The seven qualities of a short-term trader
Trading strategies and rational thinking
- Choose suitable strategies: There are various strategies in trading, such as value, growth, momentum, and short-selling. Traders need to find strategies that suit their personality and work hard to master them. For instance, a calm trader may be more suited to value investing strategies, while a more aggressive trader may be more interested in momentum strategies. Learning strategies can be achieved by consulting those who have successfully applied them, then combining that knowledge with personal characteristics.
- Cultivate rational thinking: Investing involves dealing with numbers, which requires rational thinking to explore the essence behind phenomena, rather than being confused by the phenomena. In trading, one should think more about the reasons behind the market trends and measure the extent of market and capital changes with relative values. For example, when market trends and fundamentals do not align, one should not stubbornly stick to wrong judgments but understand the situation.
Confidence and focus
- Establish confidence: Confidence is the foundation of success. Traders must believe in the work they are doing and not be afraid of making mistakes. A lack of confidence can reduce the chances of success, which applies not only to trading but also to life.
- Focus on trading varieties: There are many tradable varieties in the market. Traders can try widely in the early stages, but ultimately need to find the products that suit them best and study them in depth to become experts in that field, avoiding casting a wide net and catching nothing.
Strong learning ability
- Learn trading knowledge: The market is ever-changing, and traders must continuously learn new knowledge, understand market changes, and new patterns. For example, Buffett loves to read, and many successful investors maintain the habit of learning.
- #Acquire external nourishment for trading: Trading should not only focus on trading but also acquire nourishment from other readings, staying connected with society. The ultimate goal of trading is not only profit but also requires nourishment from culture, emotions, and art, allowing one's trading path to widen.
Calm and decisive
- Stay calm: In the stock market, avoiding haste and observing calmly can lead to an objective view of the market, enabling one to act in accordance with the trend. Do not attempt to seize every market opportunity or aim to sell at the highest point. Each trade should have clear reasons and be conducted according to plan; if one feels uneasy, then do not trade.
- Decisive decision-making: Market changes rapidly, and phenomena like the 'herd effect' often occur. If trading is not decisive, missing opportunities will be inevitable. However, decisiveness should not be reckless; it must be based on an understanding of the market and one's own abilities.
- Act with caution: There are many phenomena in trading that are difficult to distinguish. Lack of caution can lead to various mistakes, such as premature exit or entry and impulsive trading. Caution represents rigor and neutrality; traders should not act lightly unless they understand what they are doing.
- Self-discipline and self-control: The market is difficult to predict, and trading requires self-discipline to navigate oneself and find market rules. Self-discipline allows traders to buy when others are fearful and sell when others are greedy, cleansing restlessness and acting in accordance with the trend, serving as armor in the struggle against human nature's evils.
Independence and insight
- Independent thinking and action: Independent thinking and action are manifestations of complete thinking and independent personality, as well as an expression of the willingness to take responsibility and risks. For example, both Buffett and Rogers emphasize relying on one's own judgment and not depending on others' opinions.
- Cultivate insight: Short-term traders without insight find it hard to become investment masters. Insight comes from long-term practical experience and theoretical knowledge accumulation. When a qualitative threshold is reached, traders will gain sudden understanding of market rules and the essence of trading.
Perseverance and equanimity
- Maintain good qualities: The secret to making money lies in cultivating good qualities; however, these simple truths are often overlooked, constraining the development of most short-term traders. Traders need to persistently cultivate these qualities.
- Have a calm mind: One should view life, career, and stock market fluctuations with a peaceful mindset. This is related to personal experience, knowledge, and pursuits, and cannot be achieved overnight.