The Chicago Board of Options Exchange has posted interviews with several gurus (their choice of words) and I found some of the comments to be interesting.
Quant Trader Fari Hamzei
… to manage your risk you could determine the standard deviation of your returns and quit once you pass your trigger. This is one example of creating a good routine. You have to find your own routine to be consistent as a trader.
Don’t overtrade. If you don’t see what you want, just watch. I like to sit back and play some music …
Lastly, one of the biggest mistakes traders make is not cutting losses fast enough. We’re dominated by a strong psychological force of hope. All pro traders, including myself, are always working to get better at cutting losses. Successful traders must become agnostics about the market’s future. Otherwise emotions will take you out of the game. There is no room for praying while trading. Before you enter a position, you need an exit plan.
Options Expert Jon Najarian
… the biggest mistake all traders make is trading without an exit strategy. All traders must have an exit strategy. Whether you are trading options or stocks, you should ask yourself two questions: “What am I going to do if this does not work?” and “What am I going to do if this does work?”
CBOE Faculty Jim Bittman
A winning trade doesn’t make you a genius. And a losing trade doesn’t make you a worthless person. The best traders lose 40-45% of the time.
The biggest mistake is people treat trading like a gamble rather than a business. Most people go to Las Vegas not expecting to win but to have a good time. Too many people get into trading for the same reason because they do not want to put in the hard effort to consistently make money.
Second, people think trading will be much easier than it is. They believe watching a TV show or reading a book will lead to riches. Obviously, the professional traders work very hard and spend a tremendous amount of time to excel.
Third, you must accept being wrong up to 50% of the time. Most people can’t do that.
Source: Wall St Cheat Sheet
