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15 Types of Traders-Challenges Specific to Each one

1)Strategic Trader :This type of trader has a great chance of success but is (a ) likely not to recognize emotional mistakes ,(b ) lean toward perfectionism  ,and (c ) have a strong desire to be right

2)Planning Trader :Again ,this type of trader has an excellent chance of success.Your major challenge is the desire for excitement and the need to be right.You easily could become bored with trading and do things to lessen the boredom and thus limit your profits.

3)Detailed Trader :The detailed trader has a good chance of success,but you could be so into details of what you are doing that your miss the big profits.

4)Administrative Trader :You may be overly critical of yourself but not recognize mistakes that are right in front of your eyes.Furthermore ,under stress your may question your commitment to trading because your don’t find it satisfying.An administrative trader also has a good chance of success.

5)Facilitative Trader :This kind of trader has an above average chance of success.However ,you could have a problem with logic and ideas because you are always finding something new.Furthermore ,you may need external confirmation of your ideas ,beliefs ,and systems.

6)Innovative Trader :You have an above -average chance of success.However ,you probably want external confirmation for everything you do and have a strong need for a mentor.Furthermore ,you may  tend to abandon a good system prematurely if it goes against you because of your emotional reactions.

7 )Value-driven Trader :You have an above -average chance of success in trading but find that you must do things your way.In addition ,discipline ,follow -through ,and attention to details will always be a problem for you.You also may find trading boring and do things to fulfill your need for excitement.

8)Independent Trader :You are driven by logic and could easily reject systems that work well because you don’t understand them logically.Furthermore ,your trading could dominate your time and leave you socially isolated.That said ,you have a good chance of success if you apply yourself.

The remaning 7 types have a much more difficult time becoming successful in trading arena. (more…)

Nuggets from Jesse Livermore

 Don’t trade until I see a pile of money sitting in the corner. Then, I go over and pick it up.

Remember, it [the market] is designed to fool most of the people most of the time.

A prudent speculator never argues with the tape.

Few people succeed in the market because they have no patience. They have a strong desire to get rich quickly.

The big money is made by the sittin’ and the waitin’ — not the thinking. Wait until all the factors are in your favor before making the trade.”

Book Review: Hedge Hogs: The Cowboy Traders Behind Wall Street's Largest Hedge Fund Disaster

I’ve recently enjoyed reading Hedge Hogs: The Cowboy Traders Behind Wall Street’s Largest Hedge Fund Disaster, the story of how Amaranth blew up. It’s essentially a story of one man who was successful for a while and took on unbelievable amounts of risk trading natural gas futures while all of his supervisors, mostly the fund’s owner but some others as well lost all control or even desire for control. The book greatly details the actual trades and talks about many related personages, but it left me puzzled about how the trader who was mostly responsible for this disaster lasted this long. He had made a huge amount of money prior to blowing up, and even though he appeared to be quite intelligent the reasoning behind his trades are either inadequately or perhaps truthfully described as being close to random. He suddenly takes a liking to certain types of spreads and just bets on them evidently without much more than a seemingly unjustified belief that they will widen.

At some point he essentially became the market and and had to keep up the spreads by continuous buying until the fund blew up. The main trader and some others are portrayed as sociopathic degenerates driven by irrational beliefs as well as a strong desire to win at all costs. I would be interested to hear some energy trader’s or any commodity trader’s opinion about the book.

Trading Wisdom – Gary Bielfeldt

The most important thing is to have a method for staying with your winners and getting rid of your losers. By having thought out your objective and having a strategy for getting out in case the market trend changes, you greatly increase the potential for staying in your winning positions. The traits of a successful trader: The most important is discipline – I am sure everyone says that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to adequate capitalization. Fifth, you need a strong desire to win. You have to have the attitude that if a trade loses, you can handle it without any problem and come back to do the next trade. You can’t let a losing trade get to you emotionally. If a trade doesn’t look right, I get out and take a small loss.

Trading Wisdom

tradingwisdom

The most important thing is to have a method for staying with your winners and getting rid of your losers. By having thought out your objective and having a strategy for getting out in case the market trend changes, you greatly increase the potential for staying in your winning positions. The traits of a successful trader: The most important is discipline – I am sure everyone says that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to adequate capitalization. Fifth, you need a strong desire to win. You have to have the attitude that if a trade loses, you can handle it without any problem and come back to do the next trade. You can’t let a losing trade get to you emotionally. If a trade doesn’t look right, I get out and take a small loss.

Jesse Livermore / "How to trade stocks"

–“All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical (technical) formations and patterns recur on a constant basis.”

–“The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.”

–Don’t take action with a trade until the market, itself, confirms your opinion. Being a little late in a trade is insurance that your opinion is correct. In other words, don’t be an impatient trader.

–“It is foolhardy to make a second trade, if your first trade shows you a loss. Never average losses. Let this thought be written indelibly upon your mind.”

–“Remember this: When you are doing nothing, those speculators who feel they must trade day in and day out, are laying the foundation for your next venture. You will reap benefits from their mistakes.”

–“When a margin call reaches you, close your account. Never meet a margin call. You are on the wrong side of a market. Why send good money after bad? Keep that good money for another day.”

–“Successful traders always follow the line of least resistance. Follow the trend. The trend is your friend.”

–A prudent speculator never argues with the tape. Markets are never wrong–opinions often are.

–Few people succeed in the market because they have no patience. They have a strong desire to get rich quickly.

–“I absolutely believe that price movement patterns are being repeated. They are recurring patterns that appear over and over, with slight variations. This is because markets are driven by humans–and human nature never changes.”

–When you make a trade, “you should have a clear target where to sell if the market moves against you. And you must obey your rules! Never sustain a loss of more than 10% of your capital. Losses are twice as expensive to make up. I always established a stop before making a trade.”

–“I am fully aware that of the millions of people who speculate in the markets, few people spend full time involved in the art of speculation. Yet, as far as I’m concerned it is a full-time job–perhaps even more than a job. Perhaps it is a vocation, where many are called but few are singled out for success.”

–“The big money is made by the sittin’ and the waitin’–not the thinking. Wait until all the factors are in your favor before making the trade.”

Wisdom of Market Wizards

“Perhaps the most important rule is to hold on to your winners and cut your losers. Both are equally important. If you don’t stay with your winners, you are not going to be able to pay for the losers.” – Michael Marcus

“The more a price pattern is observed by speculators, the more prone you are to have false signals. The more a market is the product of nonspeculative activity, the greater the significance of technical breakouts.” –Bruce Kovner

My take – Most commons are pennants and flags. And most obvious failed outbreaks are candles ended with the close below the intended trendline.

“The most important rule is to play great defense, not great offense. Everyday I assume every position I have is wrong. I know where my stop risk points are going to be. I do that so I can define my maximum drawdown. Hopefully, I spend the rest of the day enjoying positions that are going in my direction. If they are going against me, then I have a game plan for getting out.”
“… I believe the very best money is to be made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all the money by catching the trends in the middle. Well, for twelve years, I have often been missing the meat in the middle, but I have caught a lot of bottoms and tops. If you are a trend follower trying to catch the profits in the middle of a move, you have to use very wide stops. I’m not comfortable doing that. Also, markets trend only about 15% of the time; the rest of the time they move sideways.”
“Don’t focus on making money; focus on protecting what you have.”
Paul Tudor Jones (Big Big Big Fund Manager)

“The most important is discipline – I am sure everyone tells you that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courafe to go into the market, and courage comes from adequate capitalization. Fifth, you need a strong desire to win.”
“You should have the attitude that if a trade loses, you can handle it without any problem and come back to do the next trade. You can’t let a losing trade get to you emotionally.” – 
Gary Bielfeldt

The traits of a successful trader

sachin

The most important is discipline – I am sure everyone says that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to adequate capitalization. Fifth, you need a strong desire to win.” – Gary Bielfeldt