What It Takes To Become An Elite Trader

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Alan Farley

03 Nov, 2017

in Day Trading & Scalping and 1 more

Millions of traders test their skill in the financial markets each year, but most are destined to lose their stakes and walk away with their tails between their legs. A select few defy the odds, churning out profit after profit over long periods, building the wealth, security and wellbeing that others just dream about. So what separates these elite traders from the mediocre pack and how can you gain membership to this exclusive club?

First, let’s consider what isn’t required to become an elite trader. You don’t need to take special courses or move to Manhattan and work on Wall Street for a decade or two, although many elite traders follow that path. Nor do you need a huge stake to start your journey, because you already possess the tools for slow and steady wealth creation. Finally, you don’t need to trade in a prop shop environment, heading into work each morning to commiserate with other like-minded individuals.

So, what does it take to rise above the crowd and supercharge your trading results?

For starters, treat trading as a business, not a hobby or a slot machine. This takes effort, because most humans are burdened with deep-seated money issues that rise to the surface during risk-taking. Overcome these head winds by drafting a business plan that sets forth a budget for required tools, like real-time news and charts, as well as by listing the markets, instruments and strategies you’ll trade. Complete your plan with a realistic snapshot of monthly and yearly profit targets.

Keep detailed records of your trades, updating nightly and reviewing weekly for strategic adjustments. Supplement this work with a daily journal in which you post your observations and ideas, then draw upon the contents to add new features to your strategies and risk-control techniques. Once record keeping is in place, settle in for the long haul because you need to pay your dues over three to five years to gain the insight needed to compete with the predatory crowd moving modern markets.

Become a specialist as early as you can in your trading career, choosing specific markets and styles that suit your temperament and knowledge base. You’ll need to find and master multiple trading edges, in which positive results for specific strategies can be reproduced at will over dozens of positions. All effective edges have one thing in common – an effort is made to control risk before seeking profit. Master that single concept and you’ll be well on your way to elite status.

Choose information sources wisely. It’s easy to get caught up in the media circus, watching an endless parade of talking heads spout opinions that have no bearing on your daily workflow. Instead, turn off the television and subscribe to a real-time news service that gets you the facts, unimpeded by bias or emotion. Add a selective Twitter feed, following no more than 75 carefully curated sources and you’ll be watching the same news flow as Wall Street’s finest.

Now comes the tough part. To become an elite trader, you need to learn from the best. That’s a tall order because self-proclaimed gurus are everywhere, hawking in their chat rooms and newsletters. Sadly, few of these folks have the information, experience or long-term track record you need to raise your trading game to elite status. However, rather than avoiding these folks while seeking a mentor, it’s better to sample as many teachers, styles and approaches as possible to find out what works for you … and what doesn’t. In the process, you’ll come across a handful of helpful teachers who will yield a lifetime of trading knowledge.

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Psychology of Trading

This is my thoughts on the psychology of trading, my own personal opinion, based on investing since the late 1970s and the many books I have read both in investing , the classes at UNL Grad School and SLU medical school.
1styou must find your style. Here the Zichy test can help you a lot. It’s found on page 27 (?) of Peter J Tanous’ book “The Wealth Equation”. I can send as an insert the test to you. Regina and I can score it for you. If you are honest with yourself, I am willing to copy the recommendations for your trading style. I will tell you right now I am a Blue Innovator. At Portland several people took the test and seemed to be grateful. Knowing your trading style is very important.
2nd In finance class at UNL I was told to paper trade at least a year. I suggest paper trade until you find your niche. Scalper apply at Kingstree Trading and let them train you. You will become a market maker like a friend of mine and gama scalp. Day learning everything you can and Day Trade until you losses are not greater than you gains over 9 months or more. Swing Trader? Practice by paper trading until you get it right. Long Term Trader like me (my time horizon is four months to several years) or Warren Buffett and Michael Burry MD If a scalping is your niche maybe you should apply at Kingstree Trading in Chicago, where they will train you and if you make the cut they will furnish you with the funds you need. You will need a coach for a while. Take classes from the trainer you like best. I like Long Term Trading. Years ago my “Yes” moment occurred. I had taken those classes to save the practice of medicine but investing was/is fun. Once it is fun the steps you have to take will no longer seem burdensome. Continue to paper trade a bit longer but every time a trade goes wrong give up something you really like (for me no ice cream for a couple of weeks). The trivial of your pursuit will no longer seem trivia but fun. Now is the time to commit real money to you trading. And time to find a coach/trainer. You should fast become a competent trader/investor. If long term investing is your style, stick with John K but tell John your style. (Aside: When I was a teenager a caddy for an unknown golfer in the US Open from South Africa, Gary Player ranked now as number 8 by Golf Digest, he came in 2nd. I noticed that Gary Player brought a coach with him. The three of us sat in the club house and the two us discussed with Gary his play for the day stroke by stroke. He was most interested when the shot was not perfect. I am sure that Gary was much better than his coach or I). You will slowly become a master trader/investor. I think off hand it takes ten years so be patient.
When you think you have read enough, you haven’t. The four legs to the table are psychology, chart –reading, fundamental analysis and technical analysis (add Greeks for option trading).

Nov 26, 2017

Member (3 posts)

The author of the article describes a number of things that are important to success. While I don't disagree with them, most of them are generic in nature and are just as applicable to any other profession or business endeavour.

Importantly is trading a business or a profession? If it is a business, then the focus is developing core business practices. If it is a profession, the focus is on developing core competencies.

If it is a profession, can core competencies be self taught? Are there successful self taught doctors, engineers, accountants, et al that you know of out there? I think the biggest problem is the myth that if you treat trading as a business and you have some acquired trading knowledge you will be successful. It is the logic that all dogs are mammals but not all mammals are dogs.

Nov 04, 2017

Member (600 posts)

Re: What It Takes To Become An Elite Trader

Can't argue with that.
Only it took me more like 7 years rather than three.
The part about teachers , I would say only study from historical teachers, which history provides evidence of long term profitability . It does not matter how long ago because market patterns have always been the same and always will be.

Nov 03, 2017

Member (1340 posts)

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