Merry Christmas and Happy Holidays traders. As the markets close out 2015 and move into the new year let’s not forget all the friends and family we have lost of the years. And let’s not forget the poor and suffering that is going on around the world. Below is what MrTopStep believes makes a great trader but just as important is not to forget where we came from. In the forward from the book Charlie D. it says that Charlie D was what every traders strives to be: talented, competitive, humble, exuberant and  charitable. Don’t forget your roots, and make sure you take the time to teach the next young trader learn, just as someone taught you. Charlie D knew these lessons well.

I hope you enjoy holidays..

Danny Riley aka MrTopStep

                     What Makes a Great Trader?

As traders, we are constantly striving to do better and keep ahead. The high flying game of electronic futures trading is not for those unwilling to change. In 1996, when Globex was first introduced, most said the trading floors were going to die, but that didn’t happen right away. Not until July of 2015 did the futures pits actually see their demise. The art of trading is getting harder and harder. It used to be that the humans outnumbered the robots, but after the credit crisis, MF Global, and PFG, there are a lot fewer people trading futures. If there were 3 million futures trades in the US, pre-credit crisis, it’s dropped down to under a half million. It’s not kids doing all the day trading, it’s men and women in their 40’s to their 80’s, and most of these people have been trading for most of their lives. Not only do they like trading, they find it’s in their blood.

PitBull Marty Schwartz: ‘If you want to make the money, you have to do the work’

So what is it that makes a great trader? Is it being honest with yourself, knowing when to admit you’re wrong? Is it work ethic? Or is it the ability to keep an open mind and be willing to learn new things and adjust quickly? Like I said many times, things have changed, and they are never going back to the way they were. All the free money and slippage or inefficiencies of the markets have been taken away by algorithmic and HFT trading. The computers can sense when the ‘crowd’ is too long or too short. Humans no longer ‘control’ the flow.

Things that used to work no longer work, and the things that do work only work until the HFT programmers figure them out. You can’t walk into the Chicago Board of Trade bond pit and make millions, nor can you hit the S&P pit at 30 S. Wacker for quick bucks. Technology has moved beyond the pits. The robots have taken over, the retail trader is outnumbered and outgunned, but that doesn’t mean we can’t beat the machines.

So what are some of the traits that make up a great trader? To answer this question, I took it to the MrTopStep Twitter feed and asked over 22,000 followers to give me one word that best describes a ‘great trader’, and the answers came in from all over the world. Below were the most mentioned, grouped by category

• Decisiveness, Confidence, Conviction, Fortitude, Emotionless, True Grit

• Focus, Passion, Dedication, Objective

• Patience, Careful, Discipline, Risk Management

• Modesty, Humility, No Ego

• Tenacity, Resilience, Preservation

I have always considered myself a student of the markets, and while the traits above are all part of the makeup of a great trader, some important traits have been left out. The first and maybe one of the hardest to learn is ‘consistency.’ Some of the greatest sports figures in the world were not just known for how many points they could score in a game but for their career averages. Trading is not a one and done deal. You have to study, do the work, and most of all you have to want to do the work, you have to want to be successful. Warren Buffett’s trading rules are great but they are not going to get you to the finish line. In the 1980s and 1990s there were several well known traders that consistently beat the markets (see Market Wizards http://optionboost.com/Market_Wizards.pdf ) . They knew the tricks of the trade but electronic trading has separated the men from the mice. Years ago all a trader had to do was to show up on the floor, make a market and start trading. Today is much more complicated than that. Everything is time and price and the computers are programed to take advantage of our mistakes and our buy and sell stops.

The words that I feel best describe a ‘great trader’ starts with the ability to learn and grow through your experiences no matter what your age is. Retention, which is the ability to take the lessons from everyday and use them in the years to come is a vital attribute. A long time ago I started to keep a notes handy and write down everything applicable that I learned and saw throughout the day. Now I tell the young & new traders I work with to keep a Google doc open during the day and maintain a journal of thoughts, ideas and experiences.

There are so many great qualities that are left unmentioned but another characteristic that is important and overlooked is that many great traders have learned from great mentors and in turn pass along what they learned to the next generation. This is what the PitBull did for me and what I have tried to do with younger traders such as FairValue Trader and others.

I always referred the the trading floors of the CBOT and the CME has and adult high school. Despite the seriousness of the floors and the trading business there were a lot of similarities of going to school. If you wanted to be a trader’s you had to come prepared. You have to stay organized and you have to be on time and take notes. You have to establish a trading style and you have to ask questions. There is no easy way around learning to trade. It is a life commitment that does not always go your way but it’s also a way of life for many of us. It is what we do and it is who we are… traders!

In Asia, 8 out of 11 markets closed higher (Shanghai Comp +0.43%), and in Europe 10 out of 12 markets closed higher  (DAX +2.28%). Today’s economic calendar: Markets closed for Christmas

Our View: Be safe, don’t drink and drive, make memories spending quality time with those you love and have a Merry Christmas!

As always, please use protective buy and sell stops when trading futures and options.   

MrTopSTep Year End Settlement Price Contest

Enter Now For A Chance To Win $1,000!!!

• In Asia 8 out of 11 markets closed higher : Shanghai Comp. +0.43%, Hang Seng +0.44%, Nikkei -0.11%
• In Europe 10 of 12 markets closed higher : CAC -0.24%, DAX +2.28%, FTSE +0.22% at 5:00am CT
• Fair Value: S&P -, NASDAQ -, Dow –
• Total Volume: 325k ESH and 1.4k SPH

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