CMU: Why experienced traders don’t brag

By Jani Ziedins | Free CMU

Nov 13

CMU: Why experienced traders don’t brag

Spend any time on trading social media and a person is bound to come across braggarts. Traders who are so supremely confident in their prowess they feel compelled to harass everyone who disagrees with them. While their partisan views are obnoxious, the thing to keep in mind is almost all of these braggarts are novices. Veteran traders have been humbled by the market far too many times to be so bold about their winning positions.

I wrote a previous CMU post about beginner’s luck. In it I described why beginner’s luck is a very real thing in trading circles. The Cliff Notes version is new traders who get lucky keep trading while those who lose money abandon the market and never look back. Many of the internet’s biggest braggarts are those riding a wave of beginner’s luck. Their early success fools them into thinking they are smarter than everyone else and they feel the need to boldly tell the world how great they are.

This is the polar opposite of a veteran trader who learned the hard way (often many times over) that one moment’s fortune can easily turn into the next moment’s failure. Experienced traders know the best time to sell is often when they feel the most confident. They are the last ones to run around telling everyone how great they are because they know what the market does to people like that.

As a way of giving back to the community that has given me so much, I share my experience and insights in order to help other traders. Being a contrarian by nature, that means I am frequently on the opposite side as these braggarts. I warn readers when move has gone too far, but these bold novices are fooled into thinking the good times will keep rolling because that is the only thing they’ve known. They make the fatal error of mistaking luck for skill and keep doubling down because they assume they have this game figured out. Unfortunately emotional and bold trading strategies rarely end well.

I freely admit I often enter and exit trades too early. That means the previous trend continues for another few days. These bold traders love to use that initial period of being too early as proof they are right and I am wrong. But it doesn’t affect me. In fact the more criticism I receive, the better it makes me feel because nothing scares me more than when everyone agrees with something I’ve written. I make a lot of money starting wrong and finishing right, and will always take that over starting right and finishing wrong.

I’ve been doing this long enough to know most hecklers are novices and their opinions are not worth the ‘paper’ they are written on. But newer traders don’t have the same level of confidence when it comes to hecklers and often the doubts turn into second guessing. It is smart reevaluate your positions on a regular basis, but never let the hecklers get to you. Remember they are some of the most inexperienced and emotional traders in the market. And that’s not a bad thing. Our profits come from someone else’s pockets and this game would be a lot more challenging if everyone knew what they were doing.

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About the Author

Jani Ziedins (pronounced Ya-nee) is a full-time investor and writer who has successfully traded stocks and options for more than a decade. He earned a B.S. in Mechanical Engineering from the Colorado School of Mines and an MBA and M.S. Marketing from the University of Colorado Denver. His prior professional experience includes manufacturing engineering at Fortune 500 companies, structural engineering, small business consultant, collegiate instructor, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two young children.

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(2) comments

Martin November 13, 2017

OK, so since it scares you the most when someone agrees with you, then I WILL DISAGREE!!! 😀

Well. lately I found a joy teasing those bragging about their trading. Maybe doing a wrong thing, but at some point it makes me feel good like destroying something to release the stress. But it doesn’t last long so when it becomes annoying I quit and move away.

However, this is a problem for novice traders or investors who really want to learn and then they encounter these cocky braggards. I had this issue myself when starting to learn myself. It is hard and it takes many new starts and lost money but I remained the course no matter how painful it was.

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    Jani Ziedins November 13, 2017

    I’m glad you stuck with it even when it was difficult. I will admit on occasion I have the urge to post a “I told you so”, but pride and ego are a slippery slope. Most of these guys know when they screw up and a fatter trading account is all the assurances I need.

    Reply
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