The One Personal Attribute That’s Key to Successful Trading
Let's look at the personality traits of exceptional traders — including one that might surprise you.
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There is one particular attribute that is the key to successful trading.
In 1860, the philosopher Ralph Waldo Emerson published a collection of articles with the title, "The Conduct of Life.' In his essay "Wealth," he wrote:
"Man was born to be rich, or inevitably grows rich by the use of his faculties; by the union of thought with nature. Property is an intellectual production. The game requires coolness, right reasoning, promptness, and patience in the players."
One hundred sixty-five years later, this remains the recipe for wealth, particularly in trading and investing. Cool, calm logic, timely action, and patience are the keys. Great traders think strategically and accept the that they can't predict what will happen. They know that there will be good and bad luck and that losses are inevitable. They stay cool and calm and have great patience.
There are many traders who possess great reasoning skills and are very adept at moving aggressively, but the greatest challenge for most is patience.
To many investors, patience appears contrary to what successful traders do. The perception is that successful traders are in constant motion. They are actively buying and selling, and if they aren't, it means they have failed. Good traders should be finding a constant supply of opportunities and making big, bold moves on a regular basis.
To some extent, that is so, but it depends a great deal on style and approach. An intraday trader with a very short time frame obviously shouldn't cultivate the same level of patience as someone with a time frame of days or weeks. Those with a short bias need to patiently wait out market rallies, while those with a long bias need to wait out market pullbacks.
What makes the market particularly difficult is that effective trading requires both quick, decisive action as well as patience. Traders have to be prepared to sit and wait for long stretches and then act quickly and aggressively when the time is right.
The key attribute of great traders is the ability to make the transition from active patience to aggressive action. However, those who are adept at staying patient often have a hard time acting boldly, and vice versa.
Most traders have a hard time resisting the itch for action. They anxiously anticipate what will happen in the future and find themselves implementing their battle plans before the time is right. They use up their precious cash ammunition, and then, when the market is at a key juncture, they are incapable of taking advantage of the opportunity.
Regardless of whether you are an active trader or a longer-term investor, patience is a virtue you must cultivate. That doesn't mean you do nothing; it means you make plans, plot strategy, stay vigilant, and prepare to attack when the time is right. You might test the trading waters now and then, but if you conserve your cash ammunition wisely, you will profit when the battle begins in earnest.
At the time of publication, DePorre had no position in any security mentioned.
