Human beings are fundamentally emotional creatures. The most logical trader is still subject to fear, excitement, confusion, and cognitive biases.
As such, a successful trader must do more than navigate mountains of data, chaotic market conditions, and the constant pressure to make a profit.
They also need to balance cold rationality with the emotional undercurrents of short-term trading.
Many traders focus exclusively on hard skills that can be trained, tested, and measured. Beginning traders may view soft skills as unproductive or optional. They aren’t.
In this article, we’ll dive into eight of the most important soft skills for traders to learn and master. We’ll also discuss why these skills can make or break a trader’s career.
What Are Soft Skills?
There are two types of skills that you need to be a successful trader: hard and soft.
Hard skills are the quantifiable competencies that you gain through studying and training.
In trading, hard skills include the likes of technical and fundamental analysis.
There is an unlimited number of hard skills that you can learn—they’re essential for entering the workplace and growing your career, in any industry.
However, focusing too narrowly on hard skills can also limit your growth.
Soft skills are personal attributes, and can become a force multiplier for hard skills.
If you know how to perform brain surgery but you’re an absolute jerk to your colleagues or your patients, you’ll probably encounter roadblocks on the way to success.
The same principle applies to short-term traders.
Even though you may work alone at a computer for most of the day, soft skills can accelerate your wins, while a lack of them can compound your mistakes.
If you’ve felt like your trading career has hit a glass ceiling, the odds are that it’s time to develop new soft skills.
Benefits of Soft Skills for Traders
Learning the hard, technical skills of short-term trading will help you gain entry into the world of trading. These skills help you analyze financial assets and execute trades.
On the other hand, soft skills unlock opportunities and new possibilities for short-term traders.
The best trading skills are a combination of both hard and soft skills.
For example, Warren Buffett has vast experience and expertise in financial analysis, which helps him to identify undervalued companies. At the same time, he has soft skills like discipline and the ability to remain calm under intense pressure
There are three areas where soft skills make the biggest difference.
1. Strategy
As you build your toolbox of soft skills, you should notice that you get better at making quick, smart decisions.
In the roller-coaster that is trading—with news headlines and price swings turning the tide at a moment’s notice—the fewer impulsive decisions you make, the better your results.
As you develop these decision-making skills, your ability to manage risk also increases.
Solid risk management starts with an explicit plan for avoiding exposure and minimizing losses, but you’ll feel the pain quickly if you don’t have the discipline and patience to adhere to the plan.
Soft skills also help you adapt to unpredictable events with resilience.
This ability operates in tension with the discipline required to stick with your plan. Even the best plan can’t compensate for chaos—when your strategy fails, you need the emotional fortitude to dust yourself off and try again tomorrow.
2. Self-Awareness
Many of the soft skills on our list below are rooted in self-awareness. If you can observe your emotions, thoughts, and behavior without making excuses, you can achieve more than you imagine.
Many traders struggle to manage their impulsive tendencies, insecurities, and ambitions.
The first step to improvement is to accept reality as it is, not as you wish it was. After that, you can begin to adjust your daily routine and trading practices to align or compensate for your natural tendencies.
Your capacity to learn is also rooted in self-awareness.
Even if you’re an experienced, confident trader, you’re never too old or successful to learn and master new skills.
3. Professionalism
Short-term trading can sometimes feel lonely.
Building a strong community is the antidote to loneliness and potential burnout. It’s also the key to honing your skills and learning from the best traders in the world.
By raising your soft skills, such as communication, teamwork, and patience, you’ll connect more easily with other traders, build trust, and respond graciously to other people’s mistakes.
This kind of leadership and professionalism opens the doors to new opportunities and will even increase your profitability as a trader.
The Top 8 Soft Trading Skills
The world of short-term trading is high-pressure, high-stakes, and highly emotional.
Numbers can feel like the purest and truest information you can find.
But behind every price change, thousands of traders are afraid of losing money and thousands of traders are trying to profit off impulse alone.
You can be better than both—here are the eight soft skills you need.
1. Discipline
Discipline is the rock upon which profitable traders build their wealth.
First of all, you must develop a clear trading strategy and stick to it. You’ll build a track record of consistent trades, which provides the information you need to revise your plan and make it better.
Short-term traders demonstrate discipline in a number of ways.
For example, if you prefer scalping, then dedicate yourself to learning and improving your scalping technique. Don’t mix it with algorithmic trading, or swing trading. Master one technique before you begin adding new ones.
You must also be disciplined when it comes to capital allocation. Don’t risk more money than your strategy calls for.
The third area of discipline entails protecting your trades with stop-loss and take-profit orders. These simple measures will help you minimize losses and prevent the tendency to wait too long before selling an asset.
And finally, it takes discipline to know when to stop trading.
This can be true if you’ve had a string of losses and have only been trading for a few hours, but it’s definitely true when you wrap up for the day. A short-term trader never leaves a trade open overnight.
2. Stress Management
Short-term trading requires a high degree of vigilance and quick thinking.
The stakes are high, and markets can turn on you in seconds. This leads many investors to avoid strategies like scalping.
If you’re going to build a long-term career in short-term trading, you must be able to manage the stress of the job. Develop healthy techniques to dissipate stress and keep your mind clear. You’ll stay more focused on your strategy and make better decisions under pressure.
3. Patience
This might be one of the most underrated soft skills in short-term trading.
It might look like you’re doing nothing, but it’s an illusion. Patience is the ability to watch an asset’s price move and know that you could take action, but you don’t, because the moment isn’t quite right.
Inexperienced traders get spooked when they open a trade and watch the trend turn against them. As overcorrecting your steering wheel on the highway can cause you to crash, overcorrecting your trades can lead to losses.
A patient trader is willing to watch the market and stay poised for action when the right moment arrives.
4. Quick Decision-Making
Given the nature of short-term trading, this one might seem obvious.
But new traders often make the mistake of thinking there’s more than enough time to execute a trade, or place stop-loss and take-profit orders.
If you train enough on your trading platform, you’ll gain the technical skills to make trades.
But what truly makes the difference is the split-second decision-making ability to pounce when opportunities arise, like when the latest news about Tesla hits and the stock bounces in a new direction.
The framework to make quick decisions is critical thinking, which allows you to ignore the herd mentality and trade for where you believe the stock is headed. It involves questioning assumptions, considering various outcomes, and taking multiple perspectives into account.
5. Adaptability
Adaptability is the counterweight to discipline.
A trader who is overly disciplined might behave rigidly when the market shifts and their strategy isn’t working anymore. You need the wisdom to know when to shift tactics and trade for where the market is headed, not where you wish it was going.
Veteran traders don’t build careers on over-confidence and close-mindedness.
In order to be adaptable, you must be willing to examine your skills and develop new ones, as well as revisit so-called truths about short-term trading.
Continuous learning is essential to be prepared for all occasions. Listen to other traders, keep an open mind about novel strategies, and always be willing to accept feedback about your performance and refine your strategy.
6. Risk Management
Understanding and applying proper risk management to your short-term trading strategy is essential.
Setting stop-loss and take-profit orders is just the beginning. You need to look at trading volume and your win-loss ratio to evaluate what your next trade should look like.
When you get risk management right, prop trading firms like Real Trading will increase your buying power and enable you to make even more money.
If you repeatedly fail to perform basic risk management on your trades, eventually, you’ll lose enough money that you have to quit trading altogether.
You also need to know how much risk you will take. When you take bigger risks, you can also gain much bigger rewards. However, there’s no perfect amount of risk, but for the most part, as you gain experience, your risk tolerance increases.
7. Time Management
The freedom of working for yourself can feel exhilarating. Many rookie traders discover that they don’t know how to enforce the kind of time management skills that most 9-5 jobs demand.
As a professional trader, you need to put in enough repetitions to become a competent trader. Those repetitions only come from committing to show up at your computer like you would show up for a regular job.
Planning your trading schedule is even more important if your trading strategy focuses on a certain asset or market that operates on unusual time frames.
Nobody tells you when to show up when you’re a short-term trader with a prop firm. But your trading success is directly connected to your willingness to set and keep time commitments.
8. Communication
Although short-term trading is frequently a solo activity, there are lots of opportunities to help peers, and learn from them as well.
This is especially true if you join Real Trading as a trader. By working to encourage and support other traders like you, you’ll gain a reputation as a trustworthy professional.
Teamwork is the best way to build your influence within the trading community, and to do that, you must develop your communication skills.
Take the time to listen when others talk, show interest in what they’re saying, and ask thoughtful questions.
Short-term trading is a very lucrative skill, but it’s nothing compared to what you can accomplish with effective communication.
How to Develop Soft Trading Skills
Hard—or technical—skills are somewhat linear: it’s clear what they entail, and exactly how to learn and practice them.
Soft skills are not quite like that.
If you want to master soft skills like the ones we listed in this article, you must commit to practicing them on a daily basis and continually honing them.
Read or Listen to Books
There are many books available to learn soft skills like effective communication, time management, and decision-making.
For every soft trading skill you want to acquire, there’s surely a well-rated book on the subject.
You can also look for podcasts and blogs where experienced traders share their hard-won lessons and wisdom.
Consider online teaching resources like Skillshare and Udemy as additional ways to pick up specific skills you want to add to your toolbox.
Watch Experienced Traders in Action
An experienced trader is using their hard and soft skills simultaneously, all the time.
They might do it unconsciously, but the best ones will be able to describe what they’re doing and why. It’s not a battle of soft skills vs. hard skills—they’re complementary.
When you watch a channel like TraderTV.Live you can see live trading sessions, after-trading debriefs, and explainer videos for various trading skills—both hard and soft.
Find a Coach or Mentor
One of the best ways to increase your trading skills is to engage one-on-one with more experienced traders who can help guide your development.
This could mean seeking out a trader you admire, or joining a trading floor where a veteran trader is leading a team.
Be ready to learn from multiple sources. No “ideal trader” can teach you everything you want to know. Honor the mentors and coaches for what they offer, and never stop looking for new ways to gain knowledge and skills.
Engage With Trading Communities
Look for trading forums, clubs, or social media groups where other short-term traders gather.
Once you find a community of like-minded individuals, invest in becoming a part of the community. Participate in events and contribute to any discussion that’s relevant to your interests.
These communities also provide information about workshops, webinars, and other trading-related events that you can attend. Look for sessions led by experienced traders or psychologists specializing in trading psychology.
You don’t have to get involved in every opportunity that comes your way, but it pays to commit long-term to a group. It helps you build relationships, find mentors, and gain access to members-only opportunities.
Practice in Trading Simulators
One of the best ways to hone your soft skills is to recreate low-risk trading scenarios and apply what you know. Real Trading’s TMS™ trading simulator is a great way to experience live-market dynamics without risking real money.
Devote time every week to using a simulator to practice your discipline, risk management, and adaptability. Run the scenario by other traders and get their opinion. The goal is to explore different scenarios, and stress test yourself at every turn.
By role-playing through trading tactics and external influences (like a news event or a significant market shift), traders can better prepare themselves for real-world trading.
Be Like Water—Adaptable and Powerful
When speaking of the ultimate martial arts technique, Bruce Lee advised “Empty your mind. Be formless. Shapeless. Like water. Be water, my friend.”
Bruce was showing that once you learn a technique, you should move into a state where you can quickly read the situation and adapt.
By training hard and practicing this resilient posture, Bruce became one of the most competent martial artists in the world. He developed the right soft skills to accomplish it.
The same principle applies to short-term traders.
You train hard to master the technical skills of trading, but your soft skills determine your success against unpredictable markets. Soft skills allow you to take the shape of whatever challenge you face.
Real Trading is where you come to learn trading skills and build a successful career as a funded trader. We accept new and veteran traders alike.
