The Characteristics of Successful Traders Part 3 – Week 62
I continue to reveal the characteristics of successful traders in this week’s episode of the 4 Minute Drill for Traders. I talk about how successful traders are WILLING to take losses and they take losses in stride. They don’t concern themselves with the loss, but instead focus on making money in the long run…
What has been your experience with taking small losses? We can all learn from one another so please share your thoughts… just hit the comment link below!
Hi.. Norman Hallett here with your next 4 Minute Drill for Traders.
Let’s continue our discussion of The Characteristics of Successful Traders.
There’s a conceptual point I want to make sure I mention… and that is that Success in trading can come at any level.
Whether you’re a beginner, a trader with some experience, or someone who makes his or her living strictly from trading, YOU CAN BE SUCCESSFUL.
Many people think that they have to have significant capital, or years of experience, to trade successfully.
… and that’s just not true.
(It IS true that if you don’t stay disciplined, focused, and rational, you’ll end up as a losing trader, regardless of your level of ‘expertise’.)
The VAST MAJORITY of successful traders started as small investors; they didn’t trade more than they could safely risk…. they learned from their mistakes…
… and they developed systems that worked for them and fit their personal styles.
Whatever experience you have as a trader… the rules of engagement are the same… Logical, focused, disciplined trading creates success.
Another point I want to mention in this Drill is that Successful Traders Specialize.
It’s simply not possible to understand and stay in touch with everything that occurs in all types of trading vehicles and markets across the world.
While some traders have developed systems that allow them to trade in multiple venues…
…. most traders specialize in a particular type of investment, and in a particular market.
You may enjoy trading commodity futures… and that enjoyment will help you focus and stay in touch with market events.
If you aren’t interested in currency trading, for example, don’t trade it…. because your lack of knowledge and motivation will cause you to lose focus and make mistakes.
Successful traders tend to SPECIALIZE…
… they pick an area to gain in-depth knowledge of, and they follow it closely, learning from past trends and patterns, and from their OWN trades.
If you’re a beginner trader, I recommend focusing narrowly on a particular investment vehicle and market…
…learn all you can about the market and about yourself, BEFORE you move on to other investment types.
and now I’d like to INVITE YOUR COMMENTS on specializing in your trading…
Were you a trader who used to trade any chart, in any market that looked good, and then decided to specialize?
Did you find your newfound ‘focus’ equaled success for you?
I know this to be true for many of the traders I work with.. but I want to hear YOUR experience.
Let’s hear from you!
OK That’s it for this addition of 4 Minute Drill for Traders.
So.. until NEXT WEEK…
STAY DISCIPLINED!
Category: 4-Minute Drill for Traders
Norman,
Seems that if one focuses more on following his/her plan to the letter and less on the trade results (pips and dollars)that you don’t & won’t get so emotional and upset. Larry
The premise is sound… Keep losses smaller than gains and you can make money over the longer term, it’s mathematics…
The challenge is that our inner voices, beliefs, values, self-talk, demons, whatever, are far more powerful than any conscious thought or written plan.
To successfully cut our losses short (and let our profits run) we must trade without emotion or attachment to the outcome. This takes work, especially for those of us who have blown up an account or two and have blamed ourselves as having failed or just have trouble being wrong.
To successfully trade the markets, one needs to be as emotionally detached as the market.
Plan the trade per your edge, accept the plan (risk and reward targets), execute the plan (trade), and GET OUT OF THE WAY.
Except for planned trailing stops, I find it’s better not to even watch the market play out the trade. Analysis of my personal results are that trades I let run outperform trades I try to “manage”.
Jerry, If you have more losses than winners your plan is flawed. I traded for over five years before developing a good plan for my personality. Fortunately, I was paper trading guring that time and still had my capital to use when I finally became successful in my trading. Attend every seminar and watch every training program that is available to you. You will be successful but it may not be soon. Stay Disciplined!
There´s nothing wrong with a system that has more loser trades than winner ones. As long as your pay out or avg win/avg loss ratio is high enough. For example, in my trading system, I can have two, three or four gifts (losing trades) and still be profitable only with a winning trade, because my ratio is 6:1. That´s the system. The important is to keep peforming your system as it says and not to be discouraged for the gifts you give to the market and as Norman says here being willing to take small losses and not moving or lifting your stop loss.
How do you willingly take another loss when your losses outnumber your wins?
These drills are good value! I agree totally that when I follow my plan that losses, whilst sometimes disappointing, are never depressing. Its when you exit early, or pass up a trade – not following the plan, and end up with a loss or miss a big gain that it really hurts.
If small loss is not accepted when the trade is going wrong, the trader USUALLY end up paying more Loss to that trade..
So Staying Disciplined is the ONLY way to Success in Trading
Losses happen. I feel okay with lasses as long as I follwed my plan going into the trade and follwed my plan getting out of the trade. I aldo feel good when I can step back and look at the day or week of trading and see that I follwed my plan.
I took a small loss on Tengion (TNGN) and moved on.
I took a bigger loss than I wanted to on Dennison Mines (DML) but moved on.
Great ideas Norman.
Thanks,
Joel…