Before considering what is important to trading success, let’s start with what’s not important, because what many novice traders believe is essential to trading success is actually a diversion. Many would-be traders believe that trading success is all about finding some secret formula or system that explains and predicts price moves, and that if only they could uncover this solution to market price behavior, success would be assured. The idea that trading success is tied to finding some specific ideal approach is misguided. There is no single correct methodology.
Let me illustrate this point by comparing the trading philosophies and trading approaches of two of the traders I interviewed: Jim Rogers and Marty Schwartz.
Jim Rogers is a phenomenally successful trader, although he would insist on calling himself an investor, as opposed to trader, because of the long-term nature of his market positions. In 1973, he partnered with George Soros to start the Quantum Fund, one of the most successful hedge funds of all time. Rogers left Quantum in 1980 because the firm’s success had led to expansion and with it unwanted management responsibilities. Rogers just wanted to focus on market research and investment, so he “retired” to manage his own money.
Rogers is particularly skilled in seeing the big picture and anticipating major long-term trends. ...