Common attributes of most successful traders of world
Market Wizards
A1. Burning desire to become successful trader
A2. A confidence to continue winning over a long period
A3. A methodology fit to person and remain true to discipline following the methodology.
A4. Invest substantial time to trading work.
A5. Rigorous risk control
A6. Patience to wait for right opportunity.
A7. Love what you do.
A8. Losing is part of game
A9. Acting independent among crowd
A10. Good and bad trades- asymmetrical risk reward relationship
A11. Implementation is as important as direction
A12. You don’t get paid for being right
A13. Sometimes it is what you don’t do what counts
A14. Trade size can be more important than entry point
A15. Don’t try to be 100% right
A16. Trading execution around position
A17. Flexibility is a critical trait
A18. The best remedy for a losing streak
A19. Differentiate between volatility and risk
A20. Intuition does matter
A21. When everything is going great watch out
A22. Don’t fight market
A23. The market doesn’t care when and where you entered
A24. Annual targets are counterproductive
New Market Wizards
B1. First thing first- do you really want to trade?
B2. Examine your motives
B3. Match trading method to your personality
B4. Its absolute necessary to have an edge
B5. Derive a method
B6. Developing a method is hard work
B7. Skill versus Hard Work
B8. Good trading should be effortless
B9. Money Management and Risk Control
B10. The trading plan
B11. Discipline
B12. Understand that you are responsible
B13. The need for independence
B14. Confidence
B15. Losing is part of game
B16. Lack of confidence and time outs
B17. The urge to seek advice
B18. The virtue of patience
B19. The importance of sitting
B20. Develop a low risk idea
B21. The importance of varying bet size
B22. Scaling in and out of trades
B23. Being right is more important than being a genius
B24. Don’t worry about looking stupid
B25. Sometimes action is more than prudence
B26. Catching part of move is fine
B27. Maximise gains not the numbers
B28. Learn to be disloyal
B29. Pull out partial profits
B30. Hope is a four letter word
B31. Don’t do the comfortable thing
B32. You can’t win if you have to win
B33. Think twice when the market lets you off the hook easily
B34. Mind is terrible thing to close
B35. The markets are expensive place to look for an excitement
B36. The calm state of a trader
B37. Identify and eliminate stress
B38. Pay attention to intuition
B39. Life is a mission and love the endeavour
B40. The elements of achievement
B41. Prices are non random, markets can be beaten’
B42. Keep trading in perspective
Stock Market Wizards and Hedge fund wizards combined
C1. There is no single true path
C2. The universal trait
C3. You have to trade your personality
C4. Failure and perseverance
C5. Great traders are marked by their flexibility
C6. It requires time to become a successful trader
C7. Keep a record of your market observations
C8. Develop a trading philosophy
C9. What is your edge
C10. The confidence chicken and egg question
C11. Hard work
C12. Obsessiveness
C13. Be innovators, not followers
C14. To be a winner you have to be willing to take a loss
C15. Risk Control
C16. You can’t be afraid of risk
C17. Limiting the downside by focusing on undervalued stocks
C18. Value along is not enough
C19. The importance of catalyst
C20. Most traders focus when to get in and forget when to get out
C21. If market behaviour doesn’t confirm to expectations get out
C22. The question of when to liquidate depends not only on the stock but also whether a better investment can be identified
C23. The virtue of patience
C24. The importance of setting goals
C25. This time is never different
C26. Fundamentals are never bearish or bullish in a vaccum. They are bullish or bearish only relative to price
C27. Successful investing and trading has nothing to do forecasting
C28. Never assume a market fact based on what you read or what others say; verify everything yourself
C29. Never ever listen to others opinions
C30. Be aware of ego
C31. The need of self awareness
C32. Don’t get emotionally involved
C33. View personal problems as a major cautionary flag to your trading
C34. Analyse your past trades for possible insights
C35. Don’t worry about looking stupid
C36. The danger of leverage
C37. The importance of position size
C38. Complexity is not a necessary ingredient for success
C39. View trading as a vocation, not hobby
C40. Trading like all business requires a sound plan
C41. Define high probability trades
C42. Find low risk opportunities
C43. Be sure you have a good reason for any trade you make
C44. Use common sense in investing
C45. Buy stocks that are difficult to buy
C46. Don’t anchor to low price
C47. Holding a losing stock can be fatal
C48. You don’t have to make all or nothing trading decisions
C49. Pay attention to how a stock responds to news
C50. Insider buying is an important confirming condition
C51. Hope is a four letter word
C52. The argument against diversification
C53. Caution against data mining
C54. Synergy and marginal indicators
C55. Past superior performance is relevant with same conditions expected to prevail
C56. Popularity can destroy a sound approach
C57. Like a coin market has two sides- but the coin is unfair
C58. The why of short selling
C59. The one indispensable rule for short selling
C60. Identify short selling candidates in advance
C61. Wall Street reports are biased
Unknown Market Wizards
D1. Trainer trains, trader trades
D2. There is no single true path
D3. Find a trading method is compatible to your personality
D4. You have to change your method before finding right one
D5. Keep a trading journal
D6. Categorise trades
D7. Know your edge
D8. Learn from your mistakes
D9. The power of asymmetric strategies
D10. Risk management is critical
D11. Choose meaningful stop points
D12. You don’t have to wait for a stop to be hit
D13. Don’t speculate with a loss
D14. Winning traders are dedicated to specific methodology life long
D15. Stick to trades as per your methodology
D16. Your methodology need to change
D17. If you are comfortable with an aspect of your methodology, then change it
D18. How a trade is implemented is critical
D19. Take high conviction trades matching size
D20. Don’t trade so large that fear becomes a dominant factor
D21. If you hope trade will work out, get out
D22. Don’t trade based on other’s recommendation
D23. Distinguish between trade outcomes and decisions
D24. The risk reward ratio of a trade is dynamic
D25. Human emotions are detrimental to trading
D26. Guard against impulsive trades
D27. Trades motivated by greed usually end badly
D28. Beware of a compulsion to make money in market
D29. The real damage is a bad trade
D30. Don’t exit entire position at the profit target
D31. If you are right side for too long be cautious
D32. Guard against complacency
D33. The flexibility to change opinion
D34. Missed trades can be more painful and expensive
D35. To do list when you are out of sync
D36. Tune out media
D37. Being profitable vs being right
D38. Aiming for consistent profitability can be counterproductive
D39. Be observant and highly attuned for behavioural trends
D40. Trading sometimes doesn’t work
D41. Trading for a living is hardest thing
D42. Extreme work commitment
D43. Take responsibility for your own results
D44. The two sides of patience
D45. Internal game of trading
D46. Love what you do
All these points can be mapped to each other …they are repetitive. Try doing that, I will post the table in a day or two.
Now note something what is missing here meaning what these traders DID NOT FIND USEFULL AT ALL even to discuss
- Futures and options are instruments to trade; as standalone they are not a process at all. Matter of fact none of these legendary traders are not full time F&O traders. They used these instruments when wind was on their side.
- Educational background- it doesn’t ask you should be an engineer or CA or MBA. Basically market education are live and philosophical instead of classroom based.
- None of them again asked us to use 32GB High end lap top or outdated desk top. Infrastructure is not a show stopper.
- Original capital size is not an obstacle to start trading. Same way like retirement doesn’t mean full time trading. Full time trading doesn’t mean 30 years of savings!
Next, I will share the mapping table. As you notice the principles can be bucketed into 3 broad categories:
- A Method/process
- Money Management (includes risk management)
- Human philosophy (psychology and biases)
Mastering these areas is a lifetime pursuit. But catching the rope is first step to learn rope!
Best of luck