress. Below is our October 2017 post on them, then how we practise each habit today.
Quick answer: what habits do successful traders have?
Five habits we keep coming back to: 1) protect regular time to study and practise, 2) judge yourself on the quality of your trades rather than the money, 3) invest in your skills before your account size, 4) keep learning, testing new ideas at small size, and 5) track your progress with a journal and a monthly review.
Our original post: 5 habits, October 2017
We first published this post in October 2017 as “5 Habits of Successful People”. The surviving original words are kept below. We have removed account-size and performance claims, a passage about reinvesting every penny and old link prompts.
1. Don’t settle for 9-5
Editor’s note: we have cut a passage about leaving a job. We would never suggest giving up an income to trade; the point is using the hours you already have.
There are 24 hours in the day. If you’re working 9-5, and you sleep 8 (this is being generous, you can live off much less) that gives you 8 more hours to be learning, practicing and studying. When I started learning to trade I would work my job 8-6 every day, come home and learn to trade until 2am before hitting the sack. This lifestyle was hard, and I wished someone had created a space for beginners.
2. Don’t be driven by money
This may sound counterintuitive, since the thing that probably got you reading a blog on a trading website was the desire for money. The issue lies in the fact that the more desperately you try and take money from the market, the more likely you are to throw your money away. You will take poor set-ups, you will trade too much, and you will inevitably take on excessive risk. This is what losing traders do, and what you should avoid at all cost.
You should be driven by high quality trading. There is nothing more satisfying than having profitable month after profitable month and the realisation that you are becoming a good trader. If you ‘learn before you earn’ you will have a much smoother ride.
3. Invest in yourself
Editor’s note: the original paragraphs here were about putting every penny into the markets. We have removed them, because we would not suggest anyone puts their savings at risk. Habit 4 opens with the version of this idea we stand by.
4. Learn… constantly
The best way you can invest in yourself is to invest in your mind. You should always be trying to learn new things, try new concepts, and ask new questions. Not only because it will help you develop further, but because it keeps things interesting!
Constant experimentation pays off. I had never traded a news event before November 2016, but I thought my system would work – so went for it in the name of science.
Therefore I sat up all night watching the Trump Election with USDMXN (Dollar – Mexican Peso) open on the 5 minute chart (I had also never traded such a short time-frame). I got caught in 3 false breakouts (a loss of $600) before I caught the big move and took home $4000, simply because I was intellectually curious and wanted to try something new.
Editor’s note: that trade is historical, from November 2016, and it started with three losses. Today we would test an untried idea at a much smaller size first: news spikes move fast, and with leveraged products a loss can run past your stop.
5. Track your progress
If you don’t know where you’ve come from, how can you know where you’re going?
Take some time to step back and take a serious look at what you’ve been doing and what you’ve accomplished, because setting realistic goals can be both a very scary and humbling experience. Looking back at my trade history and my P/L is sometimes a bit of shock because it’s too easy to get caught up in what’s going on and forget that you’ve lost trades in the past.
I now note down my equity every night, calculate how much of a drawdown I’m in, and look back through my trades every month. This way I know exactly how I’m progressing at all times, and you very quickly learn what’s working and what isn’t. It’s a good habit to get into to keep you on the right path and help find out what works for you.
Why habits beat willpower at the trading desk
A habit does its work before the pressure arrives. Research on traders points the same way: a study of traders at four City of London investment banks, deposited with LSE, found that those who used antecedent-focused strategies for regulating emotion had a performance advantage over those relying mainly on response-focused ones.
Antecedent-focused means shaping the situation before an emotion builds, rather than fighting it once it has. A fixed study slot, a written plan and a risk figure set the night before are all antecedent habits. Trying to calm down after a bad trade is the response-focused version, and it is where problems like revenge trading after a loss begin.
The study was qualitative and looked at professionals, so it does not prove any one routine works for a retail account. Our guide to the five psychological hurdles traders face shows where each habit helps.
How we practise each habit today
Each habit can be turned into something you do, and check, every week.
| Habit | In a normal week | How to check it |
|---|---|---|
| Protect study time | Fixed sessions in the diary | Sessions booked vs done |
| Process over money | Every trade scored on the plan | Trades that broke a rule |
| Invest in skills | One topic studied in depth | Notes you could teach from |
| Learn and test | New ideas at small size only | A written test log |
| Track progress | Nightly equity note | Monthly drawdown and review |
A weekly routine
- Book your study sessions in the diary, around work and family.
- Score each trade before you look at the P&L. Mark it “followed plan” or “broke plan”, using the rules from our guide on how to create a trading plan with a fill-in template.
- Test new ideas small. Try it on demo or at minimum size; see when to move from demo to live trading covers the trade-offs.
- Keep the journal short. A few lines per trade in a trading journal for beginners is enough.
- Review weekly and monthly. Run a weekly review of your trades, then a monthly look at what is working.
Worked example: tracking progress for a month
Example: a hypothetical trader starts the month with a £4,000 account and notes the equity every night. Mid-month the account peaks at £4,120; by the last week it is £3,980.
The drawdown from the peak is £140, about 3.4%, and the trader knows the figure exactly. The monthly review shows 18 trades, 14 that followed the plan and 4 that did not, and most of the drawdown came from those 4.
That points to a habit to fix, not a strategy to throw away. With spread bets or CFDs, leverage means a few rule-breaking trades at the wrong size can lose more than planned. Our guide on how much to risk per trade explains how to keep each loss small.
Common mistakes
- Studying only when the mood strikes. A habit needs a fixed slot.
- Setting a money target for the day. It pushes you towards poor set-ups, the pattern described in our post on characteristics of losing traders.
- Tracking only profit. Record whether you followed the plan too.
- Expecting results within weeks. Our guide to how long it takes to learn trading sets out realistic stages.
Frequently asked questions
What are the most important habits of successful traders?
The ones you can repeat and check: regular study, judging trades by process rather than money, testing new ideas small and keeping a record.
Do I need to trade full-time to build these habits?
No. The original post was written by someone who learned around a full working day, and a part-time routine removes the pressure to make money from every session.
How long does it take to build a trading habit?
There is no fixed number of days. Start with one, such as the nightly equity note, and add the next once it no longer needs reminding.
What should I track besides profit and loss?
Track whether each trade followed your plan, your drawdown from the last peak, and a short note on how you felt.
Next steps
Pick the habit your journal shows is weakest and practise that one for a month. Our post on the traits of successful traders covers the discipline and patience behind these habits, and which type of trader you are helps you fit a routine to your week.
Our price action trading course runs from building a foundation to trading psychology, and the basics section is free to start.
This article is for education only and is not financial advice. Trading leveraged products such as CFDs and spread bets carries a high risk of losing money.
