Monday, March 31, 2014

What Makes Good Traders Great Entrepreneurs

If you ask portfolio managers and traders what they like about what they do, often they'll mention the psychological benefits of working for themselves.  That is true even for traders working within firms, as they typically retain a high degree of autonomy in their decision-making.  In an important sense, successful traders are entrepreneurs:  they develop ideas for the deployment of their capital and compete in a marketplace to achieve outstanding returns.

So what kind of personality traits make for a successful entrepreneur.  In an insightful post, Leslie Fieger details 14 character traits that he has found among those who start their own successful businesses.  Among some of the most relevant to trading are:

*  An intense drive to succeed;
*  The ability to adapt to changing circumstances;
*  Decisiveness
*  Energy
*  Perseverance and determination
*  Risk tolerance
*  Strong self-confidence

One trait in Fieger's list particularly stood out:  a sense of personal destiny.  Entrepreneurship requires sustained hard work.  That is only possible for people who perceive a link between what they do and how well they will do.  An athlete won't spend years training for the Olympics unless he or she deeply believes that they are meant for great things.  The really successful entrepreneurs have begun with a vision--and they perceive the fulfillment of that vision as nothing short of their mission and destiny.

Research suggests that entrepreneurs are distinguished by having proactive personalities: they don't see themselves as being limited by external circumstances and instead take initiative to bring about change.  This "can-do" approach to life helps them persevere where others would give up.  It also proves infectious, as successful entrepreneurs find partners who share their vision.

I strongly suspect that it is this proactive component to personality that enables great entrepreneurs to adapt to changing circumstances.

So how would you rate yourself as a manager of your trading business?  How well are you leading your trading enterprise and sourcing new opportunities?  Good trading will make your day or week, but it takes entrepreneurship to make a trading career.

Further Reading:  The Trader as Entrepreneur