Wise Words from Barry Ritholtz.

Gourav wrote: “Is there any specific reason you adress the traders as she instead of he.While reading i fell bit unusual”

My Notes: I should do it more often. Woman constitute 50% of the population, so, in all fairness, they should be referred to half the time in my writings.

This question sparked off a thought: I feel one of my strong qualities is: I have an open mnd. This helps me in my trading. Traders should ask themselves: what are my strengths? Trading plans should be developed around individual strength, avoiding rules that can be influenced by weaknesses. If a trader can ruthlessly cut losses, then he should plan a strategy that trades frequently with many small losses and few large profits. To bring this down to a more macro level, for each trading day, reaffirm your strength before trading starts, decide on a goal for the day which uses your strength, then work for it. For example, A trader has the ability to identify momentum stocks from a list. Then, listen to the top 5 stocks given on CNBC, choose the two most likely to move that day, and, trade them with your levels.

In the same way, identify your weakness. Ensure that your trading plans do not include any action that includes your weak spots. In this way, you can make your weakness, a strength (by knowing about it, therefore, avoiding it). A trader is quickly influenced by TV advice. She avoids getting caught in this trap by putting the TV on mute, so that only news flashes are visible.

Readers are invited to offer comments on perceived strengths and weaknesses and how they can be used to enhance a trading plan