Thursday, September 17, 2009
Every prosperous trader has similar tools in his trading toolbox. Let's break these success traits down into logical sections:
Successful Trader Emotions:
Calm: Trader feels little emotion, even if the market goes against him. A good trader stays calm, on good or bad days.
Comfortable with self: Trader already has a sense of self worth and confidence, not necessarily by trading.
Logical: A good trader is a problem solver and knows a high percentage trade when he sees it. He finds a good trading system and sticks with it.
Patient: An excellent trader waits for just the right moment before making the trade. A patient trader can go for a month without making any trades and it doesn't bother him.
Realistic: A successful trader knows that the markets do not know him or care about him. He realizes that the equity markets are not for him or against him.
Successful Trader Work Ethic:
Hard worker: the successful trader researches stocks/funds every day using an unbiased equity analysis website, such as Morningstar.
Knows trading is not a “get rich quick” scam. A good trader considers trading his job or his own small business. He is content to break even or make a little money the first year. After that, he sets yearly profit goals.
The ethical trader never gives others buy/sell advice. He never charges anyone for his knowledge. He knows no one is an expert and that every trader does things just a little differently.
Watches at least one business news program daily
Reads any news on the wires, especially if they concern equities he owns or is thinking of buying
Gathers all information together and sifts through it in a logical fashion. He realizes that the final decision(if any) is his alone. The successful trader is a “white box” investor.
Successful Trader Characteristics:
A confident trader never listens to stock tips. He knows that if the “man in the street” has heard something, it is way too late to take advantage.
A good trader never relies on other's “expert” opinions. He knows that it will be much more satisfying to make his own decisions using his own research.
A well-grounded trader realizes that the market may crash on any given day. He also knows to expect the unexpected, no matter how well he has been doing.
A realistic trader knows that the past is never any guarantee of future results.
The successful trader is looking towards eventually making a living trading. He says to himself: “Why work for someone else when I can be my own boss?”
The practical trader knows that he must be well capitalized and that this may take awhile. He realizes, for example, that to make about $4000/month in consistent profits(a good living), he must have about $250,000 equity. These numbers yield a monthly percent profit of about 1.6%, a very attainable goal. A successful trader never has to take unreasonable risks with a well-capitalized account.
Trades for the very long term; does not day trade.
Knows the importance of diversification among all asset classes and asset sizes.
Never trades on news or rumor. The good trader knows that the market is made up of thousands of people, who sometimes act irrationally. He waits until the news is past, then trades if he's still interested.
The careful trader uses exchange traded funds(ETF's). He might have a few mutual funds/stocks, but he realizes the inflexibility of mutual funds and the volatility of the naked stock. He does not bother with options(of any kind), futures, or currency trading, since the prudent trader does not want that much risk..
Successful Trader Priorities:
The practical trader always looks for the lowest costs possible, including commission. He does not trade penny stocks, knowing the commissions can be very high for stocks under $2.00 per share.
The cautious trader uses very strict entry/exit rules for each trade. He puts in advanced orders to enforce these rules. He never second-guesses himself.
The good trader never risks more than 5% of his total equity on any one trade, even if he intends for it to be very long term. He knows that it is better to risk 1% or 2% at the most for an individual transaction.
The long-term trader who trades for a living knows that preservation of capital is his first priority. He also realizes that making small amounts of money consistently is his second priority. The patient trader knows that making a consistent living by trading may take five or more years, and considers it to be his third and last priority. The profitable trader knows that he needs all three priorities and that they must be completed in the above order.
Successful Trader Day To Day:
The successful trader takes money off the table when the market offers it to him. The amount taken depends on his trading system, but it is always consistent.
The good trader buys more shares if the fund price/share goes down an agreed upon amount or percent.
The successful trader always buys shares at a lower price and sells shares at a higher price.
The careful trader knows decides how and when to “prune” laggards and how and when to add money to funds that have done well.
The consistent trader invests more capital monthly or some other short time increment. He treats these periodic infusions of money like a bill; money he cannot access for anything else.
The prudent trader does not over trade or trade without a very good reason. He doesn't need daily "action". He trades ONLY in agreement with his trading plan. He is happy with slow and steady growth.
The Successful Trader Has Other Unrelated Interests:
His family
Plays golf or other sports
Has hobbies such as woodworking, cars, reading, or travel
Knows that he does not have to sit around his computer all day, trying to catch every tick. He leaves that to the day traders.
John J. Soares
What Color Is Your Trading Box?
One Man's Trading System
Successful Trader Emotions:
Calm: Trader feels little emotion, even if the market goes against him. A good trader stays calm, on good or bad days.
Comfortable with self: Trader already has a sense of self worth and confidence, not necessarily by trading.
Logical: A good trader is a problem solver and knows a high percentage trade when he sees it. He finds a good trading system and sticks with it.
Patient: An excellent trader waits for just the right moment before making the trade. A patient trader can go for a month without making any trades and it doesn't bother him.
Realistic: A successful trader knows that the markets do not know him or care about him. He realizes that the equity markets are not for him or against him.
Successful Trader Work Ethic:
Hard worker: the successful trader researches stocks/funds every day using an unbiased equity analysis website, such as Morningstar.
Knows trading is not a “get rich quick” scam. A good trader considers trading his job or his own small business. He is content to break even or make a little money the first year. After that, he sets yearly profit goals.
The ethical trader never gives others buy/sell advice. He never charges anyone for his knowledge. He knows no one is an expert and that every trader does things just a little differently.
Watches at least one business news program daily
Reads any news on the wires, especially if they concern equities he owns or is thinking of buying
Gathers all information together and sifts through it in a logical fashion. He realizes that the final decision(if any) is his alone. The successful trader is a “white box” investor.
Successful Trader Characteristics:
A confident trader never listens to stock tips. He knows that if the “man in the street” has heard something, it is way too late to take advantage.
A good trader never relies on other's “expert” opinions. He knows that it will be much more satisfying to make his own decisions using his own research.
A well-grounded trader realizes that the market may crash on any given day. He also knows to expect the unexpected, no matter how well he has been doing.
A realistic trader knows that the past is never any guarantee of future results.
The successful trader is looking towards eventually making a living trading. He says to himself: “Why work for someone else when I can be my own boss?”
The practical trader knows that he must be well capitalized and that this may take awhile. He realizes, for example, that to make about $4000/month in consistent profits(a good living), he must have about $250,000 equity. These numbers yield a monthly percent profit of about 1.6%, a very attainable goal. A successful trader never has to take unreasonable risks with a well-capitalized account.
Trades for the very long term; does not day trade.
Knows the importance of diversification among all asset classes and asset sizes.
Never trades on news or rumor. The good trader knows that the market is made up of thousands of people, who sometimes act irrationally. He waits until the news is past, then trades if he's still interested.
The careful trader uses exchange traded funds(ETF's). He might have a few mutual funds/stocks, but he realizes the inflexibility of mutual funds and the volatility of the naked stock. He does not bother with options(of any kind), futures, or currency trading, since the prudent trader does not want that much risk..
Successful Trader Priorities:
The practical trader always looks for the lowest costs possible, including commission. He does not trade penny stocks, knowing the commissions can be very high for stocks under $2.00 per share.
The cautious trader uses very strict entry/exit rules for each trade. He puts in advanced orders to enforce these rules. He never second-guesses himself.
The good trader never risks more than 5% of his total equity on any one trade, even if he intends for it to be very long term. He knows that it is better to risk 1% or 2% at the most for an individual transaction.
The long-term trader who trades for a living knows that preservation of capital is his first priority. He also realizes that making small amounts of money consistently is his second priority. The patient trader knows that making a consistent living by trading may take five or more years, and considers it to be his third and last priority. The profitable trader knows that he needs all three priorities and that they must be completed in the above order.
Successful Trader Day To Day:
The successful trader takes money off the table when the market offers it to him. The amount taken depends on his trading system, but it is always consistent.
The good trader buys more shares if the fund price/share goes down an agreed upon amount or percent.
The successful trader always buys shares at a lower price and sells shares at a higher price.
The careful trader knows decides how and when to “prune” laggards and how and when to add money to funds that have done well.
The consistent trader invests more capital monthly or some other short time increment. He treats these periodic infusions of money like a bill; money he cannot access for anything else.
The prudent trader does not over trade or trade without a very good reason. He doesn't need daily "action". He trades ONLY in agreement with his trading plan. He is happy with slow and steady growth.
The Successful Trader Has Other Unrelated Interests:
His family
Plays golf or other sports
Has hobbies such as woodworking, cars, reading, or travel
Knows that he does not have to sit around his computer all day, trying to catch every tick. He leaves that to the day traders.
John J. Soares
What Color Is Your Trading Box?
One Man's Trading System
Subscribe to:
Posts (Atom)
