With the imminent release of the new Veterans' Trader Project Online Stage 1 course here is a relevant article I wrote for the now defunct Bullbearings site a few years ago. Its still as relevant as always.
The 3 keys to long-lasting Trader success
I was fortunate enough to attend a presentation last month by Clare Flynn-Levy. A former fund manager turned fin-tech CEO her company ‘essentia analytics’ help institutional traders improve their performance and turn-around their slumps using key metrics gleaned from their data.
She talked about helping a trader improve his performance by 0.5% a year, which you may think is not very much. However he’s running a $10billlion fund; now that half-a-per-cent can make a very hefty difference. She talked about the consistent challenges that most fund-managers and traders face. Regardless of the size and scale of their funds – the challenges are normally pretty similar whether you’re a fund-manager or a private trader.
The reason I mentioned Clare and her work is that at the end of her tech presentation she put up a slide that described what 3 key elements she’d found turned up again and again in the make-up of the very best traders that she’d seen and worked with.
And what were the three key elements on that slide?
I bet you weren’t expecting that were you reader? I bet you were thinking it was something more technical like: Buy when ADX is above 25 or always buy new highs etc. etc.
It wasn’t about having the best computers or charting packages or brokers (though they can help.) It was about having those three key elements that keep showing up in all successful traders...
The truth is that for those of us who’ve been trading for years you’ll realise the technical side of trading starts to take a back-seat. When I say ‘technical’ that can mean a lot more than just technical analysis. It can mean; chasing the holy-grail of a perfect system or having the best IT set-up or learning more about markets and indicators, slavishly following social media etc. It becomes a lot more about managing yourself.
After her presentation a few of us went to the local pub to discuss our thoughts on the presentation. What pleased me more than anything was that the first thing one of the other traders said was “Well those are the same things Pauls been lecturing on at us for year after year.” (Finally maybe some of my sage advice is sinking in!)
Now many of you reading this may well be disappointed to find out what those three keys are. They’re neither exciting nor sexy. In a Monty-Python-esque fashion it’s not some wondrous piece of fancy equipment that goes “Bing!” when it tells you to buy or sell. They’re not anything that you can show-off to your friends and family over.
However here is the truly exciting part. All three of those keys are achievable to the private trader regardless of their level of experience, or availability of resources. All three keys can be learnt.
I have many, many times talked about advising traders to read and implement the teachings from the book “The Checklist Manifesto” by Atul Gawande about how surgery teams developed a simple process to help improve patient survivability rates. It’s a fascinating read, provides the history and development of checklists (from military aviation) and why they work for humans operating in dynamic complex environments. Read- Digest- Implement. There you go – that’s process taken care of.
Strangely enough if you develop your own ‘checklist manifesto’ and follow it ruthlessly then, hey presto, what are you demonstrating? Yep, that’s right: discipline. That’ll be a good start. (Here’s a top trader tip to help you along the way: Have rigid rules and flexible expectations. Not the other way round.)
As for self-awareness I’ve always been a fan of the work of Robin Sharma who says in his book ‘The Greatness Guide’: “With better awareness come better choices. And with better choices you’ll see better results. Clarity breeds success.”
So how do you actually raise your self-awareness? Well there’s a few ways (ideally you’d do them all). First keep a journal of all your trades and your feelings during those trades. Secondly review your journal constantly and look for patterns. Ideally get yourself around other traders that will be able to objectively view your trading and your black-spots. (Come along to the London Traders Network social events and make friends with like-minded souls. Blatant plug there!) Finally think about using a true coach (whether they be a trader, performance or executive coach) to help give you an ideal space and sounding board for all your trading experiences. They will help reflect your behaviour and develop your strengths. I guarantee doing any of them will help raise your self-awareness. Doing all of them will help propel you forward at a much faster rate of knots.
So there you have it: Process- Discipline- Self-Awareness. The three keys to long lasting trader success. Rather than be dis-heartened and dis-interested why not attempt to view those three keys as something that is eminently achievable and will make you a better trader? All of the successful traders I’ve seen and worked with have demonstrated those three key attributes. You can too.