3 Smart Skills for Informed Trading

June 3, 2025
Trading involves multiple skills, and traders can potentially improve their trading acumen—and potentially their results—by following these tips that may be associated with more balanced returns.

Successful traders are not only able to spot potential opportunities in the financial markets—they have the right skills to capitalize on them. Discipline, trade planning, and a commitment to ongoing education can form a strong foundation for long-term success in fast-moving financial markets.

Without discipline, even the best trade ideas can unravel under the stress of doubt, fear, and greed. Without trade planning and risk management, retail traders can make simple mistakes. Without ongoing education, traders may miss out on changing market trends or misinterpret technical indicators. These habits can work together for better entries, stronger risk management, and—potentially—more profitable exits.

"One skill that I see successful traders have is the ability to block out the noise of the financial media and other pundits and follow their particular trading plan," said Michael Zarembski, director of futures at Schwab. "This is quite difficult to do, especially during times of volatility in the market."

Although some trading skills may seem difficult at first, they can be mastered with practice. This article will give you an overview of each skill, as well as places you can go to for further information and ongoing education.

1.     Discipline at trading-decision time

Even short-term trading calls for long-term thinking. The most important skill for successful trading is discipline. At times, the financial markets can be deathly dull. Other times, traders are overwhelmed by price action and noise. Trading is emotional, and emotions can take over during changing market conditions. Doubt, fear, and greed—the emotions that can undo any trader—can run rampant when money is involved. Practicing restraint and sticking to predetermined strategies is crucial.

Traders can nurture their discipline by committing to a regular schedule for looking at the financial markets, practicing paper trades with a demo paperMoney® account on the thinkorswim® trading platform, and evaluating performance frequently. Trading doesn't have to be a full-time job, but it should be taken as seriously as any other work.

Learn more:

  • Panic Is Not a Strategy—Nor Is Greed | Charles Schwab
  • How to Take Advantage of Volatile Markets | Charles Schwab
  • What Is Paper Trading and Reasons to Try It | Charles Schwab

2.     Trade planning and risk management

Disciplined traders take risk management seriously. They plan every trade, keeping notes in a spreadsheet or trading journal (such as the thinkLog feature on the Tools tab of thinkorswim). They identify the trading strategy they want to use, calculate the amount or money they'll commit to the trade, and determine the prices at which they will enter the trade, take a profit (the limit), and cut any losses and close out the trade (the stop loss). "One needs discipline to have an exit point, should the market turn against them," Zarembski said. A seasoned trader should also avoid greedy impulses and close out once their target profit is achieved. While price action creates trading opportunities, it can also turn a good trade into a bad one.

Working with a trading plan helps retail and professional traders consider every aspect of a trade before they place it. Then, they can place an order with stops and limits already set to automate the trade's exit. This helps reduce the impact of emotion and the risk of errors.

Learn more:

  • Elements of a Smart Trade Plan | Charles Schwab
  • Trading Up-Close: Stop and Stop-Limit Orders | Charles Schwab
  • How Much Risk Is Right for You? | Charles Schwab

3.     Continuous learning to build market know-how

Successful traders are constantly learning. There are always new market factors to evaluate, new contracts to trade, and new trading tools to master. Technical analysis takes time to master. So does fundamental analysis. Day traders may want to experiment with swing trading, and swing traders may want to experiment with day trading. The thinkorswim paperMoney feature helps traders try new strategies without committing real cash.

Zarembski said that with experience, retail traders can get better at evaluating when to add to or reduce existing positions when trends are moving in their favor. Schwab's trading professionals regularly produce videos, articles, and courses to help both new and experienced traders learn key skills and develop their trading abilities.

Learn more:

  • Inside the Mind of a Trader | Charles Schwab
  • thinkorswim Demos | Charles Schwab
  • Technical Analysis | Charles Schwab

Bottom line

Trading is a skill, and as with any skill, it can be honed through time and practice. No matter what strategy a trader follows, learning to navigate the financial markets, master the features built into trading platforms like thinkorswim, and develop trading plans takes commitment. The good news is that this commitment has the potential to pay off. Schwab provides a one-stop destination for tools and trader education materials that may help traders develop their skills and possibly improve their long-term performance.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. 

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. 

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. 

Investing involves risk, including loss of principal. 

Schwab does not recommend the use of technical analysis as a sole means of investment research. 

​The paperMoney® software application is provided for educational purposes only, and allows users to engage in simulated trading with hypothetical funds using live market data. Market activity, trade executions, transaction costs, and other elements presented in paperMoney are simulations only. Simulated performance does not ensure success in a live environment.

​Supporting documentation for any claims or statistical information is available upon request.

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