Qualities of successful traders (by Steven Drobny)

: In your book, Inside The House of Money, you interviewed some of the best traders in the world. Could you tell us one characteristic they all shared?S: Humility. The popular image of big successful traders pounding their chest and always being right is really the guy that

 ends up out of the market after a couple of years when a secular or cyclical trend reverses. The best traders that have longevity, who have been through multiple market cycles and have consistently made money are very humble. They know that they are not smarter than the markets and to be in this game for the long term one has to be flexible. rter than the markets and to be in this game for the long term one has to be flexible.

http://www.yaseranwar.com/2006/11/interview-with-steven-drobny-president.html

 Steven Drobny’s book- Inside The House of Money, offers a rare insight into the minds of the world’s best hedge fund traders & how they profit in the global financial markets. Click here to learn more & buy Inside the House of Money.

data snooping/ data mining

i google today for Bill Egan and i find this nice little piece:

Models with adjustable lookback periods, e.g., the length of a moving average, require a tedious if simple sanity check. Test all periods. Plot the results (final equity value or whatever other measure you are using) vs. period. Which are most profitable? Is a contiguous block of periods profitable?

 If most periods are profitable, or if all periods between 1-30 days are profitable, that makes some sense. If the 24 and 66-day periods are profitable, but no others are, what real effect could be present to justify their profitability?

Many people use a 200-day moving average to estimate long-term trends. The model hypothesis is that long-term trends matter. I would not consider using a 200-day moving average to be data snooping or data mining. To me, data snooping is testing all possible periods and using the best one without doing any analysis like the one I suggested above. Poor analysis is testing only one period, even if it is your hypothesis, without checking the alternatives at all.

http://www.dailyspeculations.com/wordpress/?cat=239

The Distribution of S&P 500 Index Returns by Bill Egan

brush-up  your knowledge of S&P 500 daily moves with this recent paper

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=955639&download=yes

What makes a good trader

The work ethic can never be overstaded….i have kept a diary on every day in the market…. If i do not do my work my profit suffers…There is no shortcut in trading, the market will quickly find if you are LAZY.

 by Mark D. Cook

http://www.itws.org/mca/What%20Makes%20A%20Trader%20Successful.pdf

Gambling quotes on losing

The eternal poker pessimist, like compulsive gambler wants to lose. Losing makes him happy, confirming as it does a wide range of his most deeply held beliefs: that life is a bum rap, that his true qualities will never be appreciated by a cruelly misguided world, that he is generally undervalued and misunderstood. He will go on cheerfully defying the odds under the endearing delusion that there is more to him than meets the eye. 

Anthony Holden / Big Deal /1990

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Winners tell funny stories, and losers yell: Deal, dealer, deal! 

Poker saying

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Losers exaggerate. That’s because they are not trying to convey what really happened so much as how bad they feel.

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What do you do, when you are pushing your luck beyond its limits?  You must behave like a good philosopher and ask what axiom you are acting under. If the axiom which you are acting under is not designed to make you money, you may find out that your real objective at the end of the game is something else . You may be trying to prove yourself beloved of God. U must then ask yourself if – financially and emotionally- you can afford the potential rejection.

D. Mamet Things i have learned Playing poker on the hill (1986)

Qualities of successful traders (by Brett Steenbagger)

1) The Constant Desire to Improve – I met with a group of traders who have been successful over a period of many years. Nevertheless, they were participating in day-long meetings, including a seminar with me, to build on their success for the coming year. It was very clear that they are continually searching for new opportunities and strategies. They also value continuing education, keeping up to date with what’s happening in their areas. They track their performance and, individually as well as a group, are setting very specific goals for improvement.

2) The Ability to Press Their Advantage – The really good traders are aggressive; no doubt about it. When they’re seeing the market well and have good ideas, they aren’t shy about using their size and pressing their advantage. Lesser traders are very quick to take profits and are risk averse re: losing those profits. The very successful traders keep their risk management, but don’t hesitate to become more aggressive when they see opportunity. They remind me of boxers who, seeing opponents hurt, will go for the kill. The less successful traders seem to lack that killer instinct.

3) Emotional Resilience – The very successful traders have a great attitude about losing. They know it’s going to happen. They don’t take it personally. If anything, they try to find learning experiences from losses. Elsewhere I have written about how good traders view a losing trade as “paying for information”. A trade with an edge that doesn’t go their way either tells them something important about the market, or it tells them something about their execution. Either way, it’s a potential learning experience. Resilience means that the excellent traders trade well out of a hole. They can be down money for day, week, or quarter and continue to make the same good trades they would normally make.

4) Creativity – We normally think of creativity as a trait that belongs to artists, but it also is quite noticeable among traders who have been successful over many years. They find edges in the most unlikely places. They look at interesting relationships within the market they’re trading, and they find unique relationships from one market to another. One trader very recently told me of a strategy that exploited the way one market was priced related to a similar market at certain time periods. I would have never thought of that idea in a million years. He was making consistent money from the concept.

http://traderfeed.blogspot.com/2007/01/four-overlooked-qualities-of.html