How to think like a successful trader

Take the element of luck out of your trading by sticking to your simple, yet effective spread-betting system, says John C Buford.

I am reading a terrific book which I recommend to serious traders: Thinking, Fast and Slow by the Nobel Prize-winning economist and psychologist Daniel Kahneman.

In it, he explains that we have two modes of thinking: system one, which is intuitive and is quick to come up with answers from limited information (gut reactions), and system two, which is more considered and oversees and modifies system one. Often, the two responses are in conflict - that is where most of us live.

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(Contracts of 100 troy ounces)Row 0 - Cell 1 Row 0 - Cell 2 Row 0 - Cell 3 Open interest: 397,695
Commitments
155,61582,22435,612162,078240,716353,305358,55244,39039,143
Changes from 05/20/14 (Change in open interest: -1,676)
-1,78321,317-2,580-2,211-29,583-6,574-10,8464,8989,170
Percent of open in terest for each category of traders
39.120.79.040.860.588.890.211.29.8
Number of traders in each category (Total traders: 263)
10781705848199171Row 8 - Cell 7 Row 8 - Cell 8

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.