The Essential Characteristics of The Successful Trader
The Essential Characteristics of The Successful Trader
The Essential Characteristics of The Successful Trader
Each trader must develop the ability to focus. A one market approach may be the answer for some traders while a single trading approach to several markets may prove to be successful for other traders. The successful trader will: 1. 2. 3. 4. 5. identify a signal or a market opportunity. react decisively. feel good - whether he wins or loses. demonstrate self confidence. exercise his independence.
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Persistence...
"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.
In My Opinion
Trading Is An Art and mechanical trading methods and indicators are best used as just another tool in the practice of THE ART OF TRADING. Diversification achieved by trading a variety of markets is a mistake for most individual traders. Every market has its own characteristics and a singular trading plan will not work equally as well in all markets. You may well improve your trading success by learning one market with the goal of becoming the best possible student of this selected market. You may find that trading just one side of this market the key to your success. Learn To Survive There are as many methods of trading as there are traders. Every trader is different and no one trading approach is right for all traders. Find the methods that work for you and then concentrate on repeating these techniques.
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Take Time Out Every trade consumes emotional energy and a tired trader is a handicapped trader. Take a break - go on a vacation. Get away from the markets - spend some time with family and friends. Trading from a position of emotional strength is as important as trading from a position of financial strength. The First Calculation Is Risk The first question concerning any trade concerns risk or the amount you are willing to lose. If the protective stop has to be placed where the loss exceeds your comfort level - either move the stop closer or DO NOT TAKE THE TRADE. Remove Part Of Your Trading Profits from your account. The first objective is to remove enough profits from the trading account to cover the initial starting amount. This can be achieved by removing 50% of trading profits above a set amount. If you start with $8,000, remove 50% of any profits when the account moves above the $10,000 level. When you have removed $8,000 from the account, you will then be trading on money gained from the market. Once your account reaches the $30,000 level remove all profits above the $30,000 level. Continue to trade within these guidelines until you feel very secure in the number of contracts you are trading. Eventually you may feel secure enough to slowly increase the account size. Trading "Size" Is More Than Just Adding Contracts. The pressure from adding more contracts increases geometrically as the number of contracts increases arithmetically. Whatever number of contracts you are trading successfully, stay with that number. Otherwise, you will find yourself taking a loss on 10 contracts and then you decide to cut back and trade only 3 contracts on the next signal which turns out to be a winner and the end result is a profit that does not equal the loss on the previous trade of 10 contracts.
FIND YOUR TRADING COMFORT LEVEL AND STAY WITH IT FOR A LONG, LONG, TIME. WHEN YOU FEEL THAT YOU ARE A SUCCESSFUL TRADER, AN AGGRESSIVE USE OF YOUR ACCOUNT FOR TRADING THE FULL SIZE BOND CONTRACT WOULD BE AS FOLLOWS:
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Account Size: Account Size: Account Size: Account Size: Account Size:
When your account reaches the $25,000 level, have your broker purchase a $10,000 T-Bill which will then be used for initial margin requirements. A Solid Financial Foundation Trading is a highly speculative business and one never knows when a trading "accident" is about to happen. If you trade, sooner or later you will "wipe out" your account. If fact, you may wipe out your account a number of times. You must plan for this and more importantly, you must have a plan for recovery. All traders lose money. It is the trader that has the ability to recover and to move on to a profitable position that will succeed in the long run. The average investor that uses trading as a part of his portfolio should limit trading activities to no more than 10% of his total investment funds. For each year of the traders age, 1% of his investment funds should be placed in U.S. Government Notes and Bonds. This is accomplished by using a TREASURY DIRECT ACCOUNT (see appendix A). The remaining investment funds should be allocated to a systematic program of investing in common stock growth funds. This can be accomplished through the use of no-load mutual funds spread over such areas as International Funds, Index Funds, and small cap stock funds. A dollar cost average approach is the best way to handle the fund investments. Any portion of your portfolio that involves trading falls within the 10% limit of your total investment funds. This includes futures trading, stock trading, and mutual fund timing.
Before Becoming A Full Time Trader Get completely out of debt. Pay off the house mortgage and the car loan. Carry no balances on your charge cards. Only charge what you can pay off in full each and every month. Accumulate a significant reserve of cash invested in three or six month Treasury Bills. This can be done through your TREASURY DIRECT
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THE ESSENTIAL CHARACTERISTICS OF THE SUCCESSFUL TRADER ACCOUNT (see appendix). As soon as you are trading full time,
set up Keogh and Money Purchase retirement plans and contribute the maximum amount each year.
Some traders operate best from one side of the market. If this is your situation, then build your trading plan around your strength. If you trade best from the long side, trade only the buy signals. If the short side is your strong suit, then trade only the sell signals. Many traders will successfully operate from either side. Their trading plan will follow both valid buy and sell signals as they are as comfortable being short as being long. Trading size is directly related to our ability to withstand a loss. Once you exceed your comfort level by increasing your trading size, it will be difficult for you to carry out your trading plan. Find your trading toleration and then stick to it. A range of contract size such as 1 to 5 contracts may prove to be an acceptable level of trading for some individuals while being unacceptable to other traders. It is a good practice to trade a different number of contracts for different trading situations. The number of contracts associated with any particular entry signal is decided upon by a variety of considerations. The first entry signal of a new direction in the market usually will reach its profit objective with the least amount of adverse price movement whereas a later entry signal in the same direction may encounter difficulty in reaching its profit objective. When a new direction begins, put your full position on with the first signal. Later signals in the same direction should be traded with a smaller number of contracts.
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carrying out your plan. Do you give up because you have failing grades? Of course not. It takes years of trading experience to become a good trader. While I cannot guarantee successful for everyone, relatively few traders are successful early on. If they are, it usually is a fluke and it is but a short time and they give back most of their profits and then some to the market place. Patience, Courage, and Persistence are ingredients in the recipe of successful trading. all required
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2.
You are short because a valid sell signal has been initiated and you will remain short until the profit objective has been reached, or the protective stop was elected, or a buy signal was initiated. You are flat because no new valid entry signal is present. You will stay flat until a valid entry signal appears.
3.
Be careful of price data that you request from your broker. The official open is from the afternoon session. If you call in the morning with the idea of requesting the morning opening, you probably will receive the opening from the afternoon session.
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Request the prices for the resumption of trading or better yet, ask for the opening of the Mid Am Contract. The Mid Am Contract trades only during the day session and it will have a posted opening price. The Mid Am begins trading in the morning at the same time that the regular contract resumes trading. One other problem that you will encounter is that of the split opening. The broker will usually quote an opening range such as 110-26 to 110-28. Use the first number the broker gives you. In this case, use 110-26. If the opening range had been quoted as 110-28 to 110-26, use 110-28 as the open. One last point before moving on, SUCCESSFUL TRADING IS AN ART, it is not some scientific formula that you learn and immediately become wealthy. Rules are nothing more than guidelines to help us become successful artists. Do not fuss over an exact number. If the market gaps open and it is on the borderline of the rule for taking profits, you are going to have to make a quick decision and this is where the "feel" of the market, the art form, is going to guide you. The spirit of the rule is more important than the exact number in the rule.
Find your comfort zone for risk and stay within this zone. If a signal looks like a sure winner, a lay - up, a money in the bank type trade - STAY WITHIN THE COMFORT ZONE. DO NOT BET THE HOUSE ON THE TRADE! Remember, the easy looking trades have a tendency to turn out to be the losers. In this business, anything can be wrong. There is no such signal as a sure thing.
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