Michael Steinhardt, the now retired billionaire hedge fund manager said about the one quality he valued in people:
If there was one quality that Steinhardt valued in people it was the balls to take a position.
Very wise words indeed, as there are many traders are paralyzed from taking a position. They are afraid to enter the game. They are afraid to have a particular view or bias on a financial instrument.
The quote does not mean you need to have a view and a position in every market at every point in the day.
There is nothing wrong with having no view or bias on a currency pair. Most of the time I spend just sitting on the sidelines. But eventually there comes a time where you should have a particular bias or view that only makes you avoid trades in the opposite direction. Then when that view and bias grows strongly enough then you can actually place a trade. Sometimes that can happen in an instant for me if particular news gets released.
You need to be careful not to confuse this with forcing trades that do not go with your system. You need to be careful about over trading. You should have the balls to take a position – but only when your trading system tells you to.
Which is why hedge funds managers usually like to take small positions at least to probe the market. That way they have the balls to take a trading position and be involved in the markets.
In the Paul Tudor Jones Trader Documentary you hear him saying to “always be trading.” He is not saying that you should always be in a highly leveraged trade. That is not what he means. What is he is saying is to not be afraid to place small orders to probe the markets momentum, sentiment, and sensitivity so as to help you nail the big trade when it comes. Paul Tudor Jones can take a trading position – even a small one if the market conditions warrant it.
Constantly having the balls to take a trading position when market conditions and your trading system warrant it is a component of trading success. After all if your trading system fires off a signal but you do not take it, then what good is the trading system?
Michael Steinhardt also said:
Constant immersion in the market creates an intuition that should be lauded and worshipped.
Wise words. For if you know what to look for in the order flow, liquidity, news, sentiment, sensitivity, and global macro then the constant immersion creates that unique intuition.