The best way to improve at any skill is to learn from mistakes. Fast Money contributor Guy Adami weighs in …
Damien Hoffman: Guy, how did you get started as a trader?
Guy: I became passionate about trading on my second day at Drexel Burnham Lambert on 60 Broad Street in NYC in May of 1986. Each morning we would have a trader’s meeting at 7:00 a.m. Those meetings were “colorful” to say the least. You checked your ego at the door.
I did something stupid one day and was banned from the meeting for a month. But trading to me was as close to being a professional athlete as I would ever get without the contact … and truth be told, somedays there was “contact.”
Damien: Guy, you’ve been a pro trader for years. What would you say is the most common mistake traders make?
Guy: The most common mistake novice as well as seasoned traders make is the inability to cut a losing position. Accepting that you are wrong and getting out of a bad trade is the hardest thing to do.
As a trader you should be able to be “right” 2 out of 5 times and make money. Yet many novice traders can be correct 3 or even 4 out of 5 times and still manage to lose money. It all comes down to discipline.
Damien: So, if you were hiring a new trader, what skills would you like to see?
Guy: If I were hiring a new trader I would look for someone that understands risk and enjoys taking risk. It isn’t always the smartest person in the room or the most well educated person in the room – it is usually the person with the most “edge” to him or her that becomes the best trader.
Damien: Thanks, Guy. This should help some struggling traders.
Guy: My pleasure. I hope it helps them become more profitable.
What mistakes do you think traders make most often? Let us know in the comments below …