I really think anybody can be successful at trading as long as they use good money management ie cut they losses short and ride their winners. Its as simple as that. It doesnt matter what techniques you use under the sun like contrarian, trend following even throwing darts to choose what to trade and when. Cutting losses short and riding your winners above everything else is all one needs. Views?
agree re keeping stops/losses minimal is key, while learning and throughout ... One thing that I believe makes a difference is how to best distinguish between tradable volatile time frames (eg which 20 minutes during the first 2 hrs are "hot", worth a trade), vs non volatile chop/overtrading timeframes, using indicators like: +stock patterns: time/sales patterns, volume, adx, sector percent change, gap/breakout trade patterns +market internal patterns: TRIN readings, emini/nas futs patterns w/COMPQ breakouts etc.. many traders put too much emphasis on the specific stock chart pattern w/o integrating w/market internals at time of entry.. ken
I would agree that knowing how to manage your losers is key. I would also say that it is important to know when you can and cannot press your positions, as well.
I would say discipline and knowing when to take losses. Discipline is enforced via auto-trading, and knowing when to take losses is enforced via auto-trading. So, I guess my answer is "auto-trading"
Jamus, I think distilling trading to one key element is quite impossible. Ryan Jones who has written a book or two on money management techniques has tried to win various trading competitions over the years utilizing MM as his cornerstone. Although his understanding of MM is probably better that most, he never wins. As a matter of fact a couple of years ago, he ran an account up 256% + in a couple a months just to lose it all in a single 30 day period. Why is that? Trading itself would seem to be simple. Buy, Sell, or no position (flat) . The fact of the matter is that trading is extremely difficult. The most difficult task most people ever undertake. On a daily basis the market seeks to find your weakest link -so to speak. Money management, execution, trade management, psychology, and various other aspects, are all required if one is to succeed. Mr. Market will eventually find your weakest link. In the short span profits may accrue and trading great, but Mr Market will find what trips you up and take it all away and then some. I do agree that cutting losses, MM, etc are all important aspects to trading. My concern is for newer traders reading this post believing only a single aspect is required for trading success. Best Regards, Dave Scott
I knew this would eventually happen. The question borders on being an amphiboly and, as such, it was bound to be interpreted in one of two ways: a) What is one quality necessary to succeed, and b) What is THE one quality necessary to succeed. This implies no criticism of anyone else's post here. I guess I'll go with the (b) interpretation and try for an all-encompassing theory while acknowledging up front that execution is just as important. I'd pick Reason: The ability to perceive reality accurately (free of bias) and derive logical conclusions in the context of one's own situation quickly from those premises. I can't see how straying from this approach for any length of time can't but bankrupt someone. Think of Reason as the regression line; you can drift away from accurate perception or keep making some wild-ass conclusions only for so long, but eventually reality will assert itself. It always does. That goes not only for entry/exit analysis but also for risk management. And as I said, analysis without execution is worthless. So it is a tough question to put everything into one word, but that's my best shot at it.
Assuming you have a winning system or style of trading, I think the most important thing is PATIENCE. When I first began, I loved being in a trade at all times. A "heavy" trading day for me might be 7 or 8 trades in the minis.
The ability to turn off critical filtering (filters of perception). Rgelite, if u start digging into what u said u'll discover that there is no such person with that ability on this planet.