Editor’s Note: This article was originally written by Mr. Netto in January 2009.
Over the course of my 20 years in the trading arena, poker business, and sports odds making, certain inalienable qualities seem to resonate in those exhibiting consistent success. The process to acquire this skill set is by no means assured and represents a constant work in progress. A process invariably leading us through multiple peaks and valleys, calling into question what compels us to compete in a trading arena that oscillates so easily from unimaginably predicable to perversely difficult.
These attributes are applicable on a much grander scale, as they transcend the world of trading and investing. If you’re reading this article, odds are you possess a certain entrepreneurial zeal and penchant for taking on risk. Great leaders, doctors, lawyers, and other prominent people in society will usually possess many, if not all, of these qualities.
These 10 attributes are so important that they make up the core training I conduct for those that attend my mentorship program, any in person multi-day workshop, or those who decide to invest in my fund. They are not listed in any particular order of preference, as all have great significance and overlap with each other. I implore you to use them as a template to decide what is important and how to incorporate them to make substantive improvements to your trading and personal life.
1. Heart/Courage – Trading is a business necessitating one does things causing some degree of consternation from time to time. Trading is an institution yielding few victors at the end of the day. As a result, having the ability to buck the crowd is something which can help you achieve great things. An example of this occurs when a trade setup happens and one must battle the potential pain of a losing trade with the desire to make money. In hindsight, many of these spots look easy after the fact, but the truth remains in real time one must have a great deal of courage to pull the trigger. If you have any questions about trading and what works and doesn’t, you can contact me at email address at the end of this article.
2. Intuition – A qualitative virtue recognized by few and held by even less. Our intuition is the byproduct of the analysis performed by our subconscious. It acts much like a muscle and requires exercise to develop and grow. Like a muscle, neglect can cause atrophy. Traders with a strong intuition built on a strong trading strategy put themselves in an ideal position to achieve consistent success in the market. Over time, traders can feel the energy a market gives off and can execute trades from this. It is an invaluable tool in one’s trading arsenal.
3. Vision – While total clairvoyance as to future price movement is unrealistic. It is my goal as a trader to assimilate as much information as possible with the goal of playing out scenarios that tie in together. It’s not always easy to do, yet understanding trading does not occur in a vacuum and markets do exhibit funny things get you mentally prepared to deal with these outlier events. Those that can think for themselves and need not rely on templatized news releases for their ideas usually put themselves in a position to benefit from their forward thinking.
We have heard many times about leaders who saw an industry trend before it happened. This was no accident. It came as a result of their understanding of their field and what could change it for the better. Traders who gain an understanding of how things can potentially play out and factor that into their trading strategy go a long way to keeping their objectivity when things unfold in a fast and volatile market.
4. Discipline – Nine years in the Marine Corps helped to develop this quality, yet its resolve is constantly put to the test. As the Chief Investment Strategist for NetBlack Capital, a Commodity Trading Advisor, I manage money for high net worth investors and institutional clients. I am regularly balancing the pressure of having to produce returns with that of taking on viable market opportunities. This is part of the job and one I take on with great alacrity. However, discipline is more than just taking on a trade when you are supposed to, it’s doing your research at the prescribed times, making your Fibonacci grids the night before trading, working out regularly, eating right, keeping a trading journal, and doing the exercises of your life coach. To not have discipline in your life makes it very difficult to have discipline as a trader. In many ways, our trading is a proxy or microcosm for how we live.
5. Decisiveness – This is a great leadership trait as well as a great attribute for a trader. So many times our success comes down to how we responded during the moment of truth. Having the resolve and confidence to act on our analysis or system is imperative to achieving the most meaningful long term results. In many cases, by the time we feel comfortable; the chance has materially altered from the initial entry and puts us at risk for greater volatility.
There are many things one can do to help themselves become a more decisive trader. One of the most luminous is to put oneself in an environment of traders that act in a decisive manner and regularly experience success. Our live hedge fund trading workshops in New York let attendees trade alongside and network with some prominent money managers and traders. This gives attendees a chance to alter their “trading disposition” and become more decisive, confident traders understanding this is a game of numbers and if you’re not losing money at times, you are not taking on the kind of risk necessary to be successful. In many cases, this opens the proverbial floodgates for those looking to get to the next level of trading success.
6. Patience – The market, as much as anything in life, has a way of transforming us from cool, calm, collected individuals into irrational, impulsive, and disoriented speculators. Clearly it’s in our interests towards long term profitability to spend the majority of our time in the former group rather than the latter. Acknowledging when things aren’t going our way is the first step to becoming a more patient trader, but it’s having the patience to wait things out until we find a more harmonic rhythm that contributes immeasurably to one’s success.
As traders, it’s the losing positions that invariably do us in. A number of the bigger losers many traders experience came as a result of not being patient and waiting on the right opportunity. Many of us tend to press when things aren’t working out or we just had a losing trade. Traders can begin to play catch-up and go on emotional tilt. It’s the paradox of trading in many ways. The same competitive drive we use to drive our success has components that hasten our failure.
When going through my daily checklist I put out to members of my mentorship program, I always emphasize the markets provide a multitude of chances to trade. One need not force action when the setups aren’t right. Traders who get into positions with “the best of it”, or edge, significantly increase their chances for success in the long run.
7. Confidence – This comes from a number of areas and is developed through successful implementation of a strategy. It is also a byproduct of the unwavering belief in what you are doing will be successful. This is critical when you are in a position and at the moment of truth self doubt has a way of creeping in. It’s tempting to deviate from your plan during these occurrences. While I’m not suggesting you not be flexible in your position management, having the belief in what you are doing goes a long way in your success. In fact, it’s the confidence in your trading skill set that can give you the ability to make a decision to get out of a position knowing that things aren’t working out. This conviction is a hallmark of great leaders and inspires others.
8. Focus – The array of information that hits us at breakneck speed can at times also challenge us. Having a game plan to lock in on and isolate the markets, strategies, and goals outlined in advance helps us stay on the path to success. In trading as in life, stuff happens that is unexpected and can help us deviate. A series of losing trades or health issues we weren’t expecting. Having the focus to keep things in perspective and understand what your goals are contributes immensely to keeping one’s focus. A common thing I work on with my life coach is making a list of goals and what I plan to do to achieve these goals. My success coach holds me accountable and keeps me focused at times when life or the markets would rather have it another way.
9. Being Dynamic/Fluid/Flexible – The markets are not a static entity, nor should the people who trade them be. While in no way does this attribute undermine one following a game plan in trading, being open minded to new ideas and innovations keeps you ahead of the curve. The markets today are seeing new technology, exchanges, overnight rules, and legislation that can impact price movement and your ability to conduct your business in a more structurally efficient manner. An example of this is Alchemy Ventures, a structured finance firm out of New York and San Francisco; they have created an investment structure that significantly reduces the inefficiencies of the investment allocation, risk management, and the reporting process to the end investor. With this type of financial engineering available in the markets, staying attuned to innovative ways to generate returns are just a few of the ideas that will benefit one considerably.
10. Willingness to Learn and Improve – This is a highly competitive game and educating oneself is essential to understanding the evolving components discussed in Attribute 9. With the extensive information availed to us, having colleagues or mentors to lean on is critical. I dedicate a certain amount of time each week to reading articles about things such as yield curve analysis, the money markets, structured finance, banking, legal issues, politics, and other relevant industry news. I also lean on certain market experts in aggregating my information for making my trading decisions.
This has taken years of experience, hard work, and networking, filled with many trials and errors, to put together a system for staying on top of the trading game. However, my investors and workshop attendees appreciate this, as our returns and student success ratio put us in strong company.
The aforementioned description of attributes is not meant to be all inclusive but does to provide a framework for operating under. Much like being a successful trader requires us to take part of an evolutionary process; this list carries with it that same dynamic.