The No. 1 Most Important Factor in Your Trading Success
By Brian Hunt, editor in chief, Stansberry Research
November 16, 2009
The realization that you are responsible for your results is the key to successful investing. Winners know they are responsible for their results; losers think they are not. – Dr. Van K. Tharp
I saved this quote for the final essay in our series of all-time great trading quotes.
It's the "broccoli" of trading. It's the one few people want to read.
And that's a shame, because the idea contained in this quote is far and away the No. 1 factor in your success as a trader or investor.
Most folks who make it through the next 400 words will decide this essay simply doesn't apply to them. Those people will always lose in the market. They will always lose in life.
And worst of all, they'll believe those losses are not their fault.
Dr. Van K. Tharp is an investor, trader, and famed trading psychologist. For decades, Tharp has worked with traders to develop winning trading systems and mindsets. His work landed him in the trading classic, Market Wizards. Of all the fancy trading systems and stock strategies Tharp could present as the "Holy Grail" for traders, this is what he chose.
Personal responsibility is the Holy Grail.
For most people, the natural tendency is to find someone – anyone – to blame for their failures. It's too painful for most people to just come out and admit they screwed up. Since money is such an emotionally charged topic, the "blame game" is especially common in trading.
Folks blame their broker for bad advice. They blame an advisory writer for a stock tip that doesn't pan out. They blame Wall Street for its rigged game. They blame the government, Jim Cramer, God, conspiracy theories, and anything else you can think of.
They point their finger at everyone except the person in the mirror.
The "finger pointing" mindset is the loser's mindset, whether you're talking about sports, work, relationships, or trading. Unfortunately, most people have it. Most people simply will not accept full responsibility for their actions... and it suffocates their progress.
When you always accept responsibility for your actions, you set yourself up for a lifetime of progress and betterment. When you acknowledge your errors and discover why you made them, you can take steps to correct them. Blaming someone else for your trading failures is like ignoring an awful sound from your car's engine. If you ignore the sound, you'll eventually find yourself in the middle of nowhere with a car that won't move.
How does this apply to trading? Let's say you've been taking big losses on your stocks. When you accept that you should have minded your stop losses – but didn't – then you can make it a point to fix the problem. Or let's say the stock-picking method you're using isn't working. When you accept that it's your responsibility to decide what's best for your money – and not the responsibility of a guy on television or a stock broker – you can start looking around for a method that works.
You – and you alone – are responsible for the gains and losses in your trading account. You must take all of the wisdom and strategies accumulated by legends like Paul Tudor Jones and Stanley Druckenmiller and put them to use.
Van Tharp has spent most of his adult life – decades – working with winning traders and losing traders. This is what he found separates the two. Many of life's dilemmas are not "black or white" choices. Many of them are different shades of grey. This one is not. You either accept responsibility for your results and learn how to win... or you do not accept responsibility for your results and always lose.
If you're looking for the Holy Grail of trading, it's not in a book, stock picking system, Fibonacci series, or a currency advisor. It's embedded in Tharp's quote. It looks you in the eye every time you look at a mirror.
Trade accordingly.
Good trading,
Brian Hunt
P.S. I consider Tharp's book, Trade Your Way to Financial Freedom, the second best book on trading ever written (second to the trading Bible, Market Wizards). You can buy it used on Amazon for about $20. Used properly, the return on investment will be in the thousands, even millions of percent. |
|
|
| • |
S&P 500 sees third week of gains... U.S. stock index swells 2.5% to 13-month highs. |
| • |
Another record for gold... yellow metal touches $1,123.40, up 2% on the week. |
| • |
British stock fund EWU climbs 8% to new high in November. |
| • |
Hip clothing retailers Abercrombie & Fitch and Urban Outfitters spike to new highs. |
|
Last |
Change |
52-Wk |
| S&P 500 |
1097.91 |
+0.94% |
+16.73% |
| Oil (USO) |
40.76 |
+0.77% |
-31.35% |
| Gold (GLD) |
104.23 |
+1.02% |
+35.00% |
| Silver (SLV) |
14.44 |
+1.51% |
+88.95% |
| U.S. Dollar |
75.28 |
-0.01% |
-9.39% |
| Euro |
1.50 |
+0.11% |
+12.20% |
| VIX |
21.49 |
+0.28% |
-69.44% |
| HUI |
448.69 |
+0.60% |
+120.38% |
| 10-Year Yield |
3.40% |
-0.02 |
-0.47 |
|
|
| Company |
Sym |
Industry |
Walt Disney |
DIS |
entertainment |
Northrop |
NOC |
Big Defense |
Salesforce |
CRM |
customer service |
Intercontinental |
IHG |
hotels |
Buckeye Partners |
BPL |
pipelines |
Athenahealth |
ATHN |
health IT |
Fuel Systems |
FSYS |
alternative fuel |
Microsoft |
MSFT |
software |
BNSF |
BNI |
railroads |
Tyco |
TYC |
conglomerates |
AmerisourceBergen |
ABC |
pharma |
Nisource |
NI |
utilities |
China Eastern |
CEA |
airlines |
WellCare Health |
WCG |
insurance |
Globe Specialty |
GSM |
metals mining |
Coca-Cola |
KO |
soft drinks |
Wipro |
WIT |
outsourcing |
Cognizant |
CTSH |
outsourcing |
Urban Outfitters |
URBN |
clothing stores |
Nalco |
NLC |
synthetics |
Emergency Medical |
EMS |
medical svcs |
IESI-BFC |
BIN |
waste mgmt |
GeoEye |
GEOY |
satellite imagery |
HSBC |
HBC |
bank |
Dow Chemical |
DOW |
chemicals |
Reynolds American |
RAI |
cigarettes |
Enbridge Energy |
EEP |
pipelines |
Transatlantic |
TRH |
insurance |
Domtar |
UFS |
paper products |
ASM Intl |
ASMI |
semiconductors |
RINO Intl |
RINO |
industrial equip |
GlaxoSmithKline |
GSK |
Big Pharma |
Infosys |
INFY |
outsourcing |
Shire |
SHPGY |
pharma |
Ctrip |
CTRP |
online travel |
Abercrombie |
ANF |
clothing stores |
Qlogic |
QLGC |
semiconductors |
Cooper Tire |
CTB |
tires |
M&F Worldwide |
MFW |
check processing |
McDonald's |
MCD |
fast food |
Kellogg |
K |
packaged foods |
Dish Network |
DISH |
satellite TV |
Magellan |
MMP |
pipelines |
3Com |
COMS |
networking |
Copa Holdings |
CPA |
airlines |
WuXi Pharma |
WX |
pharma |
United Tech |
UTX |
conglomerate |
CSX |
CSX |
railroads |
Smith & Nephew |
SNN |
medical devices |
Marvel Ent |
MVL |
movie studio |
Assured Guaranty |
AGO |
insurance |
Inergy |
NRGY |
propane |
KKR Financial |
KFN |
virtual bank |
|
| Company |
Sym |
Industry |
Leap Wireless |
LEAP |
wireless telecom |
Enterprise |
EFSC |
bank |
Luminex |
LMNX |
medical supplies |
Citizens & Northern |
CZNC |
bank |
WesBanco |
WSBC |
bank |
Farmers Capital |
FFKT |
bank |
First Financial |
THFF |
bank |
United Western |
UWBK |
acquisitions |
Vitacost |
VITC |
supplements |
First Busey |
BUSE |
bank |
USA Truck |
USAK |
trucking |
|
|
