The ‘trade’ ingredients that make up a successful trader.

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An excellent article in the AFR today on page 13, ‘The second life of our star trader (12/9/16), on one successful trader ‘doing it his way” . It has always intrigued my to read of the successes of other traders. Often the template is the similar but usually they will have one unique defining point of difference.

The key “template” takeaways:

  1. Allocate capital
    – Stockradar’s Portfolio process allocates capital evenly and often with a cash component
  2. Work with probabilities for safety
    – Stockradar uses three key ‘tried and tested’ trade setups that are focused on probabilities of success
  3. Size trade with commensurate rewards
    – Stockradar carefully manages the risk exposure in each trade to generate the optimum return
  4. Manage risk in totality
    – Stockradar does this on a stock specific trade basis and also on a ‘totality’ of portfolio weighting process.

For those of you that haven’t yet you can always take a free trial and see how we really work and generate our absolute return profile.

Trading with an edge and learning to lose are two key lessons to learn if you want to become a successful trader

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What do you do when you want to be a trader but you’re struggling to be consistently profitable?

Some traders take endless courses or read countless trading books, some find a mentor. Most just keep struggling until they get it right, or give up.

But Aaron Fifield decided he wanted to do something different. So he started a podcast where he interviews some of the best traders on the planet.

Fifield, the host of the popular Chat with Traders podcast – one I listen to every week – told Business Insider he “was making little progress and something had to change if I really wanted to become a profitable trader — it had to become more than a hobby”.“I understood the power of mentors and having relationships with those who were where I wanted to be (or at least, further advanced). But no one in my circle of family or friends etc had any interest in financial markets, investing or trading and I’d always learned a lot from listening to podcasts and enjoyed listening to them.”

And thus his podcast was born.

aaron

Fifield is now 88 episodes into his journey which has included chats with Blair Hull, Jerry Parker, Tom Sosnoff, Nick Radge, Nicola Duke, RealVisiontv founder Raoul Pal and even Jack Swager, the author of the Market Wizard series of books and himself a student of great traders.

So we asked Fifield if he could share some of the wisdom he’d picked up along his journey.

The one piece of knowledge that he’d like to share with his novice trading self and other traders was you have to find your comparative advantage, your edge, to be successful.

“You need to understand the importance of having an edge — and understand what an edge is,” Fifield said.

“Blair Hull defines as an edge as making the same kind of trade hundreds of times, and in the long run, having more money than you did to begin with.”

And it’s edge that pops up again when Business Insider asked him what were the most important lessons he’d learned from his conversations with traders.

Blair Hull told him “If you’re missing an edge, there’s no reason to play”, while Tom Dante taught him “If you’re not working on your edge, someone else is”.

For me though, my favourite episodes, amongst so many, are Fifield’s discussions with ‘FuturesTrader 71’. He appears in episodes 37 and 82 and is a trader who really learnt his craft from the ground up.

His point, the one Fifield thinks is among the most important he’s taken away from his scores of conversations, is that traders need to “stop being afraid that somehow you’re going to lose money”.

“In fact, you’re guaranteed to lose money, it’s part of the process.”

Traders need to learn how to lose before they can learn how to win, Fifield added