7/29/2019 Characteristics of Great Traders
1/1
The 9 Characteristics of Great TradersBy Aamar Shehzad |
TradingMarkets.com | October 01, 2010 08:24 AM
Tags: 9 Characteristics of Great Traders, Great Traders, Aamar
Shehzad, Characteristics of Great Traders
What separates the 10% that make money from the 90% that
don't?
1. 10,000 hours
In his recent book Outliers: The Story of Success, Malcolm
Gladwell describes the 10,000-Hour Rule, claiming that the key to
success in any cognitively complex field is, to alarge extent, a
matter of practicing a specific task for a total of around 10,000
hours. 10,000 hours equates to around 4hrs a day for 10 years. For
some reason most people that'try their hand' at trading view it as
a get rich quick scheme. That in a very short space of time, they
will be able to turn $500 into $1 million! It is precisely this
mindset that hasresulted in the current economic mess, a bunch of
20-somethings being handed the red phone for f inancial weapons of
mass destruction. The greatest traders understand thattrading much
like being a doctor, engineer or any other focused and technical
endeavor requires time to develop and hone the skill set. Now you
wouldn't see a doctor performingopen heart surgery after 3 months
on a surgery simulator. Why would trading as a technical
undertaking require less time?
Trading success, comes from screen time and experience, you have
to put the hours in!
2. Education, education, education.
The old cliche touted by politicians when they can't think of
anything c lever to say to their audience. The importance of
education to success in trading cannot be placed on a highenough
pedestal. You have to learn to earn, the best traders work
obsessively to refine their edge further to stay ahead of the
curve.
3. Think for yourself.
"NO! NO! NO!"... "Bear Stearns is not in trouble"..."Don't move
your money from Bear! That's just silly! Don't be silly!"
A quote from well known stock gur u Jim Cramer aired on CNBC
days befor e Bear Stearns lost 90% of its value. Many followed this
call and felt the obvious pain as a result. Asthe old saying goes,
too many cooks spoil the broth; it is very much the same in
trading. Successful traders blinker themselves from the opinions of
others; they focus on theirown analysis of fundamental and
technical information.
4. Adapt or Die.
Market conditions change and technology advances, thus the
conditions for trading are always evolving, the rise in mechanical
trading is testament to that. The very best tradersthrough a
process of education and adaptation are constantly staying ahead of
the curve and creating ever new and ingenious methods to profit
from the markets evolution.
5. Fail to plan, you plan to fail.
The best traders have a well documented plan; they know exactly
what they are looking for and follow that plan to the letter. Their
preparation for a trade starts long before themarket open, it is
this meticulous planning and importantly adherence to that plan
that helps them avoid the biggest demons for any trader, over
trading and revenge trading.
6. "Be like Machine"
As human beings emotions pay a key role in our existence, for a
trader emotions can be a source of great pain. Trading psychology
and the management of your emotions in atrade play a key role in
overall success. Fear and greed can cut your winners short and let
your losers run. Dealing with emotions follows on from your plan;
the more robust yourplan the less likely you are to fall into the
emotional mine field.
7. Know your tools
Every trader has a set of tools they use, DOM, Charts, News
feeds etc. These tools are a trader's bread and butter; they are
the most vital part of a trader's arsenal, without which
it would be impossible to trade. The best traders have mastered
their order entry methodology, they know all about the features
they need fr om their charts. This mastery of theirtools, allows
the trader to get the very best out of the resources they have
available to them and ensures perfect execution of their trading
ideas.
8. Know Thyself
Behind all the egos and excess, the best traders know their
limitations; they focus on what can go w rong in a trade, and
expend a lot of energy in limiting and controlling their riskbefore
thinking about profits. They have a heightened sense of
self-awareness and focus on incremental self improvement.
9. Profit & Loss
The best traders focus on the trade itself rather than the
P&L; they view each trade as a technical exercise and focus on
getting the most out of the market in accordance withtheir plan.
They do not think i n terms grocery payment, the electric bill and
the desire to make X amount to cover a mortgage payment. Focusing
on the money behind a trade cancloud technical objectivity.
In Conclusion
The greatest traders work hard to get ahead and even harder to
stay ahead. Through increased and niche knowledge they constantly
adapt with the market and remain profitablein every environment.
Drive, tenacity and the will to succeed is the greatest edge of
every successful trader.
Aamar Shehzadis Chief Technical Analyst and Managing Director of
Technical Analysis providerPivotfarm.com. Prior to creating
Pivotfarm.com, Aamar worked as anindependent trader and analyst, he
is a regular speaker at trading seminars and expos and is currently
authoring a book on trading using Support & Resistance entitled
'Support &Persistance'.
Do you trade FAS, FAZ, SSO , SDS, TZA or TNA? Introducing
Leveraged ETF PowerRatings, a simple but powerful rating system for
Leveraged ETFs. Click here to see today's
ratings.
Original publication: November 24, 2009
Page 1 of 1The 9 Characteristics of Great Traders |
TradingMarkets.com
01-Oct-10http://www.tradingmarkets.com/print/.site/stocks/how_to/articles/The-9-Characteristics-of...
