Let’s talk about the specific quality or characteristic that only super traders have and that differentiate them from the rest of the 99% traders. Whenever someone enters into trading world, he has to face a lot of psychological challenges. Hundreds of writings are available on psychological trading to cover such topics. In fact, our brain works in a specific way and in trading these ways or characteristics came onto the surface. in this article we shall differentiate the trader on the basis of their psychological traits into three basic categories.
When someone starts trading or let’s talk about the most inexperienced traders, they do not know that we have to book the loss in trading and we have to get out of the loosing trade. Like super traders, they do not have any idea about the stop loss order or the risk reward ratio of the trade. These traders buy the stocks and became passive irrespective of the fact that stock is going upward or downward. In case of trader against them, they have to suffer a big loss and at some point, they have to exit the trade. This kind of traders are fall into the first category.
In the second category there are traders who know that there is a stop loss strategy, and we have to exit the trader when our stop loss hits but still there is a gap of becoming a super trader. If I am having loss in some trader then I have to book the loss and get out of the trade. But these are also not the real traders or expert traders as well. These kinds of traders fall into the second category who are in between of the novice traders and
Third Category (Super Trader)
The real profitable trader or super trader is the one who after having a stop loss hit has that much conviction or belief in the trading that he can reverse the trading position. It means super traders have the capacity to take the U-turn in trading. The trader who has this one trait or develop the trait with the passage of time comes under the category of perfect trader. These are the most profitable traders.
For example, you took a trade and set a profit target and stop loss in that trade, and your stop loss get hit, then you should have the capacity to reverse the trade. It means if you had the long position then you can convert it into short position or if you have short position then you can convert it into long position after hitting the stop loss.
This is the quality that less than one percent of traders have and this is the that big quality that can differentiate an ordinary trader from the expert one. Such trader can utilize the maximum of the trend.
Psychology of Super Traders
The biggest difficulty in developing super trader is our psychology. Our mind does not have the capacity to change itself in such a swift amount of time. When you have to take a u- turn it means you have to change the complete conditioning of your mind. If you were thinking in the long direction then quickly you have to think in the short direction and if you were thinking in the short direction then quickly you have to change your mind in terms of long direction. This is such a difficult task to handle.
You can be that much disciplined that you can think that yes, I have taken a wrong trade and I have to exit the trade on stop loss but the mental balance required to reverse the position after hitting the stop loss is not common in every trader and only the super traders in the market have this mental balance or characteristic.
If you learn to take a u-turn in the trading market or if you develop that much conviction in your trading setup, that I have to go with the market. If the market is long, I shall go long and if the market is short then I shall go short that’s it. I have nothing to do with my own thinking. I shall only think that the price is telling me to think and I shall do what the price is asking me to do. When you have that much belief in price, only then you can do it. That’s why we call it the third category or the category of the most expert traders. In this category, traders not only cover their losses by reversing trading position but in fact they also earn profit in the same trade that was going against them.
Let’s see it on chart with the help of some examples.
In the above traders the price is floating at the support area and most of the traders have their long positions at this level. The traders who have long position by looking at the support area have their stop losses just below the support area. As the price moved down, their stop loss orders got hit and they exit the position. At this level where the ordinary traders saw the loosing position, the expert traders saw the opportunity to reverse their orders. So look at the huge price movement in the downward direction.
Through this way the expert traders not only cover their losses of the long trade but also gained a lot of profit by reversing their position into short trade and flow with the price movements. This is actually the belief system or the trust on the price of the market.
Let’s look another example.
In the chart above, the price is at resistance zone and most of the price action traders have their short positions at this level and have their stop loss order just above the resistance zone. As the price violated the resistance area, the stop loss orders of all the traders got hit but only the expert traders reverse their positions into long orders. Through this way they have not only covered their losses of the short trader but also gained a huge amount of profit by reversing their trade into long one and this can be verified with the huge price movement in the long direction as shown in the graph.