Three main skills for a Wall Street trader
Most of those who seek to make a career trading ordinary shares, conducting stock exchange transactions with bonds or on a commodity exchange, watched a cult film that became classics of this genre - “Wall Street (or Wall Street) or its continuation“ Wall Street: money don't sleep ”(Wall Street II: Money Never Sleeps). Older readers are inspired by the ambitious career of Bud Fox, played by Charlie Sheen, while younger readers prefer the image of clever trader Jake Moore, who created Shia LaBouf. But we can all agree that ultimately everyone wants to be none other than Gordon Gekko, played by Michael Douglas. His big deals could turn for a successful company with even greater success or total collapse.
These characters made many students dream of hammering millions on Wall Street.
Regardless of what kind of Wall Street trader image is closest to you, the real people who worked on a stock exchange in such companies as Goldman Sachs, JPMorgan, Morgan Stanley, UBS served as prototypes for their personalities. And if you want to be one of them, then you will need certain skills.
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Maths
Mathematics plays a crucial role in trading, but not all deals are made equally. If you want to penetrate the essence and master the techniques of algorithmic trading, then at least you should be able to perform calculations ahead of time and, perhaps, even have a degree in physics or engineering. However, in the lighter trades you will need knowledge from the basic course of mathematics, especially useful to remember about the theory of probability. According to Peter Lynch, head of Fidelity Investments:
Anyone has enough brains to follow the stock market. If you know math at the fifth grade level, you can do it.
In any case, you need to be able to perform these seemingly simple mathematical operations in real time with reference to the markets. Imagine yourself a poker player who needs to calculate all the potential odds and moves of each of the opponents. As in any other case: the higher the risk, the greater the reward. So one day, when you go beyond simple short-term and long-term trades and begin to engage in operations with derivative financial instruments and derivatives, you should expect that here you will need mathematical operations of a different level.
For example, if you want to apply the CAN-SLIM trading method, which was invented by the founder of the business newspaper Investors Business Daily, William O'Neil, you will need mathematical knowledge at the college level. If you want to improve your knowledge of mathematics with the help of math courses, then look for them on sites like Coursera or Udacity .
Market conditions are unpredictable. Traders monitor the Bloomberg terminal and always try to make a plan for the next steps.
Planning
Many traders make a plan of trading operations, which they follow strictly. This personal plan has been drawn up over time. Different traders have different capital, different risk tolerance, product orientation and decision-making models. A plan is a systematic program that dictates when to take part, and when to leave tenders, and for each action there is a programmed reaction. The plan must be reliable, and you should always stick to it.
In the end, it will help you minimize risks and avoid making the wrong decisions. Market conditions are always changing, so a good trader may even have several trading plans. Even the best and most talented Wall Street trader follows a plan. Listen to traders and commentators on the Fast Money talk show Guy Adami and the Najarian brothers.
Make a plan. Do not chase the market. Occupy a position consistent with your willingness to take risks. At the very least, this is how you will be able to last longer in the game.
If you are not able to make a plan, then consider that you have already failed. Think you need to work on your trading plan? Then look for online tutorials that can help you create an effective trading plan. Then test your plan using the Chart Game . If you have long-term prospects, then try to make several securities transactions on Yahoo! Finance .
Discipline
The stock market can be compared to a roller coaster. The price level for individual financial instruments on certain days may differ depending on the mood of the investor, trader or speculator. Thus, playing on the stock exchange every day is not a task for the faint of heart. When thousands of dollars or more are invested in a deal, it is difficult to remain indifferent. Only fools believe that they will succeed in every transaction. Traders need to learn to stay calm and cool in emergency situations.
No matter how we sang Kenny Rogers, there is only one skill that can help you out: “you need to know when to hold the cards, when it's better to fold and know when to leave.” In fact, the discipline is developed with practice.
According to Jim Cramer, the Mad Money TV host, one of the best ways to maintain discipline is to stick to companies that you know and believe in. You also need to make deals for the main profiles of the company. So move and start training on the demo software that simulates the real situation as accurately as possible. Keep your plan in a prominent place near the computer and as soon as you feel that you start to deviate from it and bear losses, take a break.
Keep your composure, try to visualize your program of actions and analyze mistakes. More importantly, start with small deals and as discipline increases, you will be able to take more and more risk. Follow these tips and after a while you will become a trader with tight discipline.
Conclusion
In both Wall Street films, Shia LaBeouf, Charlie Sheen and Michael Douglas playfully operated with financial instruments. However, the harsh reality is that to build a career on the stock exchange every day, from Monday to Friday, from 9 am to 5 pm, means to experience constant stress and pressure. Markets may be volatile, and investment pricing is highly volatile. All this brings traders into an emotional state, as if they were riding a roller coaster. But you can not let this interfere with the desire to make a career in trading.
If you want to get an advantage over your competitors, you may even have to pay attention to one of many online trading courses ( there are online and offline courses and seminars in Russian - approx. Transl. ) Every day, thousands of traders are ready to to earn millions of dollars or lose them. Sometimes even those who have lost everything at the end of a given year can still count on a decent bonus at the expense of their employers from investment banks.
It is very difficult to resist the temptation to receive dividends at the end of the year. Just make sure that you have sharpened your trading skills enough - mathematics, planning and discipline. This must be done before taking on such responsibility.
Attention! In ITinvest, a vacancy for a GUI C # developer has opened, the job is to implement front-end development of software products for trading on the exchange. Details on the link www.itinvest.ru/about/vacancies/programmer-gui-c .
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Source: https://habr.com/ru/post/239499/
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