- Buy The Bull Market
- Posts
- Fear is the path to the dark side
Fear is the path to the dark side
Michael Taylor
August 15, 2023
Welcome to the August edition of Buy The Bull Market!
Let me know what you think. My goal is to create a trading journal that makes you more effective and ultimately increases your P&L.
And on that note, I was asked what I think makes a good trader.
Boiling down to it, there are only three real attributes that all successful traders have.
Rationality
Grit
Expansive market knowledge combined with effective sizing and risk management
All three of these are obtainable. They aren’t traits that you need to be born with. As Peter Lynch said, he wasn’t teething on ticker tape.
The first two are personality attributes, and the latter point is skill-based.
You also need to have all three.
Rationality and grit without knowledge leads to a blown account
Grit and knowledge without rationality leads to impulsive decisions
Rationality and knowledge without grit will see you quiet when times get tough
The markets are intensely emotional sport, and emotions lead to heightened arousal and poor decision making.
Fear is the path to the dark side… fear leads to anger… anger leads to hate… hate leads to suffering.
And whilst it’s certainly an extreme, trading can lead to suffering through the complete loss of capital and deterioration of a personal life.
Some people are better off doing dollar cost averaging in an ETF fund.
But that’s not us.
If you don’t have the above three points - do your best to get them.
Watch your emotions and learn to control them.
Most people get led astray by emotions in investing. They get led astray by being excessively careless and optimistic when they have big profits, and by getting excessively pessimistic and too cautious when they have big losses.
Don’t give up when everything looks bleak.
Successful investing requires patience
And do your best to increase your market awareness and improve your skills.
Beware of your own ignorance. So many people buy something with the tiniest amount of information. They don’t really understand what it is that they’re buying.
It’s easy to read the above quote and think that Mr Templeton was referring to buying stocks.
And in fairness, he probably was.
But as a trader, I don’t need to know what the company does.
In some cases, to me the business is just a life support machine for a stock market listing.
But if I do trade a company, I’ll know why I’m trading because I’ll have a reason for the trade.
This is crucial. If you don’t know why you’re buying then you’re a punter. And punters don’t make money.
4imprint (FOUR)
Last week 4imprint released a trading update… at 08:47:12
And I’m glad it did, because it offered a trading opportunity that doesn’t come around everyday.
Reply