The Difference Between Winners and Losers
Simulated results of more than 20 winning and 30 losing traders.
Most of the things that we do well in our lives we have learned from those who do them well. I learned how to throw a football by watching a player named Race Pauere and how to play handball by watching Paul Harber.
In terms of high technologies, this is called simulation: find a good trader and watch the trader’s every move and seek to understand the principles that make the trader earn profit and how the trader works to achieve this. Then record this winning behavior in your own consciousness and body.
I have spent the last 2-3 years recording conversations from both losers and winners, looking at their lives for not only their trading styles, but their beliefs as well. You can read about some of these traders that I have simulated in books and magazines. Some of the winners are more secret. What a discovery! There is a huge difference between the ways winners and losers trade.
Though maybe, the biggest revelation is that these traders have important similar patterns. Let’s talk about these first.
What they have in common
Both winners and losers are caught up in the idea of trading. It is their life. For both winners and losers – trading is a passion; and they both are extremists. The biggest loser I know trades with the same energy and intention as any winner. Therefore will and motivation, as distinctive features, is not a part of this equation.
Another thing that they have in common is that they don’t have many close friends of the same sex. Men and women alike usually have not more than one close friend of the same sex. Regardless of whether they are winners or losers, a passionate feature of traders is that they are not very sociable.
The extremism, which I mentioned earlier, saturates their lives. Both groups profess extreme ways of living and trust. They see the world in black and white with few halftones. I suppose that is why losers become so disappointed; they indulge in trading, but since they have been doing everything wrong from the very start; their disasters are many and constant.
And their differences
Let’s take a look at losers. This is what I have found to be common in them.
Most of them are obsessed with the idea of turning XXX,000 into XXX,000,000 and the quicker, the better. Their goal is – quick and great profits. Each one of them has had an inner conversation about their deals prior to opening position, same as several days later for the closing position!
All losers talked about an annoyance that forced them to deal. They couldn’t resist making a deal…it’s a nightmare for those people to have no opened positions and to sit tight. They are happier when they are trading, regardless of whether they win or lose; they would rather be trading than not. They look as if they have caught the trading fever, and that it has spread throughout their bodies.
Other common points exist that deal with trading solutions and capital management. Losers pay less attention to capital management. One of them told me: “The idea of this game is not about capital management, but whether you are right or not.” I have noticed that few of them pay attention to their assets and account balances. They were very surprised when they found out that some track this daily, because they didn’t understand how it is related to the winning opening position.
And finally they asked me if I knew anyone who made money for a living through trading. They seemed very unsure that this was actually possible. They had a lack of faith, even when confronted with proof they regularly receive from financial managers… that profits can be made on a regular basis.
And now let’s talk about winners
Where do I start? To my surprise, winning traders asked me as many questions as I asked them. The losers didn’t question me all that much. None of the winners traded optionally. They all had one or another capital management form and were all technical traders.
Everyone: both men and women could remember one big loss that stayed imprinted on their minds as something that they didn’t ever want to happen again. That’s why they use stops and didn’t “accept deals blindly.” They listened to their “gut” when making deals.
The biggest difference I found was that winners focused their attention on a small number of “favorite” markets. One winner used to trade only soy and nothing else from 1956 on. Losers seemed to change markets and information bulletins so often, just like when I began slipping. While winners researched or bought, losers seemed to be seeking an identity that would pull them up and make money for them.
All winners believed that they would make money and simply denied anything bad that could. They have an aura of protection around them and they simply don’t act impulsively. They are shocked by the information that most of people don’t know the procedures they use. They understand that this is a fairly intense occupation, but they think that anyone with sufficient intelligence can use the same procedures as they use.