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Co-Wise: What habits help you become a better trader?
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Habits To Becoming A Better Trader

Habits To Becoming A Better Trader
Successful traders are those with successful trading habits. Luck can only carry one so far. One of the key successful habits is to form a trading plan. As Benjamin Franklin rightly said, if you fail to plan, you are planning to fail.

Here’s how to form a trading plan and execute it successfully.
1) Financial Analysis
Identify potential stocks $Apple (AAPL.US)$ $Meta Platforms (FB.US)$ $Microsoft (MSFT.US)$ $Alphabet-C (GOOG.US)$ $Alphabet-A (GOOGL.US)$ $Netflix (NFLX.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Rivian Automotive (RIVN.US)$ $Pfizer (PFE.US)$ $Moderna (MRNA.US)$ $BioNTech (BNTX.US)$ $Novavax (NVAX.US)$ $Medtecs Intl (546.SG)$ $Altimeter Growth Corp (AGC.US)$ by analysing the company’s financial statements and dividend track record. This is where financial ratios like gross profit margin, net profit margin, return on equity, current ratio, debt to cash flow ratio, net gearing ratio and dividend yield come in handy. Also pay attention to the current news that can impact the company.

2) Technical Analysis and 2% Rule
Study the charts. Use technical indicators to spot the trend. Identify the entry price, the price target for taking profit and the price to stop loss using support and resistance. Determine the risk-to-reward ratio (RR) and the probability of success (also called the percentage of winning trades). The potential reward should be at least three times the potential risk. Don’t give in to the fear of missing out (FOMO). In the words of Warren Buffett, “the stock market is a device to transfer money from the impatient to the patient.” The risk of losing money can be minimised by applying the 2% rule (each trade should not be more than 2% of the capital set aside for investment).
Habits To Becoming A Better Trader

3) Control emotions and follow the plan consistently
This is probably the part where most traders fail. It is as tempting to hold on to winning stocks as it is difficult to let go of losing sticks but giving in to emotional impulses defeats the purpose of having a plan in the first place. Stick to the plan.
Habits To Becoming A Better Trader

4) Positive Reinforcement
We become what we repeatedly do. Foster good trading habits by rewarding ourselves whenever we follow the plan consistently. This has nothing to do with the amount of profit or loss made in the trade. For instance, exiting a trade before the loss deepens to painful levels is a trading behaviour that should be rewarded despite not making a profit.
Habits To Becoming A Better Trader
5) Review and Refine
Evaluate the trading plan for its effectiveness and finetune it to suit one’s risk appetite, financial needs, investment period and new developments in the market. There is no best trading plan, only what is suitable.
Habits To Becoming A Better Trader
With practice and perseverance, we can all become successful traders!

Disclaimer: The above is my personal opinion. It is not financial advice or a recommendation to invest. Please consult a financial advisor before making any investment decision.

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