Saturday, February 20, 2010

Greatness, Creativity, and Trading Success

Perhaps my greatest interest in psychology is understanding what differentiates highly productive, successful, and creative individuals from their more ordinary peers. Trading happens to be a worthwhile area to assess factors that lead to success, because success is so quantifiable.

In the next series of posts, I will be exploring factors associated with greatness: superlative achievement across various disciplines. An excellent overview of this area is Dean Keith Simonton's book Greatness: Who Makes History and Why. Summarizing Simonton's research, Dutton outlines several characteristics of creative geniuses:

* They have an unusually broad range of interests;

* They are open to novel and complex ways of viewing things;

* They are capable of defocused attention: thinking about one thing while focusing on others;

* They display flexibility in their work habits;

* They tend to be introverted and prosper during periods of relative isolation;

* They generally are independent and unconventional.

In combination, these qualities enable creative geniuses to draw upon a broad range of experience to understand things in new, enlightening ways.

I work with traders and portfolio managers who have achieved consistent success across a number of years. To a person, they view markets in unique ways: not one of them looks at markets in a conventional, textbook manner. They come up with out-of-the-box trade ideas, because they truly are operating out of the box--and are not afraid to buck convention.

Of the factors contributing to trading success, creativity is one of the least appreciated. Show me a true "market wizard", and I'll show you someone who has developed his or her own philosophy and approach to generating, executing, and managing trade ideas.