Commentary: Top Ten Characteristics of Great Traders

  1. Great Traders do their own homework.  They get to know a basket of stocks and how those stocks trade.  I have always believed that stocks have personalities just like people and they react differently when presented with challenges.  Some overreact others react very little.  Some hide their intentions while others are like an open book.  The great traders learn the strengths and weaknesses of their stocks.  A trader does not need to trade that many stocks in order to be successful in the market.
  2. Great Traders are excellent Chartists.  Chart reading skills can keep you out of trouble and help you make money.  I believe that fundamentals will primarily tell you what to buy (sometimes when to buy) and technical analysis will tell you when to get involved and with the proper strategy to optimize the market conditions.
  3. Great Traders have a definitive Trading Plan and they follow their plan with absolute discipline. 
  4. Great Traders are decisive and confident in their trading.  In my opinion, confidence comes from understanding your contingency exit if the trade does not go as planned.
  5. Great Traders are students of the Market and are in a constant quest for more knowledge.  My experience is that those traders that lead you to believe that there is nothing more to learn are those that will usually end up being losers.
  6. Great Traders are patient.  This may seem to be in conflict with #4.  The truth is that successful traders know when to sit on their hands and do nothing, yet be decisive without hesitation when action is needed.  Overtrading can occur for those traders that struggle with lack of patience which only ends up putting more money in the brokers’ pocket.
  7. Great Traders have laser focus on the task at hand.  Concentration to the exclusion of outside influences is critical for success.
  8. Great Traders possess the knowledge of the most appropriate strategies to implement in order to optimize Market conditions.
  9. Great Traders understand the importance of Portfolio Management which includes not only diversification but position sizing, money management and adherence to risk tolerance.
  10. Great traders are neither greedy nor fearful.  They are usually emotionally stable people and place their trading activities in context and balance with life’s other priorities.

There are other characteristics that Great Traders possess, but these are the ones that come to the top of my list.  I would mention one final activity that I feel is crucial to success and that is to keep a Trading Journal.  A journal will allow you to record your trades for future review so that you can begin to analyze those trades to see the commonality present in successful as well as unsuccessful trades.  The value of that is that you can begin to replace bad trading activity with good trading activity.  Your feelings should also be noted in the journal because the more that emotions are removed from trading the better off you will be.  Best, Robin

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