uTrade Algos

10 Traits of a Successful Algo Trader

May 1, 2023
Reading Time: 8 minutes

Successful traders possess certain traits that help them make the right decisions and maximize their profits. It is also important to have a solid understanding of the market and to continuously educate oneself about trading strategies and techniques. Algorithmic trading platforms can be useful in helping traders develop discipline and control. It is also important to be realistic in one’s expectations and to have patience and persistence.

Most traders, when they first begin trading, mistakenly believe that all they need to do is to find a great trading strategy. After that, all they’ll need to do is come to the trading market each day, plug in their great trading strategy, and the market will just immediately start pumping money into their account.

The bad news is that it’s not just your trading strategy that matters. There are plenty of traders who use intelligent trading strategies and still lose money, which is an inherent risk in trading that no trader can evade. On the other hand, the good news is that while profit and loss are part of every trader’s journey in the market, there are certain traits every successful trader can imbibe that will help them make the right decisions and maximise their profits. 

Traits of a Successful Trader

Traits of a Successful Trader

1. The More You Know, the More You Grow

A lot of times, the stock market movement is in response to the speculation. It is regulated by financial news and sentiments present in the market. 

The economic activities of the world are driven by this volatility, and a stock market is a tool that helps track the impact of these activities. Hence, the importance of global financial news for a trader cannot be underestimated.

The stock market is affected by natural phenomena like floods and famine and events like terrorist attacks, civil movements, socio-political events such as elections, international diplomacy, and even oil prices.

These events have a significant effect on the financial and economic conditions of a company, a country, and even globally. It is, therefore, crucial to be in touch with the latest news so that one can be up to date with the expected outcome and, thus, be able to speculate accurately.

There are many sources from which financial news can be obtained, with the Internet being the quickest and most convenient.  Many websites update the latest news within seconds. They also cover the news about the most active stocks, stock updates and market movements.

2. Capital Risk Per Trade Analysis

Golden Rule of Investing – How much capital you risk depends on your account size, but never risk more than one per cent of your account on a trade. In other words, don’t lose more than one per cent of your trading account on a single trade.

Let’s understand this concept with an example:

If you have ₹ .30,000 in your account, you can lose up to ₹.300 per trade; however, you can still utilise all of your capital. For example, if you buy 1,000 shares of a ₹ 29/stock, you have used up most (₹ 29,000/₹ 30,000) of your buying power.  

  • As long as you don’t lose more than ₹ 300, your risk is less than one per cent.
  • Some traders are willing to risk up to two per cent of their account. This is typical if the account is smaller and the trader is willing to risk more to make more.
  • Some traders also choose to fix a certain risk amount per trade which might even go less than one per cent.

Now, you know how much you should risk per trade based on your account size. For most stock market day traders, risking one per cent or less is ideal. It is important to adhere to that risk limit. The easiest way to make sure you don’t lose more than the decided risk limit is to use a stop-loss order.

A stop-loss order gets you out of a trade when the price moves against you and reaches a preset price.


3. Invest Only Your Surplus Funds

The biggest mistake newbie investors make is to invest money that they can’t actually afford to lose. Investing in the stock market is risky, and that means that you can potentially lose everything. 

Like any investment, there are inherent risks associated with the stock market. Some are the risks related to the overall market as the systematic risks that you can’t avoid by diversifying your portfolio, while some risks are stock-specific that you can avoid. 

You need to decide your own risk tolerance considering your age, financial strength, retirement goal, etc. If you want to take risks in the stock market, then only invest your surplus funds which you can afford to lose. 

Investments are made to generate more money, but do not invest all your emergency funds in the stock market.

4. Stay Clear of Penny Stocks

Penny stocks trade at a very low market price, generally with a share price of less than ₹ 10. These stocks have a very low market capitalisation and are typically under ₹ 500 crores.  Further, penny stocks in the Indian stock market have low liquidity and are speculative in nature.

On the flip side, penny stocks have a high potential of rewarding their shareholders. The returns are quite high if you are able to get a good penny stock. Many penny stocks have turned out to be multi-baggers for their investors. But here’s the catch – there is a huge risk involved in investing in penny stocks, and it is advisable for beginners not to venture into this terrain until they have gained sufficient experience. 

 Here are a few of the common disadvantages of buying penny stocks:

Disadvantages of Penny Stocks

Disadvantages of Penny Stocks

  • High Risk: These stocks are quite risky as the percentage of a number of penny stocks outperforming the market is quite less. Many of the penny stocks become bankrupt and go out of business.
  • Low Liquidity: There will be troubles on both ends of transactions, i.e., buying and selling. While buying these stocks, you might not be able to find a seller. In case you bought the stock, and the stock price starts falling, then you won’t be able to find a buyer to sell the stock.
  • Price Manipulations: There have been a number of cases of price manipulations in penny stocks where the insiders try to inflate the share price. Further, one can easily manipulate penny stocks by buying large quantities of these stocks.
  • Sudden Delisting and Regulatory Scrutiny: There are multiple cases where penny stocks have been delisted from the stock exchanges. Further, these stocks are regularly under scrutiny by SEBI.
  • Prone to Scams: Penny stocks have had a number of scams to their name in the past. 
  • Large Bid-ask Spread: There is a large bid-ask spread in these stocks.
  • Lack of Information: Limited information is available to the public about the company.

5. Trade When The Time Is Right

Trading during the first one to two hours when the stock market is open on any day is all that many traders need.

 The first hour tends to be the most volatile, providing the most opportunity. But beginners are always suggested to avoid trading in the first 15 minutes of the day.

Many traders also trade during the last hour of the day, from 3:00 to 4:00 p.m. ET. By that time, traders have had a long break since the morning session, allowing them to regroup and regain their focus. 

The last hour is full of bigger moves and sharp reversals. Like the first hour, many amateur traders jump in during the last hour, buying or selling based on what has happened so far that day.

Keeping the bigger picture in mind, beyond the hourly grind, Monday afternoon is usually a good time to buy because the market historically tends to drop at the beginning of the week, particularly around the middle of the month. Many experts recommend selling on Friday before that Monday dip occurs.

Likewise, prices tend to drop in September and then hike again a month later. October is generally positive overall, and prices often go up again in January, particularly for value and small-cap stocks.

6. Limit Your Losses With Limit Orders

Limit orders are increasingly important as the pace of the market quickens. Limit orders that restrict buying and selling prices can help investors avoid portfolio damage from wild market swings, such as investors have seen with shares of GameStock lately.

When an investor places an order to either purchase or sell a stock, there are two main price-related execution options: place the order “at the market” or “at the limit.”

Market orders are transactions that are intended to execute at present or market price as quickly as possible.

A limit order allows an investor to sell or buy a stock once it reaches a given price. A buy limit order is executed at the given price or lower. A sell limit order executed at the given price or higher. The order only trades your stock at the given price or better.

For example, if you place a buy limit order at ₹92, you want to buy the stock from the exchange only at ₹92 or lower. You don’t want to pay more than ₹92. Similarly, if you place a sell limit order at ₹95, you want to sell the stock at ₹95 or higher.

Definitely, the limit order is the beginner’s cup of tea.

7. Stay Calm and Keep Trading

There are times when the stock markets test your nerves, so you’ll need to be thick-skinned to be able to take a hit without falling.

The market will constantly throw losing trades at you, and you need to bounce back. If you feel discouraged every time you lose a trade or your strategy fails to produce the result you expect, your life will be miserable. This is where most traders fail – they lose heart and miss out on future opportunities.

Losing trades are constant; most successful traders will have losing trades every day. 

Don’t let your emotions cloud your decisions. Keeping emotions away from trading decisions can be challenging, especially when you’ve had a streak of wins or losses. Using an algo trading platform like uTrade Algos can prove highly beneficial in this case as you can set buying and selling instructions on the platform, bringing rationality into your trading game. It doesn’t let emotions get the better of you, and hence, prevents you from making bad decisions.

8. Stick to the Plan

Successful traders have to move fast, but they don’t have to think fast.


This is because they’ve developed a trading strategy in advance, along with the discipline to stick to that strategy. It is important to follow your formula closely rather than try to chase profits. Don’t let your emotions get the best of you and abandon your strategy. 

There’s a mantra among traders: “Plan your trade and trade your plan.”

9. Use Technology to Your Advantage

Trading is a competitive business. It’s safe to assume that the person sitting on the other side of a trade is taking full advantage of all of the available technology.

  • Charting platforms give traders an infinite variety of ways to view and analyse markets. Backtesting an idea using historical data prevents costly missteps. 
  • Getting market updates via smartphone allows us to monitor trades anywhere.
  • Technology that we take for granted, like a high-speed internet connection, can greatly increase trading performance.

Using technology to your advantage can be fun and rewarding in trading. Keep yourself updated and trade smoothly with the best-in-class built-in features of uTrade Algos, which allows you to Backtest and Forward Test your strategies, without the hassle of coding.

10. Disciplined Trading

Discipline is the foundation of all functional trading strategies. Without discipline, you will be harmed by the risks of active trading. These risks include fear, greed, and missed opportunity. 

Only by holding yourself accountable and remaining disciplined at all times can you enable yourself to achieve your trading goals.

If you focus on your trading strategy before learning discipline, the details of your strategy will not really matter. Discipline is what makes successful trading strategies possible. Discipline is why technical indicators, risk management techniques, and trading principles pay off in the end.

It is very easy for traders to feel overwhelmed. Once losses begin to pile up, it can be very tempting to take early exits. Once gains accumulate, it can be very tempting to press your luck.

No, successful traders do not have a crystal ball. They don’t know what is going to happen. What they do know is how to identify what is possible, what the probable scenarios are and how to prepare for them accordingly.

Emotions are the biggest hurdle in the gains of the stock market, and we tend to get carried away with emotions sometimes. This is where uTrade Algos comes into the picture and puts you on the path to success in your trading journey.

Algo Trading Overview

Try to imbibe these traits and implement your trading strategies without writing a single code and get set to enjoy the roller-coaster ride of the trading journey only on uTrade Algos. It is time to start!

Frequently Asked Questions

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uTrade Algo’s proprietary features—advanced strategy form, one of the fastest algorithmic trading backtesting engines, and pre-made strategies—help you level up your derivatives trading experience

The dashboard is a summarised view of how well your portfolios are doing, with fields such as Total P&L, Margin Available, Actively Traded Underlyings, Portfolio Name, and Respective Underlyings, etc. Use it to quickly gauge your algo trading strategy performance.

You can sign up with uTrade Algos and start using our algo trading software instantly. Please make sure to connect your Share India trading account with us as it’s essential for you to be able to trade in the live markets. Watch our explainer series to get started with your account.

While algo trading has been in use for decades now for a variety of purposes, its presence has been mainly limited to big institutions. With uTrade Algos you get institutional grade features at a marginal cost so that everyone can experience the power of algos and trade like a pro.

On uTrade Algos, beginners can start by subscribing to pre-built algos by industry experts, called uTrade Originals. The more advanced traders can create their own algo-enabled portfolios, with our no-code and easy-to-use order form, equipped with tons of features such as robust risk management, pre-made algorithmic trading strategy templates, payoff graphs, options chain, and a lot more.

From single-leg strategies to complex portfolios, with upto five strategies, each strategy having up to six legs, uTrade Algos gives one enough freedom to create almost any auto trading strategy one likes. What’s more, is that there are pre-built algos by industry experts for complete beginners and pre-made strategy templates for those who want to try their hand at strategy creation.

An interesting feature that uTrade Algos is bringing to the table is a set of pre-built algorithms curated by top-ranking industry experts who have seen the financial markets inside out. These algorithms, called uTrade Originals, will be available for subscribers on the platform.

Algos have the capability to fire orders to the exchange in milliseconds, a speed which is impossible in manual trading. That is why traders leverage the power of algo trading to make their efforts more streamlined and efficient. You can try uTrade Algos for free for 7 days!

Claim your 7-day free trial!

Experience uTrade Algos on the web and mobile app without any commitment.

Knowledge Centre & Stories of Success

In the ever-evolving landscape of algorithmic trading in India, AI has emerged as a game-changer, changing the way trading strategies are developed, executed, and optimised. At uTrade Algos, we recognise its significance and are eager to share the multifaceted role of AI in algorithmic trading platforms within the dynamic realm of financial markets.

In the fast-paced world of algorithmic trading, on various algo trading platforms, market making plays a pivotal role in ensuring liquidity, facilitating efficient price discovery, and maintaining orderly markets. This blog delves into the fundamentals of market making, exploring its principles, strategies, and execution in algorithmic trading.

In today's ‘fast’ financial markets, every second counts. For traders seeking to gain an edge in this high-speed environment, optimising execution algorithms on algo trading platforms for low latency trading is paramount. In this guide, we'll delve into the intricacies of low-latency trading and explore strategies to optimise execution algorithms for maximum efficiency. It is our endeavour at uTrade Algos to assist you in understanding these complexities and empower you with the tools and knowledge needed to thrive in the fast-paced world of algo trading in India and across the globe.

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