I have been lucky enough to work with and network with some amazing traders. Here are 7 things these winners do in the market to pull out millions.
1. They are patient with their setups and exits.
If what they are looking for is not there, it’s just not there. No need to argue with yourself and put on a small position or get sucked into coming into a position too early. They have seen enough moves to know when to get in and they are very patient for the right setup.
If a position has moved against them, they aren’t freaking out. Sometimes they trade around a loser as long as overall risk parameters are still in place and there is a real opportunity in the chart and not revenge trading or trading to “get back to even.”
2. They move on very quickly from losses.
There is nothing to revenge or avenge against, since they pull money out of the market. There is nothing to get back from that one stock they lost with. They have the tools, skills and confidence to not fret over the losses. It happens and is part of the plan.
3. They are contrarian.
Yes, that means when everyone sees an obvious chart pattern that sucks in the shorts and scares out the retail money for the imminent crash, they are long in size. Sorry, but if CNBC knows about it, it’s not likely to happen. They know when to trade against the sentiment and emotions of the market. It’s not hard to understand, if you do the same things everyone else does, you will get the same results as everyone else. You must be different to outperform.
4. Their emotions are in check.
Sure they can celebrate a win or a streak and be proud of their trading results but compared to newer traders swearing at their screens, or turning away because positions are moving against them and they have no exit plan, these big time winners know that controlling your emotions is huge in this game. There’s no room for an emotional error.
5. They have winners that greatly outpace their losers.
If you are scalping ES futures for 1-2 points and then take a 10 point loser your risk reward is skewed heavily out of your favor. You need to have big winners and hold onto them in this game. If you find yourself taking small winners and holding onto losers stop and regroup. Maybe the emotions are beating you into thinking you are winning taking these small profits, but over the long haul you will lose unless your win rate is extremely high. Reading Market Wizards, you find the same optionality across many different types of trading masters.
6. They adapt to what the market is showing them.
If the market is less favorable, they might still find trades but do it in smaller size. When volatility is increasing, most of them are trading smaller. The huge momentum winners of 2013 got whacked. People who only knew that one trade are now just figuring out that they need other types of trades. Big time traders adapt to what the market is showing them.
7. They are humble and generous.
The people that think they are something special get wiped out. Keeping the ego down is necessary. If you do your homework and approach these traders in the right way, and respect their time, they are more than willing to share a few things with you or answer a (relevant) question or two.