My dad is analytical, possesses truly amazing mathematical skills and had the highest IQ ever recorded at his HS. He also didn't believe in market timing and passively invested with and trusted "market professionals." Of course he got axed in 2000 along with a slew of medical doctors, engineers and assorted other left-brained individuals many of which never really returned to the markets. Just to play devil's advocate: perhaps part of your dad's success was luck (mutual fund selection and the greatest bull run on record). Also, perhaps many analytical and highly intelligent people happen to also be stubborn, overly optimistic or pessimistic, egotistical or exude other traits detrimental to trading/investing.
And here is the reality of what can happen when you diddle and daddle with your hard earned money. In not too distant past, a young enough man, with physical disabilities contacted me - why, well, he must have thought that some of what I wrote made sense to him. It transpired, he was borrowing money to trade with, to try and make some money for his family, as, his Father had lost all of his retirement money in stocks, in excess of $250K. Was it a true story being told to me, well, the truth will never be known, but to me, yes, I believed the young man by the words he spoke, as he was very upset and emotional - he decided to stop trading and pay back the loans, which was the best decision. This is the sad reality of what trading can do to people's lives - ruin an entire family and even cause some people to take their own lives - which no person should ever consider, no matter what circumstances they might find themselves in - life is short enough, so it should be enjoyed as best one can. As I keep saying, one needs to be very careful to whom one listens too - as for some people the outcome can be disastrous for the whole family - and can be all attributed to listening to "an egit". I hope the young chap is getting on ok, as he deserves it, same as everyone else. J_S
Interesting point - you have given ne an idea for a new thread - results should be interesting to see. J_S
Good points. As far as luck with my dad's success, I would say the great bull run would be the only part I would consider lucky (a big lucky). The rest not so much. Here's why. I remember his words in 1984 about why I need to buy particular mutual funds and HOLD no matter what for 50 years to retirement...every time their was a crash he would say don't panic like all of those fools who are selling! "It's only a loss if you sell"! My dad got axed in 2000 as well...but never sold and didn't have to worry about getting back in after selling. I wonder why your dad never got back in? Fear? You said he invested passively? So he sold his funds at the bottom? Yes, my dad is very stubborn, but this trait helped him in this situation! Good post.
M1NT....just to respond to your observation about left brain analytical/intelligent professional types failing at trading/investing. I believe they have the tools to be successful at trading...but I also believe they need to consume themselves into trading just as much as their profession to make it work. How does one have two professions? I tried to do it, but with mixed results. I had to immerse myself using all of my mental capability into trading to be successful. I was a successful investor before trading and thought I would be great at trading from the beginning. I had to learn about EGO and STUBBORNNESS and how detrimental it can be to my money! It was difficult, but I also had the traits to push through adversity!
"successful investor" ...all you have to do is merely buy quality companies, more or less, and hold them for eternity. Trading, on the other hand, definitely requires skill though -- trading is like being a Fighter Pilot and Army General at the same time.
I do not think trading is hard nor is it easy. Each of us were programmed to believe and taught many things by our parents, teachers, friends, and society. Almost all of those things make trading hard. If you can block out and change your thought process then you have a decent chance at making some money in the markets. There are many examples of this. From the day we were born, it was pounded into each of us that we must strive to succeed in everything we do. Failure was not an option and we must stick with something even when things are going against us. Well, all of that is WRONG in trading. Every trade I make has the potential to be wrong but does that make me a "failure?" No it doesn't. Many cannot accept a losing trade or exit a losing trade because they view it as a failure, exiting a losing trade is basically admitting that you were wrong. We were all programmed (especially males) to not admit we are wrong. This is just one example. Trading is viewed as hard because it requires many different traits. To begin with, one needs to have a trading strategy that has a consistent edge. This strategy needs to be refined from time to time because markets are always changing. Your system may have worked for the past few months but it stop working now because market conditions have changed. Again, there is nothing wrong with you just the trading environment has changed, can you adjust and change along with the trading environment? Once one has that strategy then one needs to execute that strategy with patience and discipline. One only enters a position when their system says to enter. One takes a loss when their stop loss target is hit. One exits when their profit target is hit. Can you do that again and again and again without any emotion? Paper trading is good practice for many things, such as learning a new platform or seeing how much margin is required. But paper trading will NEVER be able to replace the REAL TIME emotions of any trader. Until you have real money at stake, you will not be able to gauge how your emotions will be. I will be the first to admit that I have felt all of those emotions. When I enter a position and see that I am profitable, I am very happy. And I have been concerned when I see that my position is losing money. After taking a loss, I have been mad that the market took my money. After several consecutive profitable trades I have said to myself "this is easy, I will trade twice or three times the volume so I can make three times the money." Control these thoughts and emotions and trading becomes a little bit easier. After 20 years of trading, I still fight these emotions from time to time.
You are right and MOST dont understand you can do BOTH. Invest or play longer term moves and trade in alignment w one's personality and or skill set. It requires discipline and a non emotional mindset which most, unfortunately, lack due to $$$ being involved.
Another thing I must add is to block out as much noise as you can. I hardly watch CNBC or Bloomberg anymore. In fact, my TV is mostly off. I don't bother with Facebook, Twitter, Instagram or any social media because to me they are all useless distractions. I focus on what my charts and my trading screen is telling me. For every reason that one makes of why the markets will go higher will be someone making a counterpoint of why it will go lower. Neither actually knows! Its all blah blah blah. As for the news, my thought is if it ain't happening on my block, it doesn't affect me positively or negatively. Don't get attached to the news. And remember, only sad, bad, and depressing news is reported. The more you watch the more depressed you get. And that is absolutely the wrong mindset for trading. And one last thing, DO NOT go to the Internet for trading advice. Simply because there is probably NONE there. 99.9% of all trading sites are trying to sell you something be it Brokerage Services, Charting Packages, Newsletter Subscriptions, Trading Systems, Trading Rooms, Coaching, etc., etc., etc. Just remember this: "Those who can't make a profit trading, COACH" Think about this too: If I had a trading system that generates 80%-90% profit, I would be trading the hell out of it and be out playing golf or on beach on some private island. Why would I want to or need to sell it to you for a few hundred bucks? And if I was such an awesome profitable trader, again I would be golfing or on a beach. Why would I need that several hundred bucks to coach you? Who needs that headache? THOSE WHO CAN'T MAKE A PROFIT TRADING, COACH!