Outlining the trader's arsenal

Everybody takes on the world with an arsenal of different tools.  In the case of investing, they are not clearly supplied to you and they need to be discovered on your own.  I think it important to take stock of the different tools that play a significant role in the investors battle for gains. Since the market is one big game, you might want to spend some time augmenting your arsenal before you compete:

• Psychological: In order to succeed in investing you need some psychological tools, namely, the ability to bypass fear and greed.  You need to be goal-oriented rather than money oriented, and you need to make decisions based on your other tools rather than your emotions.  Often times, the psychological aspect can be as simple as a willingness to accept a mistake (and a loss) and move on rather than stubbornly holding on and never taking another position.


• Logistical: You need both the information flow and the ability to execute trades effectively.  This is the only element of the trader’s arsenal that is found easily enough without much education or personal effort.


• Analytical: The analytical tools and evidence necessary to produce well-reasoned justifications for taking a position.  The more you learn the more sophisticated your analytical tools become and the better your hit ratio.  This area shows how valuable education is.  


• Financial: Part of logistical, part psychological, the amount of money available to you determines a lot about risk and the ability to make particular types of trades.  You must carefully consider if a trade is practical and whether or not you can cope with losing your capital should something terrible happen.


• Educational: Going hand in hand with analytical tools, your increasing education helps make you a better investor.  It opens your eyes and detaches you from the game in the way that makes success possible.

I am going to try to pass on the tools needed to fortify each area of the trader’s arsenal, and prepare all of my readers to grow their investing education in the areas that make success not only possible, but likely.

But don’t just stop here.  There are plenty of resources online to read others insights into investing.  Visit this week’s Carnival of Investing hosted by investorgeeks.com.