There are many routes to becoming a professional trader, as well as many skills that a candidate needs to excel in a high-stress, highly-competitive field. When financial firms recruit for trading positions, they tend to look for people with degrees in math, engineering, and hard sciences rather than simply those with finance backgrounds.
There are also different trading jobs, some of which require customer-facing communication skills as much as chart savvy. That said, we’ll look at some of the skills that are required of all traders.
Key Takeaways
- Becoming a trader requires a background in math, engineering, or hard science, rather than just finance or business.
- Traders need research and analytical skills to monitor broad economic factors and day-to-day chart patterns that impact financial markets.
- The ability to focus and concentrate, particularly in a chaotic, fast-moving environment, is an underappreciated but crucial skill for traders.
- Self-control is crucial, as well as the ability to regulate emotions despite developments that could be upsetting.
- Accurate record-keeping is important for trader accountability and for learning and improving.
Analytical Skill
One skill every trader needs is the ability to analyze data quickly. There is a lot of math involved in trading, but it is represented through charts with indicators and patterns fromtechnical analysis. Consequently, traders need to develop their analytical skills so they can recognize trends and trends in the charts.
Research
Traders need to have a healthy thirst for information and a desire to find all the relevant data that impacts the securities they trade. Many traders create calendars of economic releases and set announcements that have measurable effects on the financial markets. By being on top of these information sources, traders are able to react to new information as the market is still digesting it.
Focus
Focus is a skill and it increases the more traders exercise it. Because there is so much financial information out there, traders need to be able to hone in on the important, actionable data that will affect their trades.
Some traders also focus on the types of securities they trade so they can deepen their understanding of a specific sector, industry or currency to the point where it becomes a competitive advantage against less specialized traders.
Most of the required skills are learned, and with a bit of effort, traders can improve their analytical capacity, research abilities, focus, control and record keeping.
Control
Hand in hand with focus is control and, specifically, self-control. A trader needs to be able to control their emotions and stick to a trading plan and strategy. This is especially important in managing risk by using stop losses or taking profits at set points.
Many strategies are designed so the trader loses a little in bad trades and systematically gains more on good trades. When traders start to get emotional about their trades—good or bad—strategy goes out the window.
Record Keeping
One of the most important keys to trading is record keeping. If a trader records the results of his or her trades diligently, then improving is simply a matter of testing and tweaking strategies to find a successful one. It is hard to show real progress if you aren't keeping accurate records.
FAQs
Key skills for traders
- Confidence.
- The ability to analyse data and make decisions quickly.
- Numerical skills.
- IT skills.
- Communication skills.
- An interest in financial markets.
- Analytical skills.
- Interpersonal skills.
Being able to quickly and effectively solve problems is an essential skill in the skilled trades. Attention to detail: Skilled trades jobs often require precise measurements and careful attention to detail. Being able to accurately follow instructions and pay close attention to your work will be key to your success.
What skills do you need to be a stock trader? ›
Examples Of Stock Trader Skills
- Analytical skills. The stock market can be extremely volatile, and traders analyse market trends to make sound investment decisions. ...
- Math skills. ...
- Financial literacy. ...
- Data-based forecasting. ...
- Risk quantification. ...
- Knowledge of derivatives. ...
- Investor sentiments analysis. ...
- Interpersonal skills.
The Five-Step Process Behind Every Trade
- Step One: Discovery. Goal: Find potential stocks to trade. ...
- Step Two: Analysis. Goal: Analyze a set-up to determine if there is a trade opportunity. ...
- Step Three: Game Planning. Goal: Plan your trade. ...
- Step Four: Execution. Goal: Trade your plan. ...
- Step Five: Post-Trade Analysis.
Skilled Trades are careers that often require less schooling and debt than a four-year degree. These jobs are in demand for fields like healthcare, information technology, advanced manufacturing, construction and automotive.
What is a skill of the trade? ›
What Are Trade Skills? There are several different fields of employment that fall under the classification of a skilled trade. This can include electricians, welders, plumbers, carpenters, and more. Trade skills commonly require specialized training from technical or trade schools.
Is there skill in trading? ›
One skill every trader needs is the ability to analyze data quickly. There is a lot of math involved in trading, but it is represented through charts with indicators and patterns from technical analysis. Consequently, traders need to develop their analytical skills so they can recognize trends and trends in the charts.
What is the best skill trade? ›
Highest Paying Trades
- Highest Paying Trades. ...
- Construction Management – Median salary $98,890 per year. ...
- Elevator Installers and Repairers – Average journeyman's salary is $97,900 per year. ...
- Aircraft Mechanics – Average salary $71,115 per year. ...
- Boilermakers – Range from $58,500 to $84,000 per year.
Trades resume skills are a category of abilities that relate to any trade, such as plumbing, carpentry or painting. These skills may help qualify you for many types of positions that use a specific trade or help illustrate your overall experience in various areas.
Is trading a hard skill? ›
Like all other skills, trading prowess is something to be acquired through training, coaching, and strong dedication. There are techniques to learn, practice, and master. But simply mastering these techniques will not bring success alone.
Often, trade professionals attend a vocational or trade school where they receive focused education in their chosen field to learn these skills. Apprenticeships and on-the-job training are other popular methods of learning a new trade. Trades exist across a broad range of industries.
What is the 5 rule in trading? ›
5% Rule: This rule applies to the total risk exposure across all your open trades. It recommends limiting the total risk exposure of all your trades combined to no more than 5% of your trading capital. This means if you have multiple trades open simultaneously, their combined risk should not exceed 5%.
What is the 6 rule in trading? ›
Rule 6: Risk Only What You Can Afford to Lose
Traders must never allow themselves to think they are simply borrowing money from these other important obligations. Losing money is traumatic enough. It is even more so if it is capital that should have never been risked in the first place.
What are the golden rules of trading? ›
Key Rules from Iconic Traders
Trade with the trend: Follow the market's direction. Do not trade every day: Only trade when the market conditions are favorable. Follow a trading plan: Stick to your strategy without deviating based on emotions. Never average down: Avoid adding to a losing position.
What kind of person makes a good trader? ›
Good day traders adhere to their trading plan strategy and avoid entering or exiting positions at the wrong moment – that is patience. They are vigilant and alert to key market indicators and when the right moment arrives react quickly without second guessing themselves – decisively.
What is the key for successful trader? ›
Part of being a successful long-term trader is having a simple plan that is easy to stick to. Keeping it simple makes it more likely that we will follow it. It also makes it easier to change and adapt to the fluctuating markets. Also, we want to make sure that our trading plan aligns with our personality.
Is trading a high income skill? ›
Trading can be a high-income skill if done correctly. However, several factors affect how much you can earn from trading. These include: Experience: The more experience you have in trading, the better your chances of making a profit.
