Sunday, 21 August 2016

30 Habits of Wealthy Traders

By Tim Bourquin of Trader Interviews:

1. Wealthy traders are patient with winning trades and enormously impatient with losing trades. - it takes time to get comfortable with being uncomfortable; it's impossible to jump into brain surgery days after med school graduation.
2. Wealthy traders realize that making money is more important then being right. - now, making money is just the material reward of making the right decisions, but not always; protecting the down side is also based on making the right decisions.
3. Wealthy traders look at technical analysis as a picture of where traders are lining up to buy and sell. - seeing where buyers and sellers line up, may be the holy grail of trading IMO.
4. Before they enter any trade they know exactly where they will exit for either a gain or a loss. - I think it goes well with making the right decisions; plan your trades, trade your plan...I hear that every day on the Squawk Radio from Nebraska, Hoag, Eddie, Jayhawk, Bob...
5. Wealthy traders approach trade number 5 with the exact same mind set they did on the 4 previous losing trades. - back to strategy and trade plan; they both have to printable.
6. Wealthy traders use naked charts and focus on zones. - indicators are lagging, but combined with a solid strategy and trade plan could have decent results for beginning traders.

7. Wealthy traders realized a long time ago that being uncomfortable trading is OK. - goes hand in hand with the first statement.
8. The markets they trade fit their personality. They are a participant – not an on-looker. - it takes screen time to find all the pieces of the puzzle.
9. They stopped trying to pick tops and bottoms long ago – and stopped losing money doing so there is an edge trading tops and bottoms question is: does it fit traders personality and trading plan?
10. They stopped thinking about the market being “cheap” or “expensive”. - well, we trade leveraged products at TST.

11. Wealthy traders are willing to change sides, short to long and vice versa when the market tells them to do so. - ego, flexibility, market knowledge, all come together when trading both sides of the market.
12. Wealthy traders trade aggressively when trading well and modestly when they are not. - it is easy to lose site of this aspect of trading and swinging for the fences just because of a hunch is not receipt for success.
13. They realize the market will be open again tomorrow. - setting a daily cash goal will push a trader to over trade, take unnecessary risks which result in random results.
14. Wealthy traders will never add to a losing trade....EVER. - I remember a strategy in a old book of trading: scaling in a trade...right!!! Maybe if you're trading 5 – 10.000 S&P contracts. In my opinion this may be the #1 strategy to clean an account when mixed with ego and false hope.
15. Cash is the target but wealthy traders set goals for their trading that are anything but money. - what a concept! Oh, wait a minute, isn't this the concept TST teaches day in and day out?
16. They read trading books, but they read more “crowd” books too ex: The Wisdom of Crowds, The Art of Strategy, Markets, Mobs & Mayhem. - knowledge is's all I got on this one.
17. They provide liquidity to the markets while watching price and volume. - grasping this idea is beyond me.
18. They have a way to gauge fear, greed and speed of transactions. One way: tick charts.
19. They practice reading the right side of the chart, not the left. - screen time again
20. Every wealthy trades has an “edge”. - Now, that's something new, right? Build a strategy, write a trade plan...could this have something to do with fining an “edge”?
21. Their position size is calculated exactly on risk tolerance. - this reminds me of the AHA moment I had after listening to Greg Weitzman webinar on TST I might say, it was the turning point for my trading plan.
22. Profit targets are based on Average True Range. - noted in my plan
23. One or two trades a month make their month. - Base hits, base hits, base hits...sounds like a broken record, but one must learn to like this broken record.
24. Confident decision makers in the face of incomplete information. - but it's not gambling. To the onlookers, traders are major risk takes, always flippin' the coin. I would call it organised chaos and one needs some fantastic glasses to see the 3D picture: discipline, discipline, discipline.
25. A losing trade is not a reflection on themselves as a trader. - based on my trading plan, out of 10 trading days, I can afford 4 losing days and at the end of a losing day I can say: “well, that's out of the way, now I can concentrate on the upcoming winning day”.
26. Their business isn't trading – it's fining the right trades. - I hear it all the time: “I’m going to try a short here and see what happens, hope for the best”. I know there is no trading plan when “trying” a trade and “praying” it works out. I was there a few months ago.
27. They write down or record every trade: price, thoughts, mood... - some new guy here at TST is putting an emphases on keeping a journal. Don't have time for that? Einstein wrote his thoughts and he was a genius.
28. Their conviction on an active trade remains unless something major changes. - When you have confidence in your trading plan, taking a bad trade is just a way to get to the good trade; recognising trend change helps with not letting winners turn into losers.
29. A winning trade does not result in taking on extra risk the next trade. - Nebraska always says: “trade 1 lot and let the winners build your account” and Dr. Andrew Menaker says: “ winners build confidence”.
30. They trade the reaction not the “news”.

Quote for the day

"Who looks outside, dreams; who looks inside, awakes." - Carl Jung