Make no mistake about it. A trader’s self-concept has to be separate from the trading. Who you are as a person began before you ever thought of trading and who you will be as a person will extend beyond your trading. When personal self-worth entwines with trading, it not only damages self esteem, it sabotages the trading.
You hear about it. You read about it. Don’t be misled. Traders tell stories. They write stories. They tell how great they are. Big trades. Big numbers. Big egos. Hubris. And sooner or later, big downfalls. It goes with the territory. Consider the outsized egos of certain traders who brought themselves and those associated with them to ruin.
Nicholas Leesson brought down the Barings Bank. Victor Niederhoffer ran his fund into deficit. John Merriweather threatened the health of our banking system by betting more than fifty times his capital that his strategies were certain to work, that he could forecast with impunity the direction of various bond markets.
There’s a pattern here of seeming or real success for a while and then collapse for themselves and for those caught up in blindly following them. As Wayne Dyer said, “Authentic freedom cannot be experienced until one learns to tame the ego and move out of self-absorption.”
In his wonderful book,
Pit Bull , Marty Schwartz tells several stories of the times he lost money because his ego got in the way. In the end he has this to say about ego:
“I’ve said it before, and I’m going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to DIVORCE MY EGO FROM THE TRADE. Trading is a psychological game. Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. You have to stop trying to will things to happen in order to prove that you’re right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you’re right, but to hear the cash register ring.”
Author Ruth B