Monday, October 01, 2007

Reflections on Trader Strengths

There is a growing body of research pertaining to personal strengths and performance in the business world and also in the psychology literature. The underlying idea is that we can be more effective in developing ourselves by enhancing our strengths than in minimizing or improving our weaknesses.

If this idea is correct, then the most important function of coaching is to figure out where a trader truly excels. While a questionnaire might be helpful for this purpose, nothing speaks louder about strengths than the trader's own trading results.

The goal of reviewing results should be to reverse-engineer one's own winning trades. Here are a few considerations for such a review:

* How have you researched your successful trades? How have you prepared yourself for them?

* What signals have helped you enter the successful trades? What told you to hold onto the good trades?

* What was your frame of mind before and during your successful trades? How did you get into that frame of mind?

* How did you limit the risk associated with your successful trades? How did you set your position size? Your stops?

* How did you determine a target for exiting your successful trades? What signals told you to exit?

* What market or stock were you trading when you were successful? What told you that this was the market or stock to be trading at that time?

* What time of day did your successful trade occur?

* How long did you hold onto your successful trade?

Notice that a successful trade might not be a winning trade. If you were wrong about the market, but ended up scratching the trade, that surely can be considered a success.

Similarly, not every winning trade will show you at your best. Sometimes we're just lucky!

But if you investigate your successful trades over time, you will notice patterns emerging. You will see the common features of your successes, and from those you will be able to identify your trading strengths.

The beauty of knowing your strengths is that you become more consistently aware of them and can more consciously build upon them. You don't need to be good at all kinds of trading; it's more important to trade what you're good at.


Assessing Your Personal Strengths

Solution-Focused Trading