Are traders born or do they develop? Is there a distinct personality type that will innately be able to succeed or learn the tricks quicker than others? What does the successful trader look like and do they have a specific psychological makeup or can anyone do it and succeed?
Well like many before us we have tried to find the answers to this question and spent time analysing the interviews that are in the Jack Schwager book “Market Wizards” to see if anything specific jumped out at us. However we have had to reach the conclusion that whilst it is easy to say that bold, strong and unemotional is the key profile, the fact is that there doesn’t seem to be one ideal profile or method for trading.
A prime example in “Market Wizards” of the type of personality that would on paper appear to be most unlikely to succeed is Michael Marcus. His approach to trading at the outset was driven by emotions with huge risk taking, so he does not appear to have been psychologically ready to deal with. Not for him; the calm and unemotional approach but reckless and impulsive trades with huge losses. In the end even relying on medication to help him stay in control. But he kept going and he learned from his mistakes and he has made a fortune. So what is it that enabled him to be successful in the face of such chaos and lack of control?
In his book Jack Schwager describes Michael Marcus as “aloof, almost withdrawn”. Was that what gave him the edge? Does this characteristic ensure that the trader can remain focused on their goal and be less of a follower? Does this give them the focus and the single-mindedness to succeed? Is their withdrawn nature and lack of interaction with others the element that enables them to not be so bothered by what others are doing other than in how it might affect their own trades?
The answers are speculative but it should also be noted of Michael is also a highly intelligent individual who was Phi Beta Kappa at John Hopkins University and was awarded a scholarship to Clark University Graduate School. When asked about whether it had ever occurred to him that he might not be suitable for trading Michael replied “No. I had always done well in school, so I figured it was just a question of getting the knack of it.”
So is it the success of the early years that deliver the belief to enable success later? Our own studies have shown that no matter from where the success came from, whether it be sports, academics or business, this success does help give the self-confidence to persist and gain success later on in the markets.
Indeed Michael Marcus completely believed in his ability to ultimately master the markets and gain financial success to such an extent that he says “I lost, it was the same old cycle of borrowing money and losing it.” But still he kept going. The level of risk he took meant that some losses were more than five times his salary but he started to turn it around after much persistence and started to learn from his mistakes to finally become consistently profitable.
Michael Marcus shows that determination and confidence is essential. Focus, resilience and the self-belief to win will help establish a pattern of success. To get there does require stamina and the resilience to cope with the ups and downs of trading, but determination and confidence will in the end translate into profits.
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