Some writers have posited this "desire to fail" and point to a subconscious irrationality, but when you think about it, the subconscious or whatever part of your brain which decides to pull a stop, double down on a loser, or gamble on news events, is actually much more rational and logical than we might think, for the following reason: it may realize that we might just have no edge trading at all, even before we can admit it to ourselves. The brain knows that if we lack edge we are just playing a game of roulette, and in that case will do the smart thing and bet it all on red or black, for it realizes we just cannot win over the long run, perhaps long before we consciously figure it out. So if you find yourself consistently doing the wrong and dangerous thing, it just might be your own brain quietly telling you that what you are doing just cannot be sustained. True confidence needs to be backed not only by the figures, but a quality of how those profits were obtained -- you cannot hide the truth from yourself for very long. As for the thrill of the gamble, I have long since lost the taste for any games of chance -- I used to enjoy going to the casino but find no desire to go anymore. I really don't believe in chance or even percentages in the market anymore, just right or wrong, if that makes any sense. What do I get out of trading the markets? One learns most about oneself in extremis, and to learn through the markets is to really find out what makes you who you are. To paraphrase from a book recommended by a fellow ET'er (thx nitro), it's "a view of heaven from a seat in hell."
Excellent article Dr. Brett. May I ask for a clarification? Can you define some/all of the "inborn talents" that you have noticed in successful traders? What NATURAL ABILITIES do they possess that give them an edge even before they start the game? Thank you!
Hi roberk, I disagree that it is obvious. A lot of people grow up with adults (parents, teachers) telling them they can do anything they put their mind to. Anything is achievable. While someone can read point #2 and intellectually say, yeah that is obvious, that doesn't mean in the slightest that they have the beliefs and attitudes to embrace point #2. I would estimate that most do not (myself included). Kind regards, MK
I'm not Dr Brett but I once asked Mark Douglas (Trading in the Zone) what was the defining characteristic of the successful trader and he said.... "Confidence"
DUH !! Who said it wasn't !! This stuff is all common sense diatribe by this Doctor !! No great world shaking secrets being revealed here by the thread starter. No one of decent credibility has ever said discipine was the sole ingredient for success in trading. I will say this ....regardless of how great an Edge you have in Trading , the fact is it willl NOT matter if you do not have discipline. In other wards, you will fail miserably if you have even the greatest edge in a trading system with no long term discipline. PERIOD !! End of story !!! NEXT !!!!!!!!!!!!!
This can't possibly be a sarcastic post... no one could be that naive... So I will try a serious answer. Say for basketball: INBORN (1) extremely athletic body (2) exceptional vision (3) exceptional hand/eye coordination (4) Exceptional drive to win/succeed (5) basketball/sports IQ = inate understanding of sports subtleties Even players on NBA level... Which is the top 500 players out of 6,000,000,000 people... Do not have all of the above qualities... Notably lacking #4 or #5... and riding the pine. You could go to any class of 50 10 year kids... And pick out the 2 or 3 that have any realistic potential to be Pro Basketball players. Say for trading: INBORN (1) exceptional math ability (2) exceptional lateral thinking skills = talent to process 5-10 disparate pieces of information coherently (Most people lack this... they are linear thinkers). (3) independent thinker, highly developed critical analysis, usually a REBEL Conformists cannot "think outside the box" creatively enough to succeed as traders. That's why a CFA is useless... it is meant for conformists... to brainwash you with Securities Industry dogma. (4) Exceptional drive to win/succeed You could go to any class of 50 10 year kids... And pick out the 2 or 3 that have any realistic potential to be Pro Traders... Though some of these traits would only become apparent in teens. Myself... I know this from experience. I was always #1 in math... At age 15... I finished #1 in a complex "math contest" out of > 200 people. I could have been pegged as a potential trader at age 5... age 10... age 15... whatever. My biggest mistake in life was not getting into trading until early 30s. Why? Because I spent 10 years obsessed with beating Las Vegas sports betting... Not coincidently... another Zero Sum Game.
Some good stuff, but why do Ph.D.'s think they are profound when they use analogy and metaphor, when in fact they are watering down and fluffing their thesis? I count no less than 15 such examples in Mr. Steenbarger's brief analysis.
> why do Ph.D.'s think they are > profound when they use analogy > and metaphor?. He is trying to communicate complex conclusions... To people less intelligent than himself... And to people who DO NOT want to hear what he is saying. Because... > The reality, however, is that most of these commercial entities (brokers) > have a vested interest in perpetuating a dream > that is, in reality, a cruel fantasy: > that, without real, sustained effort, anyone can make it big as a trader. This line really sums up the reality: > When you place a trade on a major exchange > you are up against the pros from Day One People understand that to be an NBA player... You will have to go one-on-one with Allen Iverson. But the same people think the financial markets are different... That you are somehow taking money away from Grandma. NO. You are directly up against the top 5,000-10,000 Pro Traders in the world... All of whom have talent, experience, killer instinct, capital. To succeed... you will have to TAKE AWAY money from these guys... Just like going one-on-one against Iverson.
Thanks for that analogy... without the mention of NBA players I, being of lesser intelligence, could not possibly have understood your point that I am competing against the top traders in the world. I get it now. THANK-YOU!!!!!!!!! If I just imagine trying to strip AI when he tries to break my ankles with a double cross-over, then I can know exactly how difficult it is to make it as a pro-trader. Thank you for clearing that up.