By Brien Satzinger
I’m now going to walk you through my battle camp. You’re being given unrestricted access to see what works for a trader. I have nothing to sell you. I don’t even have a link to make a contribution. The information I’m about to give you is valuable though it is free.
The place we begin is the most important weapon that we have and that is our mind/character. It is important that we understand our own personality. As Sun-Tzu once said,
“If you know the enemy and know yourself, you need not fear a hundred battles.”
If we are committed to becoming good traders then we must deal with the ugly parts of our personality and maximize the good. We are now going to look at the character traits a quality trader should have. Typically, a great trader is systematic, focused, disciplined and humble.
Being systematic means to have a strategy that works for their personality and it is hopefully profitable. They are determined to follow it to the letter. They have a pre-planned method for adjusting to the markets when necessary. I will say that the development of a system takes time and experience, but using software like Tradestation or Sierra Charts could expedite the testing. Even with these tools, systems need to have time to maturate. It’s not uncommon to be fiddling with a system for months or years until it finally meets our goals. We want to avoid abandoning a system or changing it because we run through a string of losses. Everyone has strings of losses. Everyone.
By focused, they can push out the distractions and focus on the game. Spouses, significant others, children, noises, cell phones, e-mail messages, Twitter and Facebook are some of the distracting things that are vying for our attention. When we’re trading we have to have our mind in the game. Have you ever had a conversation with someone and been distracted by the TV or thinking about something that’s unrelated? Were you 100% into the conversation? We desperately need to be focused when we have our hand on the mouse. It’s good to have some sort of method to get your mind in the game before placing a trade. Some examples are to go running, do yoga, recite affirmations, pray and/or meditate.
One area that we must maintain in order to stay focused is our health. We are not supermen or superwomen. A high stress trading style could have serious and possibly deadly long-term affects on our health. Being overweight or having unhealthy eating habits could also keep us from being able to concentrate for long periods of time. If you are overweight or don’t eat healthy then I suggest cowboying-up and changing that. A paleo lifestyle is one way to lose weight by eating healthy and without steady exercise. The system is very simple and free.
Check out BulletProofExec for a quick run down on the diet and if you’re interested in knowing more about it you can mine the Mark’s Daily Apple. Mark offers a very informative book entitled the Primal Blueprint which explains the concepts of primal without overwhelming you. I am not interested in selling you anything. I’m just conveying what works and is relatively cheap to do. I personally do Bulletproof Coffee each morning and I get several hours of mental focus/energy. It’s natural, tastes good, is good for me and there’s no crash when it wears off. You can find the recipe here. I have used organic coconut oil instead of the MCT oil, both work well, but I personally find the MCT oil works just a bit better. Think of a AA battery compared to a 9-Volt.
By disciplined, they know what works and what doesn’t so they stick to their system. There is no room for playing around because that usually costs money. In the military, drills are endlessly practiced until the point of becoming second nature to the soldiers. Why? So that when they’re in combat their subconscious mind takes over and they can accomplish their assignment without much mental effort. The best way to make money at this is to focus entirely on the game, the money will take care of itself.
Finally, being self aware and humble is paramount to our success as traders. In other words, do you know yourself? Do you know if you do or don’t have negative tendencies? Are you willing to improve? Like, can you be impetuous when making decisions? Are you impatient when it comes to waiting for a quality setup? These are dangerous qualities to have when trading. If you are this way, admit it to yourself. The single best way to work through it, if you can’t correct it yourself, is to find a trading accountability partner. Work together with checking your trades. Determine if a trade was good or bad based on if you followed your system or not. If you did, then it was a good trade.
We’re going to get more into creating quality systems in future blog posts.
Brien Satzinger has traded stocks, options and futures since 1999. To date, he has traded over two million shares, 500 option contracts and 2200 futures contracts, mostly done while working full time. He currently lives in Memphis, TN and you can follow him on twitter here.