10 simple tips that give me the trading edge

10 simple tips that give me the trading edge

A question put to me by a reader made me think long and hard about my trading edge.

He wrote, “In trading, what qualities are needed to be your best? In other words, why do you succeed where others failed?”

Well, success is in the eye of the beholder, but I guess I’ve done okay at mastering a life/work balance.

I have done well for a few reasons.

1. I study. Ever since I walked onto the floor of the stock exchange back in 1985 I was enthralled. I spent every lunch break in the ASX book store. Then I found the book store at the Sydney Futures Exchange. So I spent my lunch times there. I still study.

2. I don’t just study trading. I study traders. All the greatest traders have had to walk the same journey as us. It’s important to understand the context of what you’re doing. So I study their track records, processes, history – just about anything that catches my eye.

3. I don’t just study traders. I read between the lines. When people read a trading book they see the words but not the true meaning of what is being said. Many times the valuable lessons are not in the written word. Rather what is being alluded to.

4. I have no fear. The market can’t hurt me. Position sizing and diversification see to that.

5. I’m only interested in facts and what is practical and useful. I have always applied a rules-based approach to trading. Left brain bias. Research, problems and solutions are processed within a structured environment.

6. I make decisions based on good process rather than monetary outcome. So I have no attachment to losses or periods of losses. Which means I can continue to follow the process and achieve my objectives.

7. I accept there is much I can’t control. I can however control my reactions to events – good and bad. Much of that control comes from having no attachment to the money.

8. I have patience. A moderately good strategy applied over the long term will generate more wealth than chasing the latest fad. The Eighth Wonder of the World is compounding. And compounding requires time to develop.

9. I am consistent. I am able to place trades every day, week, month, year. Without fail.

10. If all else fails I go fishing. That’s my meditation.