Friday, April 03, 2020

Three Things I'm Seeing Among Currently Profitable Traders

I'm seeing lots of commonalities among traders who had a very profitable March during volatile markets and uncertain times.  Here are three of the most important:

1)  Relying on Others - I recently wrote about the importance of information flows in trading.  The successful traders are connected to carefully selected information sources and continually updating their views on what they are trading.  Lots of things have been moving quite a bit, and there has been constant news flow.  Traders well connected to peers they trust and respect are adapting quicker, and their teamwork helps sustain a positive attitude.

2)  Flexible, Flexible, Flexible - Yes, the successful traders may have bigger picture views, but they are trading actively and tactically with those in mind.  Almost to a person, the successful traders have reduced holding periods and traded selectively, where they see solid risk/reward.  As the SMB site notes, they have made a quick adaptation to the higher volatility environment, with specific adjustments each day.  They have focused their trading on what they know and do best, and they are actively minimizing distractions.

3)  Mindset - The successful traders view the current markets through the lens of opportunity; the not-so-successful traders are viewing markets through the lens of risk.  To be sure, the successful traders are doing a good job of risk management, partly because of point number two above.  But they approach the day with enthusiasm and recognize that they are living through historic times of opportunity.  This helps them deal with setbacks, because they know that other opportunities will be presenting themselves.

Active, interactive, engaged, constructive:  These are some of the qualities I'm seeing among traders who have been doing quite well in the recent market environment.

Further Reading: