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By Paul Forchione March 27, 1998
http://www.futures.net/
The legendary golfer Bobby Jones was quoted as saying
"It is nothing new or original to say that golf is played one
stroke at a time. But it took me many strokes to realize it."
I guess you could say experience is the best teacher. So
with this thought in mind, here's some of my thoughts
about the differences between novice and experienced
traders: 1. Novice traders (NT) hate taking losses.
Experienced traders (ET) have learned to "love" taking
losses. They even have specific rules for when to realize
their losses. It's the only way they've managed to "stay in
the game" long enough to realize profits. 2. NT often
underestimate the importance of diversification and money
management. ET follow a disciplined approach and never
overtrade or initiate large positions. 3. NT ask everyone's
opinion. ET are independent-minded. They know if you
ask enough people you can find whatever opinion you're
looking for. 4. NT make decisions solely on expected
market direction. ET broaden their field of vision by
factoring both statistical and implied volatility into their
trading decisions. 5. NT tend to be aggressive and to
think about the benefits of leverage. ET take a defensive
approach because they think about the losses that
leverage can cause. 6. NT look for quick results. ET
implement strategies that "slow down" their need to
respond to the market. 7. NT tend to like to anticipate
turns in the market. ET have learned it's easier and more
productive to ride the existing trend. 8. NT find the
"adrenaline-rush" of trading to be exciting. ET try to take
the emotion out of their trading so they can make
business-like decisions. 9. NT haven't learned the
personalities of the different markets yet. ET understand
the general characteristics of each market and use them
when planning trades.
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