November 03, 2011 at 9:48 am | | Comments 4

4 Traits of the Perfect Trader

Maybe ‘perfect’ isn’t the right word.  We can strive for it, but we’ll all fall short of it given enough time.  Greatness, though…that’s attainable.  But what does it take to become a great trader?

Well, I’m still working toward it myself, and maybe you are too, but we can agree it’s a combination of things.  It’s having the ability to walk the line between two sometimes contradicting attitudes or beliefs.  Here are a few of those, and I’d love to hear your thoughts on it if you have others to add to the list.

Great traders blend:

A ‘Just Go With It’ Attitude with a ‘Question Everything’ Mindset.  What do I mean by that?  Well, traders can be a skeptical bunch, but the best traders still act on what they see.  A market move might be difficult to trust, but it’s underway and it’s happening with or without you.  Traders know they can exit right away if it doesn’t work out, because after all, isn’t that why we trade rather than invest?  I recently saw a comment regarding a “real bull market” by a self-proclaimed trader.  I find it silly that a trader actually cares.  Real traders don’t mind if the moves last or not, they just go with it and adapt along the way.

Flexibility with Structure.  Great traders have a game plan in place, which gives them structure or a framework of rules to guide them in the right direction and help them avoid trouble.  But they’re also very flexible in how they implement their game plan.  They may not deviate from their discipline, but they can shift gears quickly when conditions call for a momentum-based tape or some fade trades when prices are range-bound.

Confidence with Respect for the Market.  This is a tough one and in my experience, never completely mastered.  Great traders understand risk, and they know the market can take their hard-won capital quickly if they don’t defer to the price action when their timing is off.  However, they aren’t afraid to participate, so when they see what they like, they execute with confidence.  This might be among the hardest things to get a grip on for a developing trader.

Science with Art.  Trading is definitely a science to some (quants, that’s you!), and it’s an art form to others (tape readers, holla!).  Some traders develop their own discretionary system whereby they know exactly what they’re looking for but weigh a number of factors before executing.  That might mean taking into consideration if the market’s fast or slow, or if there’s a trend or indecision, or how a run ahead of scheduled news might prompt a reversal.  Great traders develop a feel (art) through their experience, helping them identify better when to implement the proper strategy (science).

Where do you fit into the mix?  Are you out of balance in one or more of these areas?  What can you start improving on today?

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

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  1. Well said. Lots to be aware of when trading.

  2. I completely agree! Great information.

  3. Nice list. I’d like to add one thing…..that good traders ‘own’ their method. I’ve seen or talked to a lot of traders over many years, and can’t think of a single successful trader who is only trading set-ups they learned from someone else. Yes, we all learn from somewhere, but you have to blend what you’ve learned into a method that makes sense for your personality , for your risk tolerance, etc.

    If someone is profitable with their method, they’ve had direct experience with the ups and downs of that method, when it works and when it doesn’t…..and you can’t buy that kind of experience, there is no substitute.

  4. Excellent points Andrew, and I’m glad you shared these. I absolutely agree, every successful trader has that ability to grow beyond what they’re taught from someone else…might be an element of creativity, or just being an ongoing student of the market, but you’re right. Also, the element of having a method that overlays well with your personality is a requirement, no other way to stick with a method unless it ‘fits.’

    Good stuff and thank you for reading and for your comments!

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