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[Sorry if this already appeared - I had no indication that it did]
Steven Buss wrote:
> - It seems to me that there is a set of lessons that constitute the
> minimum set of lessons that one must learn to trade successfully. It
> appears that these lessons can be (and are) succintly summarized in many
> different places. And there are books and articles that contain these
> lessons stated in different ways. But it's not enough to memorize the
> phrases that encapsulate these lessons. The lessons must be internalized
> and this takes time.
Editor@xxxxxxxxxxxxxxxxx wrote:
> A semi-retired (real) brain surgeron friend of mine recently commented.
> Geeeee, I thought brain surgery was difficult, (pause)
> until I tried (intraday) trading the S&P.
>
> Please consider that when you day trade,
> you are competing against the best traders in the world.
First, I think that Peter G and Steven Buss display a lot of courage to
come forward with a story that I'm sure is quite common. Everyone likes
to crow about their successes. What is more often the case is things
NOT going according to the plan.
The above quotes from previous posts on this thread illustrate one point
to me. It says a lot about why trading is so difficult to learn.
I don't agree that the problem is that you are competing against the
best traders in the world. If you read "Market Wizards" by Jack
Schwager, you'll see that the world's best traders are wrong at least as
often as they are right. From a competitive point of view, that is all
of the opportunity that you'll ever need to compete successfully. I
think that the secret to success is in *you*.
I think that Steven is right about trading lessons being available
everywhere you turn and that in order to become successful, you need to
internalize these lessons. About the only way to do that is to actually
trade. Expect the internalization process to take a long time. It may
not, but if it doesn't, it's a bonus and not to be expected. You'll
have to be persistent. If you are a slow learner like me, you'll have
to be that much more persistent.
The brain surgeon turned daytrader is actually at a disadvantage in
starting out from the way I see it. I think that in order to succeed,
you first have to 'unlearn' the patterns that have made you successful
in other pursuits. This isn't something that you are going to be able
to do overnight, or by simply purchasing a great system.
Throughout one's life, you are called upon to form an opinion. It can
be as simple as a friend asking "what do you think of this Clinton mess"
or a neurosurgeon colleague asking you for an opinion about a particular
technique in a difficult case. The value of an opinion is determined by
the amount of knowledge and wisdom behind it. People's lives often
depend on an opinion being correct, especially in neurosurgery. Therein
lies the disadvantage for the neurosurgeon. The more knowledge and
experience you have, the more likely you are to have an opinion. Trial
and error over time have reinforced the neurosurgeon's reliance on his
or her opinion. The more often your opinion is correct, the more likely
you are to succeed in almost anything.
Experience, knowledge, wisdom all contribute to opinions, which in turn
contribute to success in almost everything except trading because they
allow you to anticipate. If you can anticipate, you can act in advance
of an occurance and either win more or lose less. That is what we
strive for. Success is generally in the anticipation of an outcome,
whether it's sports, neurosugery or anything else.
I'm sure that you've heard it before that having an opinion in trading
will kill you. It's true. The markets are unpredictable. Opinions get
in the way. Neurosurgery, though not totally predictable, is a lot more
certain in it's outcomes than the market. Anyone that says they can
predict the markets with certainty is not to be believed.
To be a successful trader, you have to learn to successfully REACT. To
*not* anticipate. This goes against all of your training, all your
learning, and most impostantly, all of the positive reinforcement you
have received. You have to learn to *not* develop an opinion, but let
the market tell you where it is going to go. You have to take a
position and develop an action plan with the underlying assumption that
you will most likely be wrong.
The reason that it takes so long to learn to trade effectively and takes
so long to internalize successful trading practices is that most of what
you have learned has to be unlearned. That's why the surgeon is at a
disadvantage. He/she has much more than average to 'unlearn'. Also,
what they've learned has been reinforced over and over and that makes it
much more difficult.
Once you learn to react and let the market guide you, you are on your
way. That means not having an opinion, not having an ego, not having
expectations that this particular trade and any other trade will be a
winner. You must be able to not just accept losses, but to expect them.
If you have control issues in you psyche, you will have something extra
to overcome and you'll experience more than the normal amount of
frustration in learning to trade.
Successful trading is being able to concentrate on damage control -
first and foremost. Preservation of capital. Expect to be wrong and
have an action plan that saves you if that is the case. Of course you
wil be right at times. If you weren't, why bother. You'll never be
right, though, if you aren't there trading. You'll never be there
trading if you have no capital. You won't have capital unless you can
successfully manage losses.
I hope that my neurosurgeon, if I ever need brain surgery, doesn't think
like a successful trader.
~Alan
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