Third Habit of highly Effective Traders

As is my norm, I prefer to first write about my position. I am flat on the Nifty. I need to short below 4905. However, the sad fact is Nifty futures will in all likelihood gap well below those levels. I will therefore need to short 100% of my exposure limit if Nifty breaks below the 5 min low it makes. It goes without saying that I will not be going long today. There are several problems in the US and Europe which are well documented. Other daily note writers must have picked up on this issue and must be filling your mail boxes with lots of data. I will not do that. Instead I will tire you in a different manner by expounding on the Third Habit of Highly Effective Traders.

The habit goes "Improve Your Internet Skills.... Get a fast wireless broadband". This habit is an extremely important part of the practices you will develop as a trader. There are some obvious benefits. There are some excellent trading groups which discusses new ideas in trading, excellent investment groups which discuss new investment ideas etc. You can even get entire trading systems on different sites which you can test to see whether it works for you. If you develop your internet skills sufficiently and spend sufficient time surfing these various forums and groups you could even get complete lines of code and save yourself the trouble of even coding the software program for back-testing your system. You get the drift. All these are what one can call normal benefits of going online during trading hours.

But the most important benefit comes from the fact that it helps the trader kill time. (Habit one also was for this purpose, but in the third habit we take it to another level) I mean despite the practice of Habit number two i.e. meditation, the mind will still crave for some action- something to keep it occupied in all the hours between trades. How long can you keep staring at a Mute TV even if there are some pleasant anchors there? You need the support of an online group of friends. You will find this in Facebook and more importantly Twitter.

Facebook, however has one serious disadvantage that you need people to accept you as a friend. Given the fact that you are trader, it is highly unlikely that you will have highly developed social skills and therefore even more unlikely that you will have a large circle of friends. I mean if one had highly developed social skills wouldn't one have been a salesperson who gets paid large sums of money as salary and bonus for wining and dining people? Why would anybody with such ability want to become a trader? So given the lack of social skills and a big friend circle, Twitter really is the better option. In Twitter you can follow anybody you fancy. Pick your choice of interesting personalities, ranging from filmstars to corporate honchos, sportspeople, international news and tv media, and a few select traders and friends if you have any. Do not hold yourself back. Use your imagination. This will ensure a steady flow of interesting tweets. Feel free to reply to any celebrity and feel free to retweet. The advantage is that in the process some people might actually start following you too.

Now comes the important part. Pay for a fast wireless broadband and a laptop. Most companies where the trader works will have draconian internet policies which will block useful sites like Facebook, Twitter and other online gaming sites while leaving all the useless news and other media sites unblocked. The personal wireless broadband will therefore be an investment which you will be forever grateful for. Want to play a game of chess or any other game that you fancy? You can do that without having to worry about falling foul of the company's IT policy. Want to visit some unmentionable sites? You will only have to be careful about deleting your internet history before reaching home. If you are smart enough you could even get the company to pay for the monthly rentals. Some excuse about having to be connected even while traveling to and fro from work could work. No harm trying.

With this third habit, you would have got yourself into a stage where passing time will not be any more a difficult proposition. This should keep you from doing unnecessary trades just to entertain yourself. Trading will therefore be done only when the market present you with an edge. With diligent practice of the first three habits, you would have reached a stage from where making money should not be very difficult. The first and the third habit will help you pass time and the second habit will make inaction a part of the trader's personality. With these habits you are now well on your way to becoming a good and effective trader.