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Common Characteristics of Successful Traders

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By David Hobart, Director, PsyQuation Consulting.

Over the years, I have worked with many traders. Most traders experience periods of brilliance, but few are able to replicate their successes consistently over time. This was especially the case inside the banks, simply because the payoff for short term success as a trader was so high relative to the downside. This incentive structure was often a poor framework to develop trading approaches that could withstand the test of time. Given these skewed incentives, it was often the case that certain personality types would dominate the banks trading desks and hence the “gung ho” trader stereotype was born.

My experience is that the truly successful traders rarely fit that single stereotype, but generally exhibit character traits that are balanced and humble. While all personality types bring strengths and weaknesses to the trading game, there are certain traits that are common amongst consistently profitable traders.

Grounded

Good traders are grounded in their strengths. They are under no illusions about what they are good at and what they are not. Rarely do good traders build castles in the sky or believe that they are better than average at everything.

Observant

In the movie “the Matrix”, the character Morpheus after meeting Neo for the first time, says to him “You have the look of a man who accepts what he sees because he is expecting to wake up.” Neo would have made a good trader. Observing, detached, interested, reserving judgement and slow to presume. Good traders see through complexity because they are not attached to the complex.

Emotionally Aware

Good traders are often passionate and are in touch with their emotions. Traders are often taught to repress their emotions, as trading emotionally is a well known recipe for losses. Repressed emotion however will inevitably seek an outlet. This outlet for the emotionally repressed is often repetitively destructive behavior, which if played out in the markets can obviously damage a trader’s profitability.

Focused

Great traders sniff out opportunity and are uncompromising in their willingness to remain focused on achieving their objectives. This single-mindedness can occur as hard edged or selfish, but is almost always present in great traders.

Resilient

Trading requires a capacity to deal with adversity in the same way as you deal with success; with a wry smile. They are both seasonal ideas and neither should be taken too seriously. With strong self belief, a good trader can ride on regardless of his/her external circumstance.

We all have elements of these traits within us. At times they are prominent and at times they are lacking. As with honing any craft, an unwavering commitment to being the best that you can be underpins all of these. Maintaining your commitment will enable you to call on each and all of these traits when required.

About David Hobart

David has been a trader and portfolio manager since 1994. He has managed teams of traders for global investment banks and hedge funds including BT, Macquarie, ABN Amro and Blue Sky Alternative Investments. He has worked with numerous traders and portfolio managers as a trading coach/performance consultant. For a detailed review of David’s CV, please see his LinkedIn profile.

If you would like to find out more about David’s trading coaching/performance consulting programs, check them out here or email david@psyquation.com .

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