Introduction
Two categories of traders, sort of, doctor Jekyll and Mr. Hyde.
So, hi, Andrea Unger here.
I want to tell you about two opposite categories of traders, of students. I’ve seen many of these among my students and they travel, they drive on two parallel ways and hardly encounter in the middle. In the middle where they should actually aim to be, but they don’t.
First Category: Dr. Jekyll: The Perpetual Student
The first category, let’s call them Dr. Jekyll, the good one. I mean, I don’t mean the other ones are bad, I say good just because these are the quiet guys.
These guys are the eternal students. People who study very hard and they apply their knowledge. In case of systematic trading, what I teach, they build strategies, trading systems.
They put them together in very nice portfolios. They run a very wise money management model.
They do everything properly. They do, they redo and they redo again. But they don’t go live in the markets. They always find an excuse. There’s always something keeping them from putting live their strategies.
I mean, I’m the first one, I always tell my students, "Please, wait, don’t go live too early. You must be sure about what you do. You must really be convinced that it’s the right time to put your money in the market because it’s your money. It’s not a joke".
But here we are in an excessive case. These people really stop themselves from going live. They always look for some new detail.
Well, among these, most of them are – this is no critic, of course – programmers, developers. These people, these guys are so experienced and in love with computer science that they always try to improve what they write, the codes, or to improve the system, the environment, the infrastructure.
They do, but they always find something new to improve. Obviously, we have tons of possibilities to improve what we do. This is not in question.
But there is a point in time where you stop because it’s good enough. It’s good enough to go live. You don’t need anything more. But they keep on looking for something more.
And then generally all people who are unsure about their possibilities and they really are adverse to any kind of risk. So they try to find the perfect scenario where they really can believe in it and they will never find it. And they still wait and wait and wait.
Well, about risk, I’m sometimes similar to these guys. I mean, not in terms of going live because I’ve been live for a while now.
I remember I was playing a game, a demo game in a fair, an expo. And in this game you should get the maximum performance possible in this computer and I was playing this game in the markets controlling risk.
I was controlling risk to be sure not to be wiped out, which was crazy because the aim was to get the maximum. That’s it. In case you lose, okay, no problem. You’re just out of the game. But to keep myself in the game, I didn’t win because I was too conservative.
So risk control is good. Of course, it’s one of the most important things in this profession, but there are limits in some cases.
So in these cases, the guys, Dr Jekyll here, they take this to an excessive level. So they always block themselves from taking action. But the aim is to go in the markets and they don’t.
Second Catagory: Mr. Hyde: The Impulsive Trader
Second category. Mr. Hyde… Well, in this category there are people looking for adrenaline, people who want the emotions of live trading.
So most often these people, they apply as students. They want to learn, but they jump directly into the market with their money. They go live and they are convinced they can learn from practice. Which is true, we learn from practice, we do learn from practice.
But not only that: everything we learn from practice must be built on a solid basis, which comes from the basis of education that you need in the market. If this basis is not solid, if it’s something which is not the best construction, everything you build on top of it is also not very stable. And one day or the other it can all come down like a castle with an earthquake and we have to avoid this.
So these people are overconfident, but they don’t really care. They don’t really care about money. They just care about the emotions, the thrill they find in the market, and they go. And they also sometimes consider education a bit boring, superficial. They don’t think it’s really that important.
They don’t care about the details they should learn. They just take the general scenario, ok? And then they apply something in the market.
In some cases they are successful, but sooner or later they are in danger because they are working with a lack of something. All the details that they didn’t consider sometimes are useful and you have to learn. You have to be aware how when to use those details. If you don’t know them, then you might face trouble.
Of course, I don’t say this will happen, but it’s really dangerous and it could happen sooner or later.
Conclusion
Now maybe you identified yourself close to one of these categories. I mean, this is already positive because normally the people in the two categories, they don’t recognize they are in these categories.
They find good excuses to justify their presence there, but they don’t feel they have anything wrong in them.
If you feel that you are dangerously close to one of these two families, then maybe you are on the right way and you are still in time to correct yourself and to try to get in the middle.
The middle, which is the right place to be, because you have to be risk adverse, control your risk and be careful about what you study. You need knowledge, but you have to take action. This action needs to be pondered.
You need right action at the right time with the right knowledge, not just action. So you have to avoid the extreme right in this case of the story, because that’s a dangerous place to be when you go with not the proper knowledge.
The middle, the middle: risk control, education, action. These things together can make you be a successful trader for the long run. I wish you, and that’s it, guys. See you next time.
Ciao from Andrea Unger!
