Trading Decisively by Bruce C. Kramer
What do you think are the most important mental skills for trading profitably? Compare your response with what a professional trader believes.
I became interested in and began to read the literature pertaining to the psychological aspects of traders some years ago. In my consulting practice, I am asked as many questions about the psychological aspects of trading - for example, how to control emotions and how to confidently make buy and sell decisions - as I am on technical systems and indicators. After a while, I thought it would be worthwhile to examine this arena from my standpoint as a professional trader, relating actual trading experience to a psychological framework for decision making. This approach is the reverse of much related published work.
In Theodore Isaac Rubin's Overcoming Indecisiveness , the author defines eight stages for effective decision
making and lists 20 secrets for decision success. Rubin's work is set in the context of making decisions in a business environment, but most of the 20 secrets are equally applicable to trading decisions. After all, trading is the greatest business of all.
Let me briefly review Rubin's ideas that apply to the markets. For our purposes, we will assume that a trading system or at least a quantifiable, systematic approach to trading is being used. We will define system statistics as the parameters of the signals generated, as in percent of profitable trades, average size of gains, average size of losses, average holding period and so forth.