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

4.2. THE STRATEGIC THINKER

Many people imagine that they are creative thinkers, when in fact they are implementers, maximizers, goal-oriented pragmatists, but not necessarily skilled at dealing with the unknown or planning the future based on experience in functioning in uncharted territories.

Ideally, the strategic trader is someone who can think outside the box. Whether he is a candidate for a PM role with a good academic record or someone who has worked his way up as an apprentice, the strategic trader is someone who understands the complexities of financial models, business drivers, a sector or industry, as well as company-specific metrics and who can make probabilistic bets on how companies are going to do so that he can blend his understanding of the company's performance with prognostic statements about what is possible. The strategic thinker has the ability to function with limited information and to deal with the unforeseen events without guarantees or certainty.

This kind of trader will be comfortable dealing with unprovable events or the tails of events rather than having to rely on consensus or conventional ways of approaching problems. This edge gives the trader an ability to see the world in a unique way, to see patterns where others simply see complexity. Aware of these patterns, he thinks strategically, always playing out alternative scenarios, always asking: "What if this happened, then what?" He is always considering different options. He first considers what ...