Saturday, October 1, 2011

Becoming a Mature Trader

In essence my goals as a trader are to (i) make money in bull markets, (ii) preserve capital in bear markets, and (iii) live a well-balanced life in all markets. Being able to achieve these goals requires maturity as a trader, which is an ongoing process. I have certainly learned a lot from others in this regard. Therefore, in this post I want to highlight a few quotes and insights that address the process of becoming a mature trader and help one answer the question: "How do I know if I have matured?"


Joe Fahmy:
When you don’t need to rely on anyone else’s opinion and you stop asking others: “What do you think of the market?” Have conviction in your ideas and don’t be easily influenced by others.

When you stop feeling the need to trade every day and you get over the “fear of missing out.”

When you learn to cut losses without hesitation.

Jacob Lund Fisker:
Picking up a sword doesn’t make one a swordsman and buying a stock doesn’t make one an investor. You must study both hard.

Investing is as much a study of yourself (I can’t help you) as it is a study of the market (I can help you). Like with swordsmanship, beginners receive different instructions in techniques compared to advanced students. A master knows no techniques because he knows all techniques.

You’ll be ready for serious investing once you begin to develop your own ideas. This is also the point where you begin to generate what the nerds call “alpha”, that is, market outperformance. This is the point when you begin to question “technique” and “method”. Original ideas have value. But few people think—this includes so-called market professionals"

Alexander Elder:
You need both confidence and humility. The ability to be aware of two conflicting feelings at the same time is one of the hallmarks of emotional maturity.

Being able to take a limited profit without kicking yourself for missing a big part of a move is a sign of emotional maturity.

A mature trader pulls money through the big hole in the efficient market theory, its presumption that investors and traders are rational human beings. Most people aren't; only winners are.

Kim Zussman:
Growing up (which takes a lifetime) is like finding out what kind of canoe you're in - and learning how to row it safely and effectively - and learning to accept yours is not the best in the race.

Brian Shannon:
Trading can be gratifying but it is not to be confused with real life

Life is more satisfying if you are actually living it, instead of obsessively looking for the next great trade


“Maturity is when your world opens up and you realize that you are not the center of it.” 
― M.J. Croan

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