a giant ferris wheel in the evening light the methaphor of the trader's wheel

What Seperates Great Traders from the Pack?

What separates full-time traders from those who struggle? Actually, every full-time trader might have a different answer based on their personality and process, but we do see many common traits. Many might think that it’s an ability to analyze a chart, and while that skill is important, it might only be 10-20% of the answer.  Today, we will share our evaluation checklist that defines the areas where successful traders get the edge day-by-day, setup-after-setup. We will also show you a new perspective for reviewing trades.

Trading is about opening and closing positions, but there’s more to it. Traders must narrow down the overwhelming complexity of markets to a few objective decisions. In order to be able to achieve that, one has to obtain an edge on each of the most important aspects of trading: observation, planning and execution. Still, even having certain skills, or edges, can leave the trader shorthanded if any competency is missing or underrepresented in the “soft skill portfolio.”  In other words, a lack of balance might sabotage the overall performance.

“If the Trader’s Wheel were a real wheel of your bike, how would the ride be?” Find the balance in your skills and recent activities.

The Wheel of Trading exercise explores and addresses the imbalances in our trader skill set. The wheel example below is Trader Skillset’s invention, and it is based on what we believe are the most critical competencies. The Wheel of Trading is a tool that enables you to get a snapshot of how satisfied you are with your trading. Rate your level of satisfaction on a scale of 1 (low) to 10 (high).


A pie sliced into 8 sections representing the 8 aspests of successful trading
Wheel of trading and day trading by Trader Skillset – click to enlarge
  •  Risk taking with confidence, without trying to  just get by. To achieve this we have to assess the risks prudently and avoid trading “not to lose.”
  • Accuracy of timing (the quality of entries and action after confirmation without hesitation.)
  • Directional bias (quality of price action based on chart readings, and trend analysis with multiple time frames)
  • Flexibility and ability to adapt to changing market conditions. Can you adjust strategy, play defense, or get more aggressive on an entry trigger based on the volatility of the market?
  • Taking losses (Can you accept losses without the slightest influence on your future decisions? Taking losses is part of the game as it is part of the plan that we define. Or, do you tend to overtrade or reverse trades after taking a loss?
  • Well-being (The state of your mind and body. In other words, the work/life balance and the physical status of the trader. Trading must be integrated into the personality of the trader, and your method must be in line with your life style and personality).
  • Focus (One must be able to target the mathematical nature of trading and eliminate distractions).
  • Trade management (quality and consistency in position sizing, selecting stop losses and trailing stop strategies).
  • Present vigilance (The ability to keep your interest, faith and confidence alive when your stop loss was hit. Being able to reenter a trade if the price action remains aligned with the setup i.e. risk, structure and trigger. Being able to lose our opinion and stand aside when price action does not line up with our expectation).

In later posts I will add ample explanations about these aspects, so do not worry if you did not get every slice of this pie. I invite you to prepare your own wheel because a trader’s long term success is not by mirroring what somebody else is doing. It is vital to find your approach especially in mental work.

When you have finished the ratings and connected the lines that form the inner wheel provides you with an overview of balance in your trading. This is not about getting 10s, it is about a smoother ride (i.e. the balance in your skills and recent activities).

If this were a real wheel of your car / bike, how would the ride be? Which area would you like to improve and how?

The constant review of trades, and trading as a process, will highlight both mistakes and successes which will help you to identify and improve some aspects of your trading. At worst, post-trading analysis will force you to remember that you will have to justify your next trade in a review; at best, it will eliminate some bad trades.

The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.

About Laszlo Nagyferenczi

Laszlo Nagyferenczi is a day trader, analyst and instructor as well as the creator of the proprietary Context-Momentum-Signal concept. He has authored over 200 blog articles about his unique approach to trading and the Elliott Wave Theory. His clients appreciate his ability to go from the theoretical to the practical i.e. all the way to the actual trade set ups. Originally hailing from Hungary, Laszlo is fluent in English and Hungarian with a long list of education credentials including BA in Economics, Certified Elliott Wave Analyst (CEWA), Certified Adult Educator for T-Groups, Professional Co-Active Coach (PCC) at CTI. The real education, though, has been the trial by fire in the markets, with real capital at risk.

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