5 Qualities of All Great Traders

I met Joe Fahmy a few years ago at Lindzenpalooza. He has a great way of communicating his trading skills to a novice to intermediate traders based on his 16 years of trading. Fahmy has guided his hedge fund to outperformance over the past 13 quarters. As previously mentioned, I wanted to present something less technical and chart focused;

This is our second attempt at bite size, easy to understand, bullet points for traders. The first post is here.

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1) Loss cutting:  Trading has this amazing historical footnote: If you study the great traders throughout history, they all share the same statement as their number one rule: CUT YOUR LOSSES! Capital preservation “keeps you in the game.” It is especially important once you understand the math: a 25% drawdown requires a 33% gain to get to break even; Down 33% means you need to rally 50% to get back to square one; As we saw in 2008-08, a -50% loss requires a +100% gain to get back to even. In sports “Defense Wins Championships.” The same goes for stock trading. Most traders need to focus more on defense.

Even Warren Buffett understand the traders credo: “The first rule of investing is don’t lose money. The second rule is don’t forget Rule No. 1.

2) Confidence: There is nothing worse than seeing a great opportunity but not having the courage to “pull the trigger” and execute the trade. Freezing up due to fear does NOT happen to great traders. These thoughts don’t even enter their mind because they are confident in their plan. They know wht they will do if the trade goes their way, and perhaps more importantly, they know what to do if it goes against them. Confidence cannot be taught. It comes from making decisions, taking action, and learning from experience.

3) No ego:  Successful traders may have big personalities, but they separate their ego from their trading. They might have serious conviction behind their positions, but when the market proves them wrong, they don’t argue with it. They simply move on and accept it.

Two things I never argue with: the stock market and women. Both of them are smarter than me, and both are always right! (BR: Spoken like a married man)

4) Consistency: The best at anything are the best because they are consistent. Michael Jordan isn’t considered the best basketball player ever because he scored 30 points ONCE in a game. It’s because he averaged 30 points per game over his ENTIRE career.

Traders should not obsess with their day-to-day profit & loss. Rather, they should shoot for consistent positive months, quarters, and years with minimal draw downs. You do not want to be the “boom and bust” trader who does well in a strong market but gives it back during market corrections. These guys are a dime a dozen and typically get blown out of the market at key pivot points (Last cycle, I knew a few who became mortgage brokers — how is that for timing?)

5) Students of the market: Successful traders NEVER get complacent. They are always eager to learn, constantly looking to improve their skills.

One way to improve is through post analysis of your trades. It is important to look at your numbers and make sure your losses are smaller than your gains.

For technical traders, studying your entry points and looking at charts that worked (and didn’t work) is part of the constant learning experience of becoming a confident and consistently profitable trader.

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Fahmy holds seminars for active traders who want to improve their returns.   Readers of the Big Picture who are interested will get a $500 discount on the full day event. Go to TradingBigWinners.com and enter the promotional code: “bigpicture500” for the New York (3/3) seminars. I will be discussing trader psychology and cognitive errors at this seminar.

拥有女人的心理浅析

希望“拥有”的心理是人们的一个普通而正常的心理活动。而“拥有”的对象又是多种多样的。有精神上的拥有渴望，也有肉体上的拥有渴望。而“拥有”的行动过程和后果能给人们带来一定程度的心理满足感。

言归正传，找个情人也能满足一定的拥有心理。

一个初次找艳遇的，通常开始时迷茫，而不知道怎么下手。一旦渡过探索学习的过程，成功地搭讪上第一个并且成功泡到手时，是非常兴奋的。会有一种成就感。然后开始迅速寻找泡第二个，第三个女人……。每泡到一个都会带来一种强烈的拥有感。这种强烈的拥有感和成功感往往掩盖了暂时思考其它不利因素。所以，大多数男人都是在进入养二奶行列的头两年内迅速膨胀并且试图勾搭多个女人。因为这个时候还处在“拥有” 心理的膨胀阶段。而麻烦尚未出现或者出现很少。人们津津乐道地说自己一年内或者两年内有多少一夜情大多属于这个时期。

而一旦过了“两年之痒”，这种新鲜感和“拥有”心理开始减弱，而麻烦也慢慢出现或者增加。到了4、5年左右，基本在一个进或者一个茶壶几个杯的临界点。为什么人们常说做到何鸿燊那样的成功只有5%呢？因为这时候没多少“拥有”的满足感，而是麻烦和负担的心理增加。并且可能经历了几个女人的折磨。因此很多男人这时候选择退出。有一位婚外情不久的朋友告诉我，他一听到情人的电话心跳立刻加快。特别是一贯读书的或者做学术的，比较少与人打交道的这种感觉特别强烈。

经历了十年左右一夫多妻生涯的，已经稳定了。感情债没付完也起码付掉一半了，虽然每个月的开销还是一样，但是这时主要是奢侈消费减少，生活成本每年迅速降低。男人们的手头更加宽松。十年一定经历过甜酸苦辣，感情的升跌也经历过，麻烦的情人也面对过处理过。这时应对情人已经能够泰然处之，做到“不以物喜，不以己悲”。谈论麻烦情人时，是“如今识得愁滋味，欲说还休。欲说还休，却道天凉好个秋”的坦然态度。我坦白，虽然也经历了十多年的金屋藏娇生涯，现在泡到新人我依然有兴奋的感觉。但是分手我也兴奋。所以已经不是单纯的“拥有”的兴奋了。

需要提醒的是，还处在“两年之痒”的男人们，切记谨慎审视每一个女人以免找到难于纠缠的女人。数量的增加不说明问题，质量才是最关键的。这对于将来能够避免使用炸弹及雇用杀手会很有帮助。