I spent seven years with the firm where I began my trading career. Little did I know it at the time but I was surrounded by an unusually high number of very talented traders. One of the traits that they shared was an attitude that they would take out from the market as much money as they possibly could every single day. What I mean by this is that they were never satisfied with one or even a series of winning trades if they believed there was more opportunity available to them.

The traders with this attitude were super competitive with themselves and with the market overall. If they were up $3K for the day they wanted to push for $5K  If they were up $10K they wanted to push to $15K. But they were rarely reckless in their pursuit of maximizing their profits each day. Sure, they would give back 20, 30, or even 50% of their profits on some days, but for the most part their P&L would be higher at 4pm than it was by the midday.

There is a bunch of things that go hand in hand with this type of “killer instinct”. One, is the idea that if you are in a good trade then press that trade for maximum gains. Too often young traders (those with less than two years experience) are so anxious to book profits that they fail to recognize the upside potential in their position and exit far too early.

Point #1: The reality of the market today is that spreads are so tight you can have a very detailed trading plan that will allow you to exit within pennies of your exact stop price if you believe a position is moving too far against you. This  market characteristic gives you the luxury of not getting flat a position that has traded in your favor until something has changed significantly. And if you do get flat if the stock is behaving well you can reestablish fairly quickly without giving up too much on the spread.

Point #2: Spend some time learning what the true potential is for a stock that you are trading. If you aren’t part of a trading desk with more experienced traders then this will be more difficult but certainly not impossible. Mike has me record videos each time I spot a trade with a risk/reward of greater than 20:1. He refers to them as “Spencer Easy Plays”. The idea is that all of these setups repeat themselves over time and if you become familiar with enough of them you will be aggressive the next time you see one. We actually captured one such trade yesterday in SVNT from the 10.05 level.

Point #3: Develop a trading style that suits your personality during the first couple of years of your career but don’t neglect becoming a well rounded trader. What does this mean? I was talking to one of our traders after the close today who has about six months of experience. He is very focused on maintaining a very high ticket average. No argument there as he gets to keep a greater percentage of his P&L with a higher ticket average. But I got the feeling that he could not see the forest for the trees on a broader point I was trying to make. Not all trades are created equal; some are “Trades to Hold” and others are scalp plays. Please don’t discount the importance of learning both. Right now, trades to hold are working very well because of the  strong underpinnings in the market. But this will change. Guaranteed.

So there are two ends of the spectrum for those who don’t yet have the “Trader’s Mentality” necessary to crush the market on a daily basis (lack of trading experience notwithstanding).

The first group are those on our desk who love trades where they can identify only a few cents of risk and can make 25 to 50 cents. These traders are rarely negative and make enough money to pay the bills. But if they continue to not add other parts to their game they will never experience the monetary upside this profession has to offer.

The second group are those on our desk who are so focused on finding trades to hold for 1-3 points that they tend to neglect their trading skills that will allow them to make money on a consistent basis in any type of market. This group would have never survived from 2002-2003 when volatility was as close to zero as you can imagine.

Both of these groups need to find a happy medium. That is what our head trader Gman has continued to improve on during his three years on our desk. There are maybe three or four others who I see actively pursuing this goal. They are the one’s who will ultimately be rewarded with greater P&L and the satisfaction of having mastered one of the most challenging professions.

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