Question: Do you think traders should take routine vacations away from trading?

Dr. Doug Hirschhorn:

Yes, and I think they should take vacations whenever they feel “burnt” - that could be one day a week, one week every quarter or several months each year. Whatever you need - you should do.

I often tell clients that the market is not going anywhere. It has been around long before you started trading and it will be here long after you are done so don’t worry, it will still be there when you get back from vacation. It is hard enough to make money trading so you need to be fully focused when you are in the game. A trader should view vacation as part of the cost of trading for a living. It is essential to success.

Dr. Doug Hirschhorn:

I would advise against it - especially if they had to “earn a steady paycheck to live.”

Trading is hard enough, but when a person has to make a regular paycheck to pay their bills or support a family, then the odds of them succeeding in trading dramatically decreases because they will be pressing to try to make money (and do things like holding losing trades too long, cutting winners short), rather than just making high quality trades and letting the money take care of itself.

That  being said, if they were passionate about trading the markets and wanted to do it, then I would suggest that they get a real job after market hours so they can have some positive cash flow coming in the door and not rely on trading as their only way to earn a steady pay check.

Question: Out of all the personality types that exist, do you think there is an ideal personality type for a trader?

Dr. Doug Hirschhorn: I do not believe the ideal personality type for a trader exists. I believe anyone can be successful in trading while the level of success, of course, will vary.

I think successful trading is about understanding your own personality and then developing a trading style or approach that matches your personality. For example, if you are an analytically minded person, then you should develop a longer-term, fundamental or technical approach. If you are an intuitive type person, then you will be successful with a shorter-term, price-action approach. Where I see traders get messed up is when they try to trade in a style that is in conflict with their personality or when the market is paying a specific style of trading and the trader loses patience and tries to change their natural trading approach.

Question: Was there anyone who served as a helpful mentor to you?

Dr. Doug Hirschhorn:

Shane Murphy. He is among the most well-known sport psychologists in the country. When I was doing my masters degree, I met him and basically asked him if he ever needed an assistant to please keep me in mind. He called me up one day and asked me if I would teach his college level sport psychology class while he was traveling doing some consulting. For a split second, I thought to myself, “I am not qualified to do that” and then I thought, “Wait a second, if HE thinks I am, then why shouldn’t I think I am?” So I said, “Yes.” That was a HUGE turning point in my life and career.

Another key mentor to me is Robbie Vorhaus. He used to run his own major PR firm in New York  city and is now a top crises communications expert. I met him through a mutual friend because he liked trading and had read some of my articles from Trader Monthly Magazine. When I started to get calls to do media appearances, Robbie was there to coach me through the process. I consider him to be like my brother and, aside from my wife and family, I know he is one of the few people in this world who truly cares about what is best for me.

Trading Psychology: The 16 Truths about Great Trading

By Dr. Doug Hirschhorn

1) 45-55% (Average winning % of any given trader)

2) Traders do not mind losing money, they mind losing money doing stupid things

3) You can lose money on a Great trade

4) Focus on the Trade, Not the Money

5) Trading is a game of Probabilities, not Perfection

6) Trade to make money, not to be right

7) Nicht Spielen Zum Spass (if it doesn’t make sense, don’t do it)

The market does not know how much you are up or down, so don’t trade that way (Think: “If I had no trade on right now, what would I do”)

9) Learn to endure the pain of your gains

10) There is no ideal trader personality type

11) Fear and Fear drive the markets, not fear and greed

12) Keep it simple: Up-Down-Sideways

13) Make sure the size of your bet matches the level conviction you have in it (No Edge, No Trade; Small Edge, Small Trade; Big Edge, Big Trade)

14) Making money is easy, keeping it is hard

15) H + W + P = E

a. (Hoping + Wishing + Praying = Exit the Trade!)

16) Trading is NOT like sports

a. Before an athlete takes a shot, he or she is NOT supposed to think, “What if I mess up this shot?” ; In trading that is called “risk management”

b. In sports, when you miss a shot, you don’t lose points

c. In sports, the opponent adjusts to what YOU do; In trading, the market does not know or care about YOU

d. In sports, you focus on improving weaknesses; In trading, your strengths are your weaknesses and vice-versa

e. In sports if you get poor results, you need to practice harder, put in more effort; In trading, effort is not positively correlated to improved performance

In this concluding section of my tutorial on trading and patience, I present 7 strategies that you can implement to help improve your patience — and your returns.

In the third part of my Trading and Patience tutorial, I examine the 5 ways that a lack of patience can lead to losses for traders and investors.

In the second part of my video tutorial on trading and patience, I examine the 6 reasons why traders and investors lose patience.

In part one of this tutorial, I talk about the importance of patience in formulating and executing an investment and trading strategy. There’s more to come!

Here’s my initial take on the trial of Galleon’s Raj Rajaratnam which began in Manhattan this week.