Four 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? 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?

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or get our free newsletter to keep up!

One Comment on “Four Traits of the Perfect Trader”

  1. It’s weird hearing you list that stuff.  Number one is totally what I do outside of the market as well.  My best friend gets annoyed w/ all my questions, but I’m always up to do/go wherever.  

    #2– Someone told me “The best algorithms are the ones that do one thing really well… not some magic key to the overall market.”  Trade certain areas and get out when it’s not working.  Ex, if you trade well when the market trends… don’t trade when it’s chopping around. 

    #3– I’ve always been really sensitive to respect.. and explain to other people about trading: personality flaws cost you money.  If you have to be right (contrary to obvious evidence,) you lose money.

    #4 — Yeah, I’m getting more into algo trading.  But it’s not always a good time to turn the box on.. news etc.  On the other hand, I don’t really like when traders say “I just know”…. or “I can feel it”… your brain is like a computer… there’s a set # of factors that go into your decisions… you can break them down.  That’s basically saying “I made a lot of short cuts and I don’t really know how they work.”

    Nice Article!  [email protected] to discuss more

Leave a Reply