So, have you read any good books lately? I know, dynamite opener, right? But there’s a good reason for me asking you that, and this is it: Because successful traders are forever going in search of newfound knowledge, trading skills, and even life lessons that will make them better and more successful. Are you doing the same for yourself?
A big reason why there are so many trading books, resources, and continuing education out there is because, well, some of it really works! Now, I know what you may be thinking: “But where do I even start?” And, in fact, I agree that the endless supply of information available for traders does make it difficult, so today, we’ll discuss a few trading skills you can actively develop on your own, and where you may turn in order to find resources that will help you do it.
Be forewarned, though, that we’re not talking about learning to somehow time the markets or develop your own trading algorithm here. We want to talk about trading skills that will help you add knowledge, look at the market from new or different perspectives, and especially bring out the best in yourself. So here are a few trading skills you’d be wise to continually develop, which could be especially helpful when selecting your next article, blog, or trading book to read.
Perhaps besides “How do I become a successful trader myself?” the next most popular question on the minds of traders is always “What is it that makes the best traders in the world so successful?” And the great thing about it is that so much has been written and even made into film about the world’s best traders that it’s both easy and fun to learn more about these individuals and their trading methods.
Men like Jesse Livermore, perhaps history’s most famous trader, or George Soros, who “broke The Bank of England” for a $1 billion profit in 1992. Or Paul Tudor Jones, who amassed his fortune shorting stocks during the 1987 crash. Or Richard Dennis and the famous Turtle Traders.
Why, there’s even a whole class of infamous traders, like Nick Leeson, the rogue trader who brought down Barings Bank, or modern-day Ponzi schemer Bernie Madoff. Plus there’s so much available on investing icons as well, men like John Templeton and Warren Buffett, just to name a couple.
More than ever, learning about those traders (and investors) who have come before us, how they approached the markets, and the actions that would ultimately make, and in some cases, break them, is a truly fascinating endeavour that will stimulate your mind and perhaps even strengthen your desire to learn about and trade the markets.
So our advice: Seek out knowledge and information on the world’s best traders, whether it’s on the Internet, or in books like Reminiscences of a Stock Operator, or anything written about or produced by the traders themselves. Develop and feed your appetite for information on what made these traders “tick,” and even as you continue to hone your own methods and trading skills, never stop thirsting for knowledge about who else, and what else, is out there.
For all the market studies that go into becoming a successful trader, you might be surprised to learn that most every successful trader I’ve ever known also devoted time and energy to studying crowd psychology, which isn’t specific to the markets at all. Actually, it’s more about the psychology behind mobs and riots!
How can that help your trading, you wonder? Well, think about what it is that ultimately drives price action in the markets. It’s not indicators, technical analysis, or news by itself! Actually, price action in any financial market is driven almost entirely by human emotions like fear, greed, and even panic, which are the very same psychological responses we stand to learn about by studying the mentality of crowds. And there’s no shortage of places to learn about it, either.
In fact, well-known books on the subject may include The Wisdom of Crowds and Markets, Mobs, and Mayhem, both of which address (indirectly, of course) the same human nature that drives markets, whether under “normal” conditions, or amidst the manic volatility seen in “crash,” “bubble,” or “crisis” scenarios.
Developing an understanding of crowd psychology may give way to an entire host of new trading skills, from the ability to remain calm and composed under pressure, to being more confident trading amidst the kind of volatility that can threaten the careers of less-experienced traders. Not to mention the fact that this is uncommon knowledge that can provide a useful edge in the markets throughout your day-to-day trading endeavours.
Even intraday traders and those who maintain more intensive schedules in the markets must find time to devote to health and wellness. And, in an effort to live well and develop useful trading skills, many actively meditate, practise yoga, or study martial arts, any or all of which are activities we’d recommend for Lazy Traders as well.
Beyond the exercise benefits, though, these activities place a heightened emphasis on discipline, repetition, focus, and using the mind’s own power to create a healthy consciousness and clear our psyche of negative energy. Need we say any more about how and why those are all useful trading skills?
So read up on martial arts principles, particularly the call for extreme discipline and focus, try a yoga class, or safely impart exercise into your daily or weekly routine as a healthy outlet for the stresses and frustrations you may encounter both in trading and in life. Lifestyle trading lends itself well to outside opportunities such as these, and because of the nature of trading the markets, there are indeed many parallels—especially on the mental side—that will help further your trading skills in the process.
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