5 Skills That Traders Need

 Andrew Beattie

Updated Aug 27, 2019

There are many routes to becoming a professional trader—and many skills 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. (See Trader Vs. Investment Banker: Which Is Right For You?)

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.
• Also crucial, in terms of temperament: self-control, and the ability to regulate emotions despite developments that could be upsetting.
• Accurate record-keeping is important for trader accountability and for learning and improving.

1. 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 from technical analysis. Consequently, traders need to develop their analytical skills so they can recognize trends and trends in the charts.

2. 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. 

3. 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 in 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.

Skills are learned, and with a bit of effort, traders can improve their analytical capacity, research abilities, focus, control and record keeping. 

4. Control 

Hand in hand with focus is control, or 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. 

5. 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.

3 Simple Steps to Building Wealth

By Investopedia

Updated May 15, 2019

Building wealth is a hot topic that sparks heated debate, promotes quirky "get rich quick" schemes, and drives people to pursue transactions they might otherwise never consider. "Three Simple Steps to Building Wealth" may seem like a misleading title, but it isn't. While these steps are simple to understand, they're not easy to follow.

The Steps

Basically, building wealth boils down to this: To accumulate wealth over time, you need to do three things:

1. You need to make it. This means that before you can begin to save or invest, you need to have a long-term source of income that's sufficient to have some left over after you've covered your necessities.
2. You need to save it. Once you have an income that's enough to cover your basics, you need to develop a proactive savings plan.
3. You need to invest it. Once you've set aside a monthly savings goal, you need to invest it prudently.

This makes a simple equation: 

Savings=Income−Spending\text{Savings} = \text{Income} - \text{Spending}Savings=Income−Spending

Step 1: Making Enough Money 

This step may seem elementary, but for those who are just starting out, or are in transition, this is the most fundamental step. Most of us have seen tables showing that a small amount regularly saved and compounded over time can eventually add up to substantial wealth. But those tables never cover the other sides of the story – that is, are you making enough to save in the first place? Keep in mind that there's only so much you can cut in costs. If your costs are already cut down to the bone, you should look into ways to increase your income. Also, are you good enough at what you do and do you enjoy it enough that you can do it for 40 or 50 years in order to save that money? 

There are two types of income – earned and passive. Earned income comes from what you "do for a living," while passive income is derived from investments. This section deals with earned income.

Those beginning their careers or in the midst of a career change can think about the following four considerations to decide how to derive their "earned income":

1. Consider what you enjoy. You will perform better and be more likely to succeed financially doing something you enjoy.
2. Consider what you're good at. Look at what you do well and how you can use those talents to earn a living.
3. Consider what will pay well. Look at careers using what you enjoy and do well that will meet your financial expectations.
4. Consider how to get there. Determine the education requirements, etc., needed to pursue your options.

Taking these considerations into account will put you on the right path. The key is to be open-minded and proactive. You should also evaluate your income situation annually.

Step 2: Saving Enough of It 

You make enough money, you live pretty well, but you're not saving enough. What's wrong? There's only one reason why this occurs: Your wants exceed your budget. To develop a budget or to get your existing budget on track, try these steps:

1. Track your spending for at least a month. You may want to use a financial software package to help you do this. Make sure you categorize your expenditures. Sometimes just being aware of how much you are spending will help you control your spending habits. 
2. Trim the fat. Break down your wants and needs. The need for food, shelter, and clothing are obvious, but you also need to address less obvious needs. For instance, you may realize you're eating lunch at a restaurant every day. Bringing your own lunch to work two or more days a week will help you save money.
3. Adjust according to your changing needs. As you go along, you probably will find that you've over- or under-budgeted a particular item and need to adjust your budget accordingly.
4. Build your cushion – you never really know what's around the corner. You should aim to save around three to six months' worth of living expenses. This prepares you for financial setbacks, such as job loss or health problems. If saving this cushion seems daunting, start small. 

1. Get matched! Contribute to your employer's 401(k) or 403(b), and try to get the maximum your employer is matching. 

See also: 4 Best Personal Finance Apps

The most important step is to distinguish between what you really need and what you merely want. Finding simple ways to save a few extra bucks here and there could include programming your thermostat to turn itself down when you're not at home, using regular unleaded gasoline instead of premium, keeping your tires fully inflated, buying furniture from a quality thrift shop, and learning how to cook. This doesn't mean that you have to be thrifty all the time. If you're meeting savings goals, you should be willing to reward yourself and splurge (an appropriate amount) once in a while! You'll feel better and be motivated to make more money.

Step 3: Investing It Appropriately

You're making enough money and you're saving enough, but you're putting it all in conservative investments. That's fine, right? Wrong! If you want to build a sizable portfolio, you have to take on risk, which means you'll have to invest in equities. So how do you determine what's the right level of exposure for you?

Begin with an assessment of your situation. The CFA Institute advises investors to build an investment policy statement. To begin, determine your return and risk objectives. Quantify all of the elements affecting your financial life including household income, your time horizon, tax considerations, cash flow/liquidity needs, and any other factors that are unique to you.

Next, determine the appropriate asset allocation for you. Most likely you will need to meet with a financial advisor unless you know enough to do this on your own. This allocation will be based on the investment policy statement you have devised. Your allocation will most likely include a mixture of cash, fixed income, equities, and alternative investments.

Risk-averse investors should keep in mind that portfolios need at least some equity exposure to protect against inflation. Also, younger investors can afford to allocate more of their portfolios to equities than older investors, as they have time on their side. 

Finally, diversify. Invest your equity and fixed-income exposures over a range of classes and styles. Do not try to time the market. When one style (e.g., large-cap growth) is underperforming the S&P 500, it is quite possible that another is outperforming. Diversification takes the timing element out of the game. A qualified investment advisor can help you develop a prudent diversification strategy.

To get started investing, you will need a brokerage account. With the sheer amount of brokers to choose from, picking one can be a troublesome process. To help ease that confusion and frustration, we have created tools to help out. Check out our guide on how to open a brokerage account and also our list of the best stock brokers to get an idea on how to move forward with investing your money.

4 Reasons You Should Seek Out a Business Coach

Jeff Boss

Guest Writer

Entrepreneur, Executive Coach, Author, Speaker 

 

 

 

So, you made the leap from being an employee to owning a business. Congratulations, you’ve just entered the ranks of becoming a soon-to-be entrepreneurial failure or a near-term startup success.

Of course, the question becomes how do you stay alive as a newfound business owner? After all, being a subject matter expert in a particular job is one thing, being a generalist for an industry (an organizational leader) is something else entirely. 

There comes a point where stagnation sets in. You can take yourself only so far without the help of others. Hey, it happens. Consider it part of the startup lifecycle.

Enter the business coach. There isn't anything else that you receive 100 percent dedicated attention to you. A business coach is somebody who helps you move from where you are to where you want to be, and does so by solely focusing on your goals. 

“If you are not clear on your vision, then every single opportunity will distract you and impede your progress,” says Tracy Cherpeski, an entrepreneurship and wellness coach. 

Related: Before Hiring a Business Coach Make Certain Their Skills Match Your Goals

After all, you’ll never really know what you’re capable of until there’s someone to push you outside your comfort zone. Just ask any professional athlete. If a business coach is something you’ve thought about recently but aren’t quite sold on getting one yet, here are four reasons why you should:

1. To brainstorm brilliance

There’s a common saying that goes, “nobody is smarter than all of us.” In other words, the collective power of many is far superior to the single power of one, which speaks to the value a coach brings in brainstorming new ideas. However, doing so is both an art and a science.

Anybody can go online and find brainstorming software for free with the goal to generate genius -- that’s the science part. The “art” part, however, is excavating personal values and beliefs that you never knew existed and linking them to your desires and intentions. Sometimes it takes a new perspective to see an existing connection.

2. To bounce ideas

Nowhere else do you find somebody solely dedicated to acting as your own personal sounding board. A coach -- well, a good coach -- pushes out all thoughts from his or her own brain to be present and just listen. Doing so allows the coach to ask powerful questions that unearths deeply rooted values otherwise firmly planted.

The best part about this is the amount of judgment that the coach offers: zero. Unlike the local rumor mill in your neighborhood or office, it’s not a coach’s responsibility to opine about your position, but rather to suspend judgment in such a way that guides you toward your own goals.

Related: Get Some Real Advice for God's Sake

3. To be accountable 

Isn't it strange how easy it is to break the promises we make to ourselves, but less so when we involve other people? A coach serves as an accountability partner who challenges you to strategize and develop your goals while aligning your efforts toward achieving them. 

4. To receive guidance

A business coach will challenge your thinking, goals and willingness to grow. As somebody who has “been there, done that,” a coach also acts as a role model because of the experience that he or she shares. Additionally, a coach has unique insight that broadens your business awareness.

Think of it this way: When Santa Claus brings you a new toy, you get excited at the thought of playing with it but maybe a little disheartened at the thought of having to assemble all those ridiculously tiny pieces. So what do you need? Directions. You need guidance for how to get from where you are to where you want to be, and once you do, you play with the toy all morning.

The key metric for success from coaching isn’t so much the cool technical tools you learn -- those will become obsolete in roughly 18 months. The value of coaching resides in the mental tools the coachee learns that help him or her navigate toward success both inside and outside of the business world.

Every athlete and every top performer uses a coach to bring out their best. Why don’t you?

Tim Sykes
Editor, Penny Stock Millionaires

The 7 Steps to Success in Trading The secret list of rules you need to follow… My biggest regret in my trading career is taking so long to learn these… How to save yourself time and money…

Dear Penny Stock Millionaire, As many of you know, I am a self-taught trader… And as you may also know, that SUCKED! Doing it all by myself, I was forced to learn a lot the hard way, many cases of trial and error along the way and that fact is, in part, what inspired me to become the mentor to people that I never had. I didn’t have a mentor or a program like mine. But I wish I had. I probably would have made money a lot quicker and not made so many bone-headed mistakes if I had. But lamenting the past won’t change anything. Instead of complaining, I want to help you so that you don’t have to make the same mistakes I did! Here are seven pieces of advice that I’d like to offer new traders, positioned exactly where I used to be. #1. Seek out an education. The idea of just jumping in and starting to trade penny stocks might be tempting. You’ll figure it out as you go, right? Not so fast. I’m all for going for it, but take a step back before you do anything hasty. Remember, this is your money, and you don’t want to lose it. Before you trade, it’s smart to learn a bit about the process and theory behind trading so that you don’t lose your money in ways that could easily be avoided. You must educate yourself on trading in an applicable, real-life way. With my students, we progress into real advice and methods that you can put to work. I don’t want you to wait years and years to make your first trade, but I do want you to have an idea of what you’re doing before you dive in. #2. Have a willingness to learn. It’s best that you learn this early on in your career: as a trader, your education is never complete… meaning it will never end. Seeking out an education, as discussed in the previous point, is partially so that you can make educated trades. But that’s only the tip of the iceberg. But if you really want to be a longtime, successful trader, you’ll need to have a will and a desire to learn. This is something you basically want to turn on and never turn off. Keep reading, learning about the philosophies and methods behind successful traders, and stay interested in the world, in terms of not just finance, but everything else, too! #3. Know what you’re working toward. If you’re not working toward something as a trader, then your career will have little direction. So what are you working toward with your trading? What are your goals? When you’re new as a trader, you should have strong clarity on what it is that drew you to trading. Money, obviously. But, money for what? A newer house? A nicer car? A better quality of life? Really dig deep and figure out exactly what it is that you want to buy with all that money you’ll make. Tattoo that desire on your brain and think of it with every trade you make. It will help you stay motivated, which makes you a better trader. Having goals to stay committed to will keep you going when things get tough.

#4. Recognize your strengths and weaknesses. It’s important to be able to identify your strengths and weaknesses early on as a trader. Basically, the sooner you do identify them, the sooner you can streamline your trading. By recognizing your strengths, you can play to them, and adjust your study and trading schedule to suit what works best for you… Every trade and student is different, so it’s important to recognize this and adapt to whatever works best for you! By recognizing your weaknesses, you can either work around them or make a decision to become stronger in those realms. This might involve studying harder in certain areas, or taking the steps to remove bad habits from your daily repertoire and replace them with good habits. #5. Give yourself time. Patience is a virtue when it comes to trading. Don’t expect miracles (or millions) in your first week. It doesn’t have to take an incredible amount of time to start earning money, but don’t rush it. Let yourself discover what works and what doesn’t, and get your footing as a trader. Slow but steady wins the race when it comes to developing these skills. Don’t try to jump ahead, because there’s so much that you can learn along the way that can help you later. Giving yourself the room to learn and improve over time will take away a huge stressor from your trading career, and it will also make the journey more enjoyable. #6. Network, network, network. Creating a network is important for any entrepreneur, and traders are no different. Making friends with other new traders can create a positive support network and help you stay inspired. And making friends with traders who are further along in their career than you can give you insight and help you emulate their success. A mentor, too, should be part of your network; this is a trader who is further along in their career than you who takes it one level higher, acting as your adviser. Meeting with a mentor on occasion can inform your career, give you ideas, and help you know what career pitfalls to avoid. Moreover, creating a strong network is a great thing for new traders, as you never know what opportunities your connections might afford you in the future. #7. Learn to love trading. If you walk away with nothing else from this article, take this advice to heart… If you learn to love trading, you’re doing yourself a great service as a trader… the process and the journey is actually even more enjoyable than the rewards…the rewards are nice, don’t get me wrong, but learning to be self-sufficient is priceless. Even if I lost all my money tomorrow, I know EXACTLY what I must to do get it back so I’ll NEVER be down for very long, no matter what happens. It’s a good feeling. And I want you to have that sense of security, too. And remember, too many people suck at their jobs and don’t excel because they don’t truly enjoy it…doing something you hate is no fun. It makes the time crawl by, and it does nothing to improve your quality of life… don’t make that your future. But doing something you love makes time fly and makes you feel vital and excited about your day, and about life in general. As the old cliche goes, if you love your job, you never have to work… if you love trading, all the preparation you have to do won’t feel like work. If trading can become one of those things that you love, then your career will seem effortless and success will come to you far more quickly and more naturally. These seven pieces of advice are vital for new traders. I wish I’d had them when I was a new trader! So go forth! And don’t make the same mistakes I did. Regards,