Common traits of top traders
This post is hugely important, especially for traders outside of funds.
The basis is to observe the best traders, a specific behavior when they are successful.
Interestingly, the same behavior is observed in the most outstanding athletes, businessmen, members of elite special units.
The best of the best, when they are successful – they want to be even better. Therefore – they continue to educate themselves. They still learn about their strengths and weaknesses and work on them. They continue to train, research, and develop technical skills – in our case, knowledge about markets, new analytical methods, new sources of advantage, new strategies, indicators, and tools to make their work easier.
Professional development has become a lifestyle for them, something they do regardless of success or failure.
The success they enjoy is certainly gratifying, but it is also contextual, it is an (inevitable) side product.
Interestingly, they often derive more satisfaction from this effort than from the success itself: in the market, in business, or in accomplishing a very difficult mission.
Learning, development, overcoming oneself is for them a lifestyle, a passion that consumes them, a blessing that success brings them and a curse that consumes practically all their time.
In short – their secret is passion.
Passion enlightened, I mean by that you know your strengths and weaknesses well and you work with specifics. And if we’re talking about specifics then we’re also talking about measuring results, states, progress.
But that’s a story for a completely different article, which I’m sure will be written at some point.
What are qualities of successful traders?
The best trader’s advantage consists of 2 parts and to systematically earn you should have both.
What are the advantages of the best traders?
Technical advantage – I understand it as all the skills and knowledge that make up your trading system.
Do you know what exactly your advantage is?
To show the extreme advantage I will use the example of the best traders. Everyone else has some kind of advantage “between” the best and the weakest (who do not have these traits at all or at a very low level).
What creates an advantage of best traders?
- Access to unique knowledge, preferably before everyone else.
- Knowledge about companies’ plans, new products (which is unavailable to others), that’s especially in a case of the stock
- Ability to reliably estimate companies’ results before they are published
- Knowledge of political changes and their impact on the markets
- Use of alternative data
- Use of market formations that pay well and that others are not aware of.
This can be accompanied by:
- knowledge and ability to use technical analysis
- finding specific entry points and methods
- using formations that others have overlooked or using what is known but in your own unique way
How to build an advantage in trading?
The advantage of the best traders is usually built from several things at once. It can be a hybrid of several things, e.g. it can use its knowledge of company movements, identify entry points through technical and volume analysis and execute the entry itself through an automated system which makes great use of liquidity.
The advantage of the best traders can come from better tools, e.g. for building positions, for maximizing positions (there are some of these in the biggest funds) they improve results and simplify life.
You will find your advantage if you answer the question:
On what basis do I make decisions about the choice of an instrument (company, commodity, currency…)?
Some systems are based on fundamental analysis, macro analysis, company analysis, supply and demand analysis (e.g. commodities), then we have technical analysis, price and candlestick formations and a multitude of indicators.
You will see your advantage (or lack thereof) when you ask yourself what is unique about your system?
You may answer me that you use, for example, well-known price patterns, triangles, flags or similar. But this may mean that you are doing the same thing as everyone else. There is nothing wrong with that if you trade on a small scale, privately or as a hobby.
However, if you are or want to be a professional trader it is not enough. Formations, elements of technical analysis work sometimes and sometimes they don’t. If something repeats over and over again big traders will enter the market and use the accumulated orders for their own entries (stop hunting is an example) and your advantage will be gone sooner than later. A pattern that worked very well will suddenly stop.
The best traders not only know exactly what their advantage is, but also go to great lengths to improve it.
This post is not meant to give you a ready answer on what to do and how to do it, but rather to draw your attention to a problem that may cost you a lot in the future.
You should, like the best traders, know exactly what your trading advantage is and build on it.
If you don’t know this, I hope I tugged on your arm and told you that you fell asleep at the wheel.
Nothing has happened yet, but you have fallen asleep.
PS. For more on the use of alternative data in trading for yourself, but also for large trading funds, check out the latest issue of New City Trader. Subscribe below, it’s free.