Success is the ability to go from one failure to another with no loss of enthusiasm - SIR WINSTON CHURCHILL
A while back I was having a conversation with my partner Martin Bedick about the markets and in particular taking losses. I thought some of his comments were worth sharing with our readers.
I asked him, “Martin, what is it about this business that keeps us coming back for more? It's absolute torture at times.”
Martin answered, “Well, you’re not going to believe this, but I went into this business because I actually thought trading was going to be an easy way to make money. It was only after I drove myself crazy for years that I realized I had a problem. I wasn’t making any progress so I decided to re-think my whole approach to trading. I realized that I just wasn’t thinking straight. I began to learn how important one's mindset is to being a successful trader. Part of the game is dealing with constant challenge. I think that’s why I like the Mark Douglas quote from “The Disciplined Trader”:
Most people like to think of themselves as risk takers, but what they really want is a guaranteed outcome with a little bit of suspense.
"That was me", he continued saying.
“So, you’re saying you think people are unaware of the risk?” I asked.
"No", Martin said, “I’m saying that they have not accepted the risk. When you have really accepted the risk you’re no longer afraid of what may happen. The only thing that is certain in trading is nothing is certain. Once you understand that anything can happen, you’ll always act in your best interest and protect yourself. I had to learn how not to be afraid so to speak. Losing traders are always fearful……They’re afraid of losing money. They’re afraid of being wrong. They’re afraid of either missing a big move or leaving money on the table.”
“It’s always astonished me how much time people spend trying to eliminate risk. It’s irrational. We all know this is impossible. Instead, one needs to quantify the risk and then change their mindset so that they truly learn to accept the risk. This may be the risk of losing money, the risk of being wrong which can lead to criticism from colleagues or clients, or the risk of missing moves by either entering late or exiting early which could lead to a different type of angst all together. Only when we can truly accept all the risks involved in trading, we will become better traders.”
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