The web team for the Lord of the Rings Online has published an overview of the traits system. The article details what the four main categories of traits are all about and how they benefits your character's advancement. A snippet is below:

Acquiring and activating Traits is one of the most flexible methods for customizing your character in The Lord of the Rings Online^TM: Shadows of Angmar^TM. Simply put, Traits are new skills, bonuses, and other enhancements that benefit your character. There are four main categories of Traits: Virtue, Race, Class, and Legendary, which are earned by completing Deeds, quests, and other achievements during your adventures. Your Deed Log contains information about which of your current Accomplishment goals will reward you with a Trait.

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