Page 466 - THE MARKET WHISPERER

462 PART 14 - The Demons Are Coming!

to lose and do not expect returns other than the pleasure of learning how
to trade.

My hobby is the most popular sport in the world: golf. The cost of
golf lessons, equipment and an annual membership to the golf club is far
higher than what I expect you to invest for intraday trading. By contrast,
your chances of profiting from intraday trading are higher by far than my
chances of ever being a pro golfer!

The Self-Discipline Test
Ask any veteran intraday trader the secret of success, and you’ll get this

answer: strong self-discipline. Intraday trading is a technical profession
based on statistics and fixed, known rules. The rules are simple, but the
mental exertion needed to uphold them is tough and requires a high level of
self-discipline. The psychological conduct of the novice trader runs against
market behavior. The novice trader finds it difficult to play “by the book”
when it looks as though the market is behaving differently to expectations,
when it looks like the profit accrued is becoming an impending loss, or
when it looks as though staying with the stock, even though it is moving
against the trader, seems like a good idea in the hope that it will still make
a comeback. These are just a few of the many examples of mental states
that cause the novice trader to deviate from the straight and narrow path
and betray the rules of trading.

I already know what your answer will be if I ask, “Do you have self-
discipline?” In all honesty, I have a problem with your answer. I have never
met a person yet who thinks he or she lacks self-discipline. It seems that
we all truly believe we are disciplined, just as alcoholics are certain they
can stop drinking whenever they want and smokers reckon they can put
cigarettes aside at the drop of a hat. This is also why there is no need to test
you on this question. Your answer is predictable, but I accept it with a good
deal of skepticism. I sincerely hope you’re right and I’m wrong.

Was I strongly self-disciplined when I started out? In my dreams! Even if
you discover, as I did, that you lack discipline, don’t worry. Most pro traders
build their self-discipline as they develop their trading skills. It may cost
you a lot of money, but every slap on the face you get from the market
when you shift away from the rules will reinforce your self-discipline.

The “Hate to Lose” Test
Hating to lose has no connection whatsoever with our financial

situation. Even some of the very rich are not psychologically built to cope