29/12 – Goldstein’s 10 habits of successful traders

Finishing off 2016 blogging with a psychology-related blog post.  Some weeks ago had the chance to listen to Steven Goldstein for an hour.  Goldstein is a well respected London-based trader performance coach who also has many years of trading experience under his own belt. His coaching business is AlphaRCubed.

psychology-dec29Earlier this year he published “10 Habits of successful traders” on LinkedIn.  The article is very good – definitely check it out! Nearly all of the habits are psychological and/or behavioural in nature – to do with the trader’s mindset.  Presumably, tick a good chunk of the points and you probably have a winning mindset!

In this blog post, I work through his main points and give myself ticks and crosses as appropriate.   Found this exercise very helpful!

[Note that, in addition to a winning mindset, the trader also needs to have a thorough understanding of the financial markets, have developed his own trading strategy as well as a money management system]

[A few of the 10 habits have been subdivided further in this blog post]

  • Learning from mistakes – review, analyse, adjust (tick but can do more)
    • Am completing reviews and reflection on my trading on a very regular basis. But… Am I REALLY learning from my mistakes?  Have I compiled a list of my mistakes? Am I finding solutions for how I am going to avoid repeating the mistakes in the future?  Am I finding out how I made the mistake?  Am I finding out why I made the mistake?  Am I only picking on small mistakes, and missing the BIG PICTURE mistakes?
    • Example of big picture mistake – not developing alternate income streams to supplement my living costs whilst reduce anxiety and pressure on my trading operation.
  • Love Trading (tick)
    • Am definitely passionate about trading. Out of interest – Why do I love trading?  What evidence is there that I love trading?
  • Trading style suits trader’s personality (unsure – X?)
    • Takes a long time to accomplish this – normally start off adapting the style from mentor/coach and then mold the style to one’s own personality (yes, this is the journey I’m currently experiencing)
    • My style must leverage on my strengths and try to minimise the impact of my weaknesses
    • Requires a high degree of reflection and self-appraisal
    • Consider ‘risk profiling’ to understand myself better (unfortunately this is on the expensive side for an independent retail trader)
    • What are the different trading styles available? Do I even know what they are? Discretionary (Trend-Following, Mean-Reversion, Catalyst-driven), Systematic, High Frequency/Algorithm, Fundamental, Arbitrage, Market-Making, Exploitation
  • Reduction of anxiety and stress (X, am doing some of these but lots of room for improvement)
    • A quote directly from Goldstein’s article because it is really well explained:

‘Complex Systems’ are not the domains of ‘Professional Experts, Technical Specialists, or ‘Scientists’, as the LTCM disaster of the late 1990s highlighted all too well. Rather, success in ‘Complex Systems’, requires adopting a ‘behavioural and emergent approach’, it is the domain of the highly skilled and capable. In financial markets, emotional intelligence, spatial awareness, probabilistic thinking, and behavioural abilities all come to the fore, as much as, if not more, than, intellectual intelligence.

  • Complex systems create uncertainty -> uncertainty leads to anxiety -> anxiety leads to poor decision-making
    • Reduction of anxiety can be achieved by increasing preparation – also by mental visualization (as in athletes performing in sports competition)
    • Can also be achieved by looking after mental and physical health – nutrition, sleep, exercise
  • Humility and Humbleness (tick)
    • Be able to admit being wrong at times
    • Always being open to feedback and advice
    • Thinking through some of my trading colleagues, I’d say that Paul Wallace is a good example in this respect – he seems pretty humble to me, never boasting about his trades or knowledge in the trading area
  • Planning (X/tick – more longer-term planning required)
    • (Goal-setting and strategies -> Quarterly Operations Bulletins)
    • What are my long term goals – next 1 year, 3 years, 5 years, 10 years, 20 years – post 60 years old – how would I like to be trading, how much time, from where? With how much capital? How does this tie into my current level of capital?
    • “3-week block planning” – this is actually working out very well since I started using it in early November – it’s providing a lot of structure
  • Preparation (tick)
    • Design and implement processes and routines – made significant progress in this area over 2016
  • Discipline (tick)
    • Compliance with processes and routines – made significant progress in this area over 2016
  • Patience (?)
    • Not sure whether I am patient or not – am also thinking that things are taking a lot longer than I expected
  • Respect for risk and uncertainty (tick)
    • Being aware of possible outcomes and the probability of each outcome – the theory of expectancy
    • Easy to understand and grasp for me given my extensive poker background
  • Strong risk and money management (tick)
  • Focus on making money, not being right (tick)
  • Work/Life Balance (tick/X)
    • Some improvements to be desired here. Although I regularly have exciting things going on outside trading, and am keeping fit, recent trading progress/performance to regularly influence my level of happiness.  Additionally, in 2016, thanks to issues with relationships and family, it has not been a year of stability – which probably had an adverse impact on my performance – that said, some of those things were outside my circle of influence.

In summary…

It seems I am well on the way to having and/or developing the traits typically exhibited by successful traders.  However, there are definitely some things for me to work and improve on.

As I said above, working through the article in this manner was very helpful for me – you might want to do the same if you are looking to improve your “inner game”.  And definitely check out Goldstein’s website.

That said, wish you all great Saturday night for seeing in the new year…..





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2 Responses to 29/12 – Goldstein’s 10 habits of successful traders

  1. David Eppel says:

    Patience- that made me laugh. I’ve been trading options for 16 years,some great years, some losing years too. I think I’ve improved and found a style that suits me, as options don’t tend to slap you around 5 seconds after entering the trade. I’ve been trading the market’s money for some years now. Can barely remember the anxiety of directional trading and getting stops taken out in a nanosecond. Good luck to those who choose such a hard road.

    Liked by 1 person

  2. chainbreakercorporation says:

    This was very useful. Thanks for sharing.

    Liked by 1 person

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