Every year, millions of traders test their skills in the financial markets, but most of them are destined to lose their shares and walk away with their tails caught. A few people are not afraid of hardships and continue to create profits for a long time, creating the wealth, security and happiness that others dream of. So, what distinguishes these elite traders from the mediocre ones, and how can you obtain membership in this exclusive club?
First, let us consider what is not needed to be an elite trader. You don’t need to take a special course or move to Manhattan and work on Wall Street for a year or two, although many elite traders follow this path. You also don’t need a lot of shares to start your journey, because you already have the tools to create wealth slowly and steadily.Finally, you don’t need to trade in an item shop Environment, go to work every morning, sympathize with other like-minded people.
So, how can you stand out and enhance your trading results?
Treat trading as a business
First, treat trading as a business, not a hobby or slot machine. This requires effort, because most people are burdened with deep-seated money problems, and these problems will surface during the risky process. Overcome these disadvantages by drafting a business plan, develop a budget for the required tools (such as real-time news and charts), and list the markets, tools, and strategies you will trade. (See: What you need to be an elite trader.) Use real snapshots of monthly and annual profit targets to complete your plan.
Record keeping and taxation
As with any business, keeping accurate, organized and up-to-date records for your trading business is very important. It is a good idea to have digital and hard copy backups of important transaction related documents, including:
Your trading plan:
- Plan description
- Planned programming/coding (if applicable)
- Input (for example, the length of the moving average)
- Past version of the plan
- Broker organization
- Should be checked once a month (error does occur)
- Record of your transaction activity
- List of important phone numbers (ie brokers, ISPs)
- Economic calendar
- Market holidays at a glance
- Renewal date
- Troubleshooting checklist
Save these digital copies in a folder on your computer, and save the hard copy of each copy in a dedicated “trading binder” with separators for each part.
Beyond the file
In addition to relevant documents, staying organized as a whole makes it easier to become an effective business owner and trader. For example, your office and trading desk should be organized, free from clutter, and equipped with necessary office supplies. Things like calculators, paper and pencils, your transaction log, and lists of important numbers should be easy to find.
It is also helpful to have a structured approach to research and development of your trading plan. This largely boils down to well-thought-out research methods so that you don’t waste time repeating the work that has already been done. For example, by tagging different versions of a trading plan methodically, you can find what you need more easily. For example, your counter-trend strategy may start with CounterTrend V1.0; after modification, the next version can be saved as CounterTrend V1.1.
Track your taxes
The IRS expects you to abide by the same tax laws as investors, unless your trading activities reach a certain level and obtain “trader tax status.” Active traders can make mark-to-market (MTM) options for tax purposes, which can deduct certain transaction-related fees, such as platform fees and education fees.
Not everyone is eligible for MTM status, and not everyone wants it. If you make this choice, all your positions must be counted as closed at the end of the year; regardless of whether they are actually closed or not, all related taxes will be due.
Although securities dealers in particular may benefit from MTM elections, it may be detrimental to futures and commodity dealers because they usually enjoy more favorable tax treatment in the absence of elections. Reversing the MTM election can be difficult; if you are considering making a choice, you should consult a qualified CPA, tax expert or lawyer with experience in trading tax issues before making any decision.
Transaction tax laws are complex and subject to change from time to time. Therefore, finding qualified professionals to handle your taxes is usually worth the expense and effort. If you work with a certified public accountant, tax expert, or lawyer, keeping a good record can reduce the pressure on tax time, and even cheaper.
Specialize in something
Become an expert early in your trading career and choose a specific market and style that suits your temperament and knowledge base. You need to find and master multiple trading advantages, where the positive results of a particular strategy can be reproduced at will in dozens of positions. All effective edges have one thing in common-strive to control risk before seeking profit. Master this single concept and you will smoothly move towards elite status.
What it takes to become an elite trader
Choose your information sources wisely
It’s easy to be attracted by the media circus and watch endless conversation leaders express opinions that have nothing to do with your daily workflow. Instead, turn off the TV and subscribe to a real-time news service to let you know the facts and not be affected by prejudice or emotions. Add a curated Twitter feed, follow no more than 75 carefully selected sources, and you will see the same news flow as the best news on Wall Street.
Find quality mentors
Now is the difficult part. To become an elite trader, you need to learn from the best. This is a daunting task, because self-styled masters are everywhere, peddling in their chat rooms and newsletters. Unfortunately, few of these people have the information, experience, or long-term track record needed to elevate your trading game to elite status.
However, instead of avoiding these people when looking for a mentor, try as many teachers, styles and methods as possible Find out what suits you and what doesn’t suit you. In the process, you will meet some helpful teachers who will gain life-long trading knowledge.
Take good care of yourself
Depending on your current lifestyle, your ultimate task may be the most difficult. Once you choose to take the elite path, you need to monitor your personal habits and relationships. Drug use, malnutrition and insomnia can weaken the intelligence needed to withdraw money from the market every day. Coupled with marital discord or quarrels with your parents, your money and discipline are more likely to be lost due to your position.
Understand the deep connection between your feelings and your bottom-line results. The financial market is the worst place to deal with personal problems, so clean up your behavior and quit smoking, go to the gym, and buy flowers for your spouse. You have important work to do and you need to do your best to trade in your game.
Elite traders take the financial market seriously, always weighing risks and potential returns. They honed their skills through detailed record keeping, carefully selected data sources, clear trading advantages, and lifelong connections that guide them to higher levels of achievement.