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wenn. Great post. Haven't seen that one before.
I think it is safe to say that we ALL get something from the "thrill"
of being under pressure when a position is going against us or going in
our favour very quickly. I have worked on institutional trading desks
where one of my responsibilities was to make markets in interest rate
swaps and options. I would say that I got the
biggest "thrill" in times of such turmoil when we didn't even know if
were alive let alone making money. There is something about the
challenge of trading that draws us to the activity - if it were so, so
easy with a more predictable outcome would we still do it? I don't
think so. Which explains to a certain extent why there are many traders
whose tendancy to self-destruct will increase with their level of
success. Not because of some subconcious mumo-jumbo of "wanting to
fail" because of such-and such a childhood experience but because they
push the envelope too far in search of more "thrills".
An analogy perhaps. Traders love to drink and party. I worked in Tokyo
for many years and the bars and clubs in Roppongi stay open until close
to
sunrise and sometimes well past sunrise. The clientele are mainly
traders from the big trading firms. There are generally 3 ways of
categorizing these party-animals:
(1) Those that are at home by 9:30, safe and conservative to get a good
nights sleep according to a set routine. Drinking games are out of the
question, let alone going on a bar-crawl at 4am.
(2) Those that are often out until 5am. Home, S----, shower and shave
and get a taxi to the office and at their desks at 7am sharp. But there
are times when the body is not going to take that kind of abuse, so they
wimp-out and are home by 9:30 at the riducle of their peers. They love
stupid drinking games - but only when they have a stomach full of food
and feel up to it.
(3) Those that want to stay out the longest no matter how much their
livers hurt with the too-often result of being too damned ill to get to
the office at all, let alone on time. They are always there playing
stupid drinking games - even if they have to go to the bathroom to
hrow-up periodically.
How does this relate to traders:
(1) These are the 90% or so that fail in trading without ever really
experiencing a good winning stretch that makes you believe you can do it
and gives you the guts to carry on. They usually have so many
indicators on the screen that its tough to see the price! They are
always on the search for the latest academic literature on the newest
indicator or chart pattern - in search of that ever elusive holy grail.
Many of them are analysts that want to trade. I have worked with some
of the best
analysts around, but yet they could not trade their way out of a wet
paper bag no matter how good their call on the market. If your are a
good analyst then
STAY a good analyst - don't ****-it up by trying to become a trader.
(2) These are the traders that make steady money, but also suffer the
inevitable drawdowns. They are far more relaxed in their trading, do
not follow too many indicators or methods and often are not system
traders but trade on intuition alone. These are the successful traders
who have a life outside of the markets. In fact one of the traders I
knew way back in my London days would not know an RSI from an elliot
wave and yet loved moving averages and was a brilliant trader. I last
got a post card from him from the Carribian where he trades yen
derivatives for a large hedge fund.
(3) These are the traders that often go bust. Sometimes they will be
successful for many years, but eventually they will get clocked. They
have great winning stretches, but when they lose.....boy do they
lose.... Which is a shame, because if they understood moderation in all
the things they did they would probably be at the top of categoy 2.
Although I don't believe success in trading is an innate quality, I do
beleive that there are certain traits that are innate and explain to a
certain extent why we WANT to trade. I have worked with traders who
retired from the professional markets after 5 years because they made
some much in bonuses. When I look at them, here are so many
differences between them yet they have enough between them that they get
along very well. It is that "enough" that makes them successful
raders. A big chunk of that "enough" is that they enjoy the thrill of
trading, just as they enjoy the thrill of being out partying until dawn
but know when and where
to draw that proverbial line.
Read into this what you will. There will be those that disagree. So be
it.
E.
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