"they can afford to lose a lot of money, and they think they're too smart to be wrong." - That's spot on House.
And to further drive the point home, I offer one of my favorite interview moments---
Taken From:
THE NEW MARKET WIZARDS (CONVERSATIONS WITH AMERICA'S TOP TRADERS)
By: JACK D. SCHWAGER
.
Interview with Victor Sperandeo:
Schwager – “You almost seem to be implying that intelligence is an impediment to successful trading. How would you explain that?”
Sperandeo – “Assume that you're a brilliant student who graduates Harvard summa cum laude. You get a job with a top investment house, and within one year, they hand you a $5 million portfolio to manage. What would you believe about yourself? Most likely, you would assume that you're very bright and do everything right. Now, assume you find yourself in a situation where the market is going against your position. What is your reaction likely to be? "I'm right." Why? Because everything you've done in life is right. You'll tend to place your IQ above the market action.
To be a successful trader, you have to be able to admit mistakes. People who are very bright don't make very many mistakes. In a sense, they generally are correct. In trading, however, me person who can easily admit to being wrong is the one who walks away a winner.
Besides trading, there is probably no other profession where you have to admit when you're wrong. Think about it. For example, consider a lawyer who, right before a big case, goes out with his girlfriend and stays up half the night. The next day, he's drowsy and inadequately prepared. He ends up losing the case. Do you think he's going to tell the client, "I'm sorry, I went out last night and stayed up too long. If I were sharper, I would have won the case. Here's your money back." It will never happen. He can always find some excuse.
He would probably say something like, "I did the best I could, but the jury was biased." He will never have to admit he was wrong. No one will ever know the truth except him. In fact, he'll probably push the truth so far into his subconscious that he'll never admit to himself that his own actions caused the loss of me case.
In trading, you can't hide your failures. Your equity provides a daily reflection of your performance. The trader who tries to blame his losses on external events will never learn from his mistakes. For a trader, rationalization is a guaranteed road to ultimate failure.”
And to further drive the point home, I offer one of my favorite interview moments---
Taken From:
THE NEW MARKET WIZARDS (CONVERSATIONS WITH AMERICA'S TOP TRADERS)
By: JACK D. SCHWAGER
.
Interview with Victor Sperandeo:
Schwager – “You almost seem to be implying that intelligence is an impediment to successful trading. How would you explain that?”
Sperandeo – “Assume that you're a brilliant student who graduates Harvard summa cum laude. You get a job with a top investment house, and within one year, they hand you a $5 million portfolio to manage. What would you believe about yourself? Most likely, you would assume that you're very bright and do everything right. Now, assume you find yourself in a situation where the market is going against your position. What is your reaction likely to be? "I'm right." Why? Because everything you've done in life is right. You'll tend to place your IQ above the market action.
To be a successful trader, you have to be able to admit mistakes. People who are very bright don't make very many mistakes. In a sense, they generally are correct. In trading, however, me person who can easily admit to being wrong is the one who walks away a winner.
Besides trading, there is probably no other profession where you have to admit when you're wrong. Think about it. For example, consider a lawyer who, right before a big case, goes out with his girlfriend and stays up half the night. The next day, he's drowsy and inadequately prepared. He ends up losing the case. Do you think he's going to tell the client, "I'm sorry, I went out last night and stayed up too long. If I were sharper, I would have won the case. Here's your money back." It will never happen. He can always find some excuse.
He would probably say something like, "I did the best I could, but the jury was biased." He will never have to admit he was wrong. No one will ever know the truth except him. In fact, he'll probably push the truth so far into his subconscious that he'll never admit to himself that his own actions caused the loss of me case.
In trading, you can't hide your failures. Your equity provides a daily reflection of your performance. The trader who tries to blame his losses on external events will never learn from his mistakes. For a trader, rationalization is a guaranteed road to ultimate failure.”
soo true!