VERY VERY good thread, Eric. Couldn't agree more with many of your posts, including this one: Winning and losing is not just fun for these people, it's personal. They choose not to trade, when the alternative is losing. And even consistently successful traders realize that there are times when the odds are just not in their favor, and they step aside and don't trade during these times. I would add a corrolary to this that simply reads "there's always another trade" -- as for me, I'd rather stay out and miss an opportunity than jump on something I'm not quite comfortable with and end up losing because I tried to trade the market I wanted, not what I saw. In other words, to me, "Flat And Looking" (for the next trade) beats (Rushing) "In And Losing." My trading style is based on a philosophy of knowing "when to stay out" versus knowing "when to go in." For me, it's conservative and keeps me pretty disciplined. No need to be always in the market, or running around chasing whipsaws. I have no regrets missing an opportunity -- but I WILL have regrets being stupid and not sticking to my rules. Again, this is a GREAT thread -- there are some great nuggets of useful, practical wisdom here.
Overall good thread guys. I enjoy reading stuff posted by Eric, Austin, Dustin and ignore the pollution. I have noticed that there is a lot of talk about being thrifty and humble. I am well aware of the definitions for both but fail to understand the meaning in the context of somebody who is a successful trader. Can you guys provide examples?
Excellent quote. That the kind of mindset that seems common among consistently profitable traders, IMO.
Regarding humble: The most important concept about being humble is what humble is NOT. Humble traders do not "know it all". They realize that anything can happen, and it's outside of their control. They are not overconfident. The moment you lose this, and think you've "got it all figured out', they market will throw you a nasty curve ball and teach you a lesson. Often, the overconfident traders may be the otherwise 'good' traders that <i>still</i> manage to blow-out their accounts. Maybe they saw a 'really, really good trade' and wanted to make the most of it. By being overconfident, and not humble, they bet the ranch, and lose. So long as you don't ever think you quite fully understand the markets, and realize that there is unknown dangers lurking in the shadows that you can't even understand, then you'll treat trading with the caution and respect that it deserves. Humble is good, overconfidence is dangerous, IMO. Regarding thrifty: I see this over an over among successful traders, but don't have a great explanation on why. I suspect that this mindset better enables a developing trader to survive the learning curve long enough to become successful. Also, along the lines of what vikana posted, that mindset can be found among those that think it's 'important enough' to make system changes that might only yield an average improvement of 0.01 cents per share ($0.0001 per share) average profit. Someone that's not 'thrifty' might figure it's not worth their effort to make such a change, while the thrifty among us will say that a dime is a dime and they want to save it.
I understand EricP. Does this attitude spill over to life outside of trading? I understand that none of your friends walk around with a name sticker saying hello my name is _________ I make 20K/day. So how humble does one get in that department? Does being humble require not displaying confidence? Would one notice Eric that you and your buddies are doing well? Or is the level of self-actualization so high among guys in your league (as per Maslow) that there is no need to display any kind of signs of material success or mental superiority to the 99% that can't hack it as traders and do not have fat accounts?
For most such traders I know, their friends/neighbors/family would be shocked to find out that they even earned even 20% of their current income. For what it's worth, my neighbors include elementary school teachers, plumbers, policemen, real estate agents, etc. I seem to recall Sam Walton (founder of Walmart) was known to drive around, visiting Walmart stores, in his 17 year old white pickup truck. He was the richest man in the world, but didn't see a need to 'display' it.
Then why do it? Most people try to make it in this business to attain freedom to be able to do what they always want it. If one is pushing let say 1 million a year then why live in the place where libraries suck, houses do not look all that attractive and 50% of the population get a stiff one over a football game. (just an example). What is the reason for making all this $$$ if nothing changes (financially that is)? What is the motivation? I mean nobody trades because they actually love being by themselves surrounded by 10 monitors listening to the hum of their computers' ventilators. As for Sam. Do you really think that having billions and living the way he did is a way to go through life? I understand a trader who has a couple good years and is able to put away 1 or 2 million and not spending it knowing that in this business anything can happen, but when a guy sits on top of billions and lives his life as if he were poor, that is just sad.
The succesful trader does this: 1-focuses on only one forex pair, future, stock or stock option 2-focuses on only 1 or most two time period charts 3-know's their exact best time to trade 4-know their "bent" towards selling or buying