Trader mentality

author Steve Spencer (SMB Capital)

I spent seven years at the firm, where did you start your career as a trader?. I didn't understand then, that he was surrounded by an unusually large number of very talented traders. One of the qualities, which they possessed: they took so much money from the market, how much they could carry and did it every day. I mean, that they were never happy with one or a series of successful trades, if they understood, that the market provides them with more opportunities to earn.

Traders with this attitude were supercompetitive among themselves and by general market standards.. If they were + $ 3k, they always aimed to make + $ 5k. If they were + $ 10k - they always aim for + $ 15k. And they were exceptionally desperate in their quest to maximize their profits every day.. Certainly, they poured 20, 30 and even 50% arrived some days, but most of them P&L was higher at 4pm, than for lunch.

There are several things, accompanying this type of "killer instinct". First, this is the idea, what if you are in a good deal - you need to trade like that, to get the maximum possible profit. Too often young traders (they, with less than two years of work experience) so preoccupied with taking profit, that they cannot recognize the maximum possible potential of the position, and go out too early.

1) The reality of today's market is that spreads are so tight, that you can create a plan for yourself, in which you will exit literally in cents from the price of your stop in case, если вы считаете, that the position is moving against you too fast. If you go out to zero, when stock ведет себя хорошо, you can log in again quickly enough, without losing too much on the spread.

2) Take some time to explore the real potential in stocks, which you are trading. If you do not trade in a large office, where there are more experienced traders, then it will be harder to do it, but not impossible. Майк заставляет меня записывать video everytime, when I see a trade with a risk / reward potential greater than 20/1. He calls them "Spencer's Light Trades". The idea is, that these setups are repeated, и вы, being familiar with many of these setups, you can be aggressive, when you see them next time. We recorded one of these trades - it was SVNT yesterday from 10.05.

3) Develop a trading style, который подходит вам, during the first few years of your career, but don't neglect the opportunity to become a universal trader. What does it mean? I spoke to one of our traders after the close today, in him 6 months of experience. He is very focused on maintaining high average earnings per share. But I got a feeling, that he cannot see the forest for the trees. Not all trades are the same. Some are buy and hold transactions, others are scalping. Both are important. Now the former are working more because of the strong upward movement of the market. But that will change. Guaranteed.

Therefore, there are two extremes for those, who has not yet comprehended the "Trader's Mentality", необходимый, to beat the market daily (naturally we are not talking about a simple lack of experience).

First group Are those, who loves deals, where you can only risk a few cents and make 25-50 Cents. These traders rarely go home in the red and make enough money., чтобы оплачивать свои счета. But if they continue to focus on just one strategy, they will never experience a real money rise., what our profession has to offer.

Second group Are those, who is so focused on finding deals on 1-3 поинта, that they neglect trading skills, allowing you to systematically make money in any type of market. This group would never have survived the market. 2002-2003 years, when volatility was so close to zero, as far as you can imagine.

Both of these groups must find a reasonable balance. This is what, that our main trader Gman has been improving during three years of work in our company. There is, may be, three or four others, who is actively working towards this goal. It is they who will ultimately be rewarded with a large P&L and the satisfaction of mastery in one of the most interesting professions.