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Traits of A SUCCESSFUL TRADER

  
  Education
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Courage…courage-1

“The credit belongs to the man who is actually in the arena, who strives valiantly; who knows the great enthusiasms, the great devotions, and spends himself in a worthy cause; who at best, knows the triumph of high achievement; and who, at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat.”
Theodore Roosevelt

Persistence…persistence1

“Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.”
Calvin Coolidge

The above quotes strike me as being appropriate for all of us engaged in the endless quest of trading profits. I make it a point to review these statements on a regular basis as I am well aware of the fact that I am only as good or bad as my last trade.

I accept the fact that I will never have it “made” as a trader. Each and every day is a new trading situation and I must be prepared with my trading plan. I must PLAN MY TRADE AND TRADE MY PLAN.

DOUG HIRSCHHORN’S 8 WAYS TO GREAT

  
  Education
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I just completed reading a book 8 WAYS TO GREAT.  It is short (114 pages) but packed with great insight on what makes great people great.  I read it in a few hours and as is the case in all the books I read I highlight major points and make margin notes about what strikes me as important enough to share with others.  What follows are the eight principles or “ways to great” and the quotes I found worth passing along.

First Principle: Find Your “Why?”

“The reason most people go through life with big dreams but fail to achieve them is because they ask themselves “how” before they know their “why”(9).

Second Principle: Get To Know Yourself

“The perfect trader-if such a person exists-is methodical and careful about making decisions, extremely disciplined, resilient to setbacks, with a high degree of internal confidence.  He holds strong opinions but is also able to admit quickly when he is wrong, not take it personally, and view it as a learning opportunity rather than a failure.  He understands the value of leaving his ego at the door.  He’s willing and able to trust his gut and place big bets when the opportunity presents itself.  In fact, that pretty well describes the ideal blend of characteristics of any successful person, no matter what he is doing professionally or personally” (18-19).

Third Principle:  Learn To Love The Process

“The best traders don’t think about how many millions they need to make each year.  They focus on making the best trading decision they can with each trade they make. And if there isn’t a good trading opportunity right now, they have the discipline to do nothing and just wait. Concentrating on one trade at a time is their process” (38).

Fourth Principle:  Sharpen Your Edge

“Gaining a competitive advantage is like having a two-edged sword, and you need to keep both of them sharp.  On edge is internal-knowing what unique skills you bring to the table.  The other is external and comes from gathering knowledge that makes it more likely you’ll succeed” (45).

Fifth Principle:  Be All That You Can Be

“The takeaway lesson for everyone wanting to optimize their own performance without regard for what others are doing is fourfold: 1) know your edge; 2) act only when you have the edge; 3) avoid taking the outcome personally because it involves factors that are beyond your control; 4) measure your success in terms of how well you performed and not only the outcome” (70).

Sixth Principle: Keep Your Cool

“Deciding when to cut your losses is one of the toughest decisions for anyone to make, but traders at the top of their game know that they always have to make the decisions they need to make, which may or may not be the ones they want to make” (77).

Seventh Principle: Get Comfortable With Being Uncomfortable

“In the trading world, you will either make money or lose money on any given trade. All that matters in the end is making more money when you’re right than you lose when you’re wrong.  Knowing this, traders have learned to accept failure as part of the game, but they also use the information they acquire from their mistakes as a learning tool.  Frequently, what they learn from losing money is more valuable than what they learn when they make money” (90).

Eighth Principle: Make Yourself Accountable

“Commitment, perseverance, and discipline are the characteristics that move people beyond desire to action, that differentiate mediocrity from greatness, and that separate greatness from superstardom” (95).

And to sum up: “True success begins with a state of mind.  But it takes specific actions and behaviors to move from intentions into action and get results” (2)

Insightful quotes from Trading legend, Larry Hite

  
  Education
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No matter what information you have, no matter what you are doing, you can be wrong.

One of the great things about the market is, the markets don’t care about you. The market doesn’t care what color you are. The markets don’t care if you are short or tall. They don’t care about anything. They don’t care whether you leave or stay. 

… the beautiful thing about the markets, they don’t like you, they don’t dislike you, they just don’t care. They are there everyday. You want to play, you can play. You don’t want to play, don’t play.

We approach markets backwards. The first thing we ask is not what can we make, but how much can we lose. We play a defensive game.

There are just four kinds of bets. There are good bets, bad bets, bets that you win, and bets that you lose. Winning a bad bet can be the most dangerous outcome of all, because a success of that kind can encourage you to take more bad bets in the future, when the odds will be running against you. You can also lose a good bet, no matter how sound the underlying proposition, but if you keep placing good bets, over time, the law of averages will be working for you.

Quotes by Paul Tudor Jones II

  
  Education
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Paul Tudor Jones II is one of the most successful hedge fund managers. He has never suffered a losing year. His fund has returned 23% annualized gain since its inception in 1986. Paul Tudor is a momentum trader, who believes that price move and trend unfold only because of investors’ behavior.

Markets have consistently experienced “100-year events” every five years. While I spend a significant amount of my time on analytics and collecting fundamental information, at the end of the day, I am a slave to the tape and proud of it.

I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over.

There is no training — classroom or otherwise — that can prepare for trading the last third of a move, whether it’s the end of a bull market or the end of a bear market. There’s typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. The only way to learn how to trade during that last, exquisite third of a move is to do it, or, more precisely, live it.

Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of a great bull market is typically a blow-off, whereas the mania runs wild and prices go parabolic.

Quotes by Paul Tudor Jones II

  
  Education
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Paul Tudor Jones II is one of the most successful hedge fund managers. He has never suffered a losing year. His fund has returned 23% annualized gain since its inception in 1986. Paul Tudor is a momentum trader, who believes that price move and trend unfold only because of investors’ behavior.

Markets have consistently experienced “100-year events” every five years. While I spend a significant amount of my time on analytics and collecting fundamental information, at the end of the day, I am a slave to the tape and proud of it.

I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over.

There is no training — classroom or otherwise — that can prepare for trading the last third of a move, whether it’s the end of a bull market or the end of a bear market. There’s typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. The only way to learn how to trade during that last, exquisite third of a move is to do it, or, more precisely, live it.

Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of a great bull market is typically a blow-off, whereas the mania runs wild and prices go parabolic.

Wise quotes from Bernard M. Baruch

  
  Education
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263-1Wise quotes from Bernard M. Baruch:
Bernard Baruch was a stock market speculator who became a millionaire by age 30 in the early 1900’s and eventually a statesman and advisor to multiple Presidents during WWI and WWII.

  • -A speculator is a man who observes the future, and acts before it occurs.
  • -If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he is wrong.
  • -During my eighty-seven years I have witnessed a whole succession of technological revolutions. But none of them has done away with the need for character in the individual or the ability to think.
  • -Age is only a number, a cipher for the records. A man can’t retire his experience. He must use it. Experience achieves more with less energy and time.
  • Do not blame anybody for your mistakes and failures.
  • Every man has a right to his opinion, but no man has a right to be wrong in his facts.
  • I made my money by selling too soon.
    I never lost money by turning a profit.
  • Most of the successful people I’ve known are the ones who do more listening than talking.
  • Never pay the slightest attention to what a company president ever says about his stock.
  • Whatever failures I have known, whatever errors I have committed, whatever follies I have witnessed in private and public life have been the consequence of action without thought.

Market Wisdom from Bernard Baruch

  
  Education
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You don’t read a lot about Bernard Baruchanymore, but his teachings about the market are useful today as they always have been. There are several good books about him including his own“Baruch: My Own Story” which I recommend highly especially for those of you looking for a book to take with you on your summer vacations.

Although I’ve provided several quotes from Bernard Baruch through the years, here are some notes that I’ve taken from reading about him and his market wisdom. Enjoy!

    • Baruch started out as most traders do – i.e. losing lots of money because he lacked the knowledge, experience, & discipline. “You have to lose money in order to better yourself.”
      • Real success in the market takes time and money. Unfortunately “most people view the market as the place where the miracle of great and quick riches can be performed with little effort.”
        • Overtrading and holding too many positions in his early years caused Baruch to go broke many times before he developed the discipline to succeed.
          • A successful speculation is “a man who observes the future and acts before it occurs.” Acting swiftly in the market is important.
            • After losing money from the recommendation of others, Baruch focused himself on the facts. “One must search through a maze of complex and contradictory details to get to the significant facts…..Then he must be able to operate coldly, clearly, and skillfully on the basis of those facts.” The challenge for the successful speculator is “how to disentangle the cold hard facts from the rather warm feelings of the people dealing with the facts.” Moreover, “if you get all the facts, your judgment can be right; if you don’t get all the facts, it can’t be right.” (more…)

            Winston Churchill for Traders and Analysts

              
              Education
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            Twenty five quotes from Winston Churchill for traders and financial analysts:

            1. I love this war. I know it’s smashing and shattering the lives of thousands every moment — and yet — I can’t help it — I enjoy every second of it. (A letter to a friend, 1916)

            2. I pass with relief from the tossing sea of Cause and Theory to the firm ground of Result and Fact. (The Story of the Malakand Field Force, 1898)

            3. True genius resides in the capacity for evaluation of uncertain, hazardous, and conflicting information.

            4. The truth is incontrovertible. Panic may resent it, ignorance may deride it, malice may distort it, but there it is. (Speech in the House of Commons, May 17, 1916)

            5. Success is not final, failure is not fatal: it is the courage to continue that counts. (The Prodigal Project : Book I)

            6. It is a mistake to look too far ahead. Only one link in the chain of destiny can be handled at a time. (Speech in the House of Commons, February 27, 1945) (more…)

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