The Mental Strategies of Top Traders: The Psychological Determinants of Trading Success

4.12. IDEA COMPLETION

Coming up with a variant perception and defining the expectational gap requires work. In order to give those ideas the decided conviction that you need to move upon them, a trader has to be willing to dig in and go the extra mile to find the information he needs.

"If you are going home with positions and own a stock overnight, you should know what is going on," said one trader. "If something comes out that was public and anticipated, and you are unaware of it, it is irresponsible and stupid."

Successful traders understand why businesses are durable and valuable and what events will unlock value in the stock. Beyond the variant view and the path to getting paid, it is critical to understand certain things about the business and the people involved in every trade. A successful trader will want to know why an industry exists, the history of the industry, the major players, the drivers of growth in the industry, and the barriers to entry to the business. He will want to understand the business model, whether the business is scaleable, how to leverage the business model in order to understand whether a company is going to be profitable, and why one company will achieve greater profits and higher multiples.

By taking a look at all your information and processing it into the big picture, you can make more informed decisions about your trades. The analytical effort should be to distill things to their essence and not be obfuscated by details.

One way of keeping your ...