* Preparation - What a differentiator. Some traders send me their journal entries every day. Others more occasionally or not at all. Some journals are detailed with extensive reviews of individual trades and lessons learned. Other journals are general and purely self-focused. Some journals contain concrete goals and plans for the next day's or week's trading. Other journals are entirely backward looking. One successful trader routinely takes breaks during the trading day and creates multiple periods of preparation, which create multiple opportunities to learn from mistakes and adapt trading accordingly. The investment in preparation--before the market open and after the close--is highly correlated with success.
* Flexibility - The successful traders have moved to different opportunity sets since the market volatility. The less successful traders spend considerable time bemoaning "choppy" markets. The adaptive group sees plenty of opportunity in markets. The less successful traders want the market to fit their style of trading. Higher idea velocity combined with sound risk management means that traders who sees more opportunity will have better odds of participating in larger trades. It is often a handful of bigger winners that account for a meaningful proportion of overall profits. The best way to have few big winners is to generate few worthwhile ideas. The best tool for generating ideas is open-mindedness: looking at more new things and looking at old things in new ways. Bouncing ideas off others is a great tool for fresh perception.
* Offense and Defense - The traders who have had the hardest time lately have had the least staying power in their ideas. They want their positions to move significantly in their favor and very little against them. That is a formula for stopping out on noise. I recently spoke with a successful trader who spends considerable time and effort hedging his positions and making sure he has multiple independent positions at all times. The balance allows him the freedom to let his ideas play out. Another successful trader has been careful about sizing trades initially and aggressive about adding to them as market behavior confirms the trade thesis. The winning traders are able to play offense because they emphasize defense.
In short, the traders who have performed best in the recent market environment have been those most energized. They have used the altered environment to find new opportunities and change what they're doing. They embrace change--in themselves and in the markets.
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