Each successful trader has their own traits that enable them to make money in the markets, but every trader also has their own weaknesses and demons that they must battle and keep in check. Some rich traders were born to trade, they have about as much emotional attachment to a big position size as normal people have with ordering a pizza. While many people are trying to trade that are just not built for it,many people can not deal with losses at all or crave human contact instead of a computer screen. There are people that know in their heart that they will succeed in the markets, even losses and losing streaks make them stronger because they are learning instead of breaking.
Here are my own strengths & weaknesses that I see after a dozen years of battle.
Strengths:
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I have an unquenchable thirst for knowledge and information. I will read hundreds of books and study charts like maniac.
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I just love the markets, I enjoy watching the show whether I am participating or not.
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I can’t stop, I do not know of any game as fun and challenging as trading.
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I never get bored with trading.
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I am not afraid in the least to buy breakouts or short break downs.
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I HATE losing money, I despise it, this enables me to have no trouble cutting losses short.
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I HATE selling a winner, I will let a winning trade run as far as it will go, and am very patient with wining trades. This gives me an advantage in trending markets and monster stocks.
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I am a risk manager first and a trader second, I examine how much I could lose before I enter a trade and position size accordingly for a 1% loss if I am wrong.
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I do not diversify I focus my trading. My very short watch lists enable me to be very knowledgeable about specific stocks price patterns and daily ranges.
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I am very knowledgeable about options after much study so I have many more tools for profits at my disposal than just stocks.
Weaknesses:
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At times I am too aggressive, I enter positions too soon with good entries instead of waiting for great entries with better odds.
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Sometimes I under estimate potential volatility in a trade and lose 2% of equity in a trade versus 1% which is my goal.
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I have trouble at times changing up systems when the market changes, I trend follow too deep into a volatile market when option strategies or going too cash would be much more profitable.
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This year my single biggest mistake was not comprehending the possibility that Apple could fall to $505 from the $700ish peak. I let fundamentals bleed into my charts. While I played the $390 to $700 run with call options I gave back profits trying to play it off many support levels that did not hold. I should have been in cash, playing options strangles, or shorting it instead of buying support later in the year as it fell 200 points.
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I am not happy with a few hundred dollars in profits, small profits almost make me mad, each trade I make with a belief that it is possible to make a thousand dollars or more in profits with my entry. While aggressiveness is great in bull markets and trends it is dangerous in volatile markets or when there is headline risk. I have to keep myself in check at all times so I do no trade too big or hope when I should exit. The weakest link in any trading method is the trader. I am my own worst enemy.
The good news is that my strengths have over come my weaknesses over the past dozen years and led to some great profits. Understanding and being truthful about your own strengths and weaknesses is a key learning for every trader if you want to over come the weak areas and build your own strengths.
