How To Identify Your Strengths And Weaknesses As A Trader
To become a professional trader, you must perform well in this stressful and highly competitive environment. You will hear about a lot of strategies to gain personal progress as a trader. However, an important strategy that works in trading is to maintain a balance between your strengths and weaknesses.
You must know the right strategies, learn optimal skills, keep strong mindsets and simultaneously work on your weaknesses to succeed in trading. If you work on your strengths and weaknesses, you improve continuously.
When it comes to strengths and weaknesses, people often believe that if you work on your weak points, you will automatically improve your trading performance. However, this is not the case always. You must also identify and work on your strengths so that they can overcome your weak points. Maintaining this balance helps you in different ways while trading.
How does learning your strengths and weaknesses can help you in trading?
- Helps you optimise your strategy if you know what you excel in and what you struggle in
- You develop self-awareness to focus your efforts in trading
- You can trade as a whole and at the same time, you can also focus on details.
- Helps in reviewing your trading performance constantly
- Gives you the ability to view your failures and challenges in a healthy manner
- Boosts your self-confidence and self-trust
- Helps you pick the right trading style as every trading style needs different traits to be a successful trader.
Identifying Your Trading Strengths
Review your journals of trading
Reviewing your trading journals is essential. It is important to note the situations where you performed well. So, if you are not in the habit of keeping a record of your trades, start doing it as soon as possible. This is a useful tool to identify your strengths. Try to identify the top ten profitable trades. Make note of which pairs you traded? Did you follow any trading plans?, What was your strategy in those trades; technical, fundamental, or both? How long did you hold the trades?
Apart from this, identify some common things that helped you win those trades. This analysis will help you understand where you were good at.
Pen down your strengths as a trader
According to trading psychologists, you must identify your top five strengths. Forex market is a personal experience and thus, you must pen down your strengths on your own without engaging others. Ask some questions to yourself like, “What is your pattern?”, “What is my self-portrait?”, “Do I ever use my strengths in my actions?”
Do not overthink. Think about yourself and start writing simple traits in you like creativity, love for learning, leadership, kindness, etc. This way you can assess your strengths naturally.
Once you have noted down your five, think of the ways, you can use them in your trading. For example, if your number one strength is your love of learning, you must read books on forex trading and study different systems related to it.
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Know what people say about you
Once you have assessed yourself, ask people around you about your strengths. Sometimes you overlook some traits within you that people around you may notice. So, ask your friends, colleagues, or trading contacts for qualities that can make you a good trader. Be ready for assertive criticism. Take their inputs and compare them with your list.
Analyse how you handle things at the start
When you start trading, ask yourself few questions to know your patience level. These can be:
- Can you wait for a good trading opportunity or do you consistently need ideas to consider?
- How do you manage trade?
- Can you manage a position for a long time or do you want to reach the conclusion soon?
If you think that you are patient in the above situations, you are suitable for a swing trading style. For an impatient trader, it is better to pursue day trading where he can get multiple opportunities daily.
How To Improve Your Strength As A Trader
Once you have determined your personal and career strengths, you must take advantage of the same. You must learn how you can use them for your trading system. For example, if you think you are good at organising and strategising, you must use them for your trading success.
You can make a strong foundation for trading with knowledge. You get to learn about trading through forex education and your experience in it. Whatever is the way, constant learning helps you gain skills over trading tactics. You must always work on improving your strengths.
Often traders want to achieve perfection when it comes to their trading. However, strength is not making perfect trading. Instead, you must learn to achieve balance and lay stress on progress around your strengths.
Apart from the technical strengths, don’t ignore your passions and interests that are helpful in trading. When you work on your natural talents, you are promoting happiness and self-relief. This strengthens your mental wellness that further improves your trading aspects.
Identifying Weaknesses And Fixing Them
Review your journals of trading
Without well-maintained records and journals, how can you even identify any problem? If you have a detailed trading history, you can easily see what you should work on. You can calculate your ratio for risks and rewards. You can also see on which trades you made money and on which you lost the most.
Further, a journal will also help you in identifying your behaviour patterns that need to be fixed. Behaviour patterns are not easy to resolve and you can’t do it until you identify them. Also, make sure to review your detailed journal and other records regularly, at least once a week. This way you will surely make considerable progress in your trading career.
Identify how often you trade
Most of the traders earn profits only by knowing how long should they wait for the ideal trade set-ups. Some people trade many times a week and end up in frequent losses with some trades. Due to these losses, they get into revenge mode to get their money back from the market. If you behave like this, you are impatient and impatience is not a good characteristic for forex trading.
You should sit in the bushes and behave like a disciplined trader until you see an opportunity. Try to sit and wait for the best trades as this will make trading fun and profitable deal for you.
Analyse how you handle trade progress
Forex trading involves a lot of setbacks. The development of a trade is a long and frustrating process. Don’t be impatient if things don’t turn out as per your expectations. Performance anxiety is quite common. Often, people become overly pessimistic in such cases. As a result, they take it as their failure and eventually quit. However, the key to overcoming such failures lies in being slow and persistent. If you think you are losing track, it is better to take a step back. Further, it would be much better if you stop and regain your perspective. Getting impatient will only result in stress.
It is human nature to lose control and try to push ourselves in difficult times. In fact, the best approach is to stop struggling rather than getting tangled in the mess.
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Identify why you stopped out and how to Re-enter the trade
Do you often stopped out in a trade and then trade in your desired direction? If so, you are not good at entering trades and you must learn the skills of re-entering the trade. Learning to enter a trade can be tricky as it may lead to overtrading. However, it is quite valuable for daytime traders.
Deciding to re-enter means you know that your original timing was wrong and now is the right time to trade. Thus, it is a difficult decision at times.
Identify Risk management strategy
If your risks vary from trade to trade, it means inconsistent risk management is your weakness and you need to work on that. Whenever you enter a trade, make a spreadsheet to know what percentage of your account is at risk. If varying risk on each trade is your strategy, then it’s fine. Otherwise, this practice will help you know your risk in each trade. When you know the risks involved, you get an idea of when the trade is going against you and when should you quit. Further, knowing the risks involved keep you mentally calm and composed.
How you can work on your weakness
- Turn your weaknesses into learning skills by taking additional training through forex education or any mentor.
- Practising on a demo account also make you learn a lot of things. This will fine-tune your skills and you will not risk any capital in it. Work on your weaknesses while trading on the demo account. Try to minimise losses.
- Forex is a volatile market and you will experience losses in it. However, encourage yourself to bear losses and move forward. Leave all negativities and self-doubt behind and start afresh if you incur any loss.
- Be open-minded and get ready to accept any changes. Don’t hesitate in trying new strategies as they will make you better. Try to move out of your comfort zone, identify your errors, and train your mind for new things.
- No matter what are your weaknesses, keep a vision or goal for the future. If anytime in the middle of self-improvement, you feel de-motivated; your goal will push you to move forward.
Trading is not rocket science or a superhuman gift that you cannot get or learn. It is a strategy that needs effort to learn and excel. When you know your strengths and weaknesses, you can overcome them. For a trader, it is essential to understand and be truthful about his strengths and weaknesses. Success in trading requires developing excellence in all aspects. For a volatile market like forex, balancing your strong and weak points can help you optimise the skills needed for a profitable trade.
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