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Successful things I did when I started trading: Reach CEO Patrick Nelson

A trader’s success in the markets is often influenced by their psychology and behaviour. Good traders need to stay calm, understand fear, and maintain their discipline.
A trader’s success in the markets is often influenced by their psychology and behaviour. Good traders need to stay calm, understand fear, and maintain their discipline. For new traders, managing this can often be difficult, and many suffer losses or pull out of markets entirely as a result. To gain a better understanding of how successful traders operate, Reach Markets CEO Patrick Nelson shared some of the strategies and habits he relied on as a new trader that helped him better manage his positions. Here are five traits Mr Nelson employed as a new trader that proved useful later in his career.

Develop a routine

Making sense of market movements and identifying potential trade ideas is time-consuming and requires traders to process immense amounts of information – and for many, this overwhelming volume of news can lead to ‘analysis paralysis’. Developing a routine helped Mr Nelson better manage his time and news consumption by ensuring he focused only on the things he needed to do, read or understand to make sure he was across his trades. “I would always make sure I checked the right data and read up on the right news, from sources I knew would help me make better decisions,” he said. “But focus is essential here. A lot of people don’t realise that financial news can have just as many mindless distractions as social media sites can.”

Work to a trading plan

Early in his trading career, Mr Nelson said he got caught up trying to find ‘silver bullet’ trading strategies or identify the ultimate analysis tools that would help him create infallible trading strategies. Rather than continue wasting time looking for hail-mary solutions, Mr Nelson said these early experiences taught him the value of developing a more comprehensive trading plan – and the importance of sticking to that plan. “It’s just as that old adage goes: a business that fails to plan, plans to fail,” he said. “Traders are no different. Develop a plan that works for your trading goals, and stick to it so long as it’s feasible.”

Do the work

Creating and implementing a trading plan is one thing – being good at executing on it is another, Mr Nelson said. That’s why it’s important for traders to dedicate time improving themselves, their knowledge base, and their skillset to ensure they’re good at each individual element of their trading plan. Putting in the hours to learn and improve will help traders make the most of their trading plan and help them identify new trading ideas.

Understanding yourself

Understanding how you think about markets and react to their fluctuations is critical, but Mr Nelson said many new traders often don’t understand precisely what this process entails. “I think many traders assume understanding their own thought processes means shutting off that internal dialogue, and that’s not quite right. You can’t shut that off,” he said. “But you can learn to ask yourself the right questions, and see how things from your personal life – work, health, relationships – can all have an impact on your trading decisions.” Mastering this, Mr Nelson said, can be the difference between success and failure – especially in the fast-paced, high-stakes world of trading.

Accept that winning and losing are part of the gig

Trading is risky business and every experienced trader has a story or two of taking pain on a deal they thought would pan out differently, Mr Nelson said. He added that it’s important to understand that no individual trade is an endorsement of a trader’s strengths or weaknesses but a “random set of events that play out”. “If they play out enough times and you have an edge in your analysis and you can execute your trading plan well, then you can have confidence that you can make money, even when you’re having some losing trades,” he said. “You need that confidence as much as you need your capital.” To try trading for yourself using the most powerful Options Trading technology in Australia, click here for a 7-day trial of our Implied Volatility platform.  We wish you well with your trading, and as always if you have any questions, please feel free to contact our trading desk on (03) 8080 5795. From 5 October 2021, under Design and Distribution Obligations, anyone opening a trading account will be required to meet the Target Market Determination criteria of Phillip Capital and subject to an assessment the results of which will determine your eligibility for a trading account, for further information please see PCL Target Market Determination – Exchange Traded Options. Trading options is not suitable for everyone. There is a risk that you can lose more than the value of a trade or its underlying assets. You should only trade if you are confident that you fully understand what you are doing. Past performance is not a reliable indicator of future performance. The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss. If you are thinking about acquiring a financial product, you should consider our Reach Markets Financial Services Guide (FSG) including the Privacy Statement.
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