When they are burnt out and stop trying…
I know right? Sounds ridiculous and stupid. “Traders become profitable when they work really hard and when they put in their hours and when they really really really want it.”
Maybe.. Except that’s not true.
This is not the first time I have discussed this for sure but maybe it’s the first time I’ve really believed it.
It always seems like there is this weird line between profitable and unprofitable that I never really understood. Guys like Jessie Livermore and Warren Buffett are held up as trading and investing oracles. They are the ones that made millions and billions. But 95% of retail margin calls.
Livermore’s quote about money not being made from thinking but from sitting on his hands and Buffett talking about buy forever and never sell make sense but we don’t do it.Why?
Because the retail world needs immediate gratification. I know because I have been there. The marshmallow experiment plays out every day in every market. The ones that make it are the ones that don’t need the marshmallow today, or tomorrow, or even next week.
We (retail) won’t sit on a trade to make money. We will sit on a loss in hopes of not losing, but we won’t sit on a winning trade. We won’t hold a profit until we puke from making money. We puke from drawdown and can’t figure out why it doesn’t work in the long run.
So… When does retail become profitable and make the move from retail to professional?
When they burnout and stop “trying”.
What is “trying”? It’s the mentality that we bring from our jobs that tell us that every hour should be productive to show that we are worth out wage. We think that being busy equates to productivity. We need to be entertained and our inability to not have our coffee, cake, marshmallow RIGHT NOW stop us from being successful. Our phones give us immediate feedback and we twitch to watch them, the same way we twitch to watch our trades.
We put more effort into “proving it’s possible to trade a 5m chart all day every day and make a ton of money”. We try really really hard to figure the game out and do it our way. We seek out those that we think are “experts” in the type of trading we think we want. BUT we will not listen to the small voice in the back of our heads saying “the game isn’t what you think it is”.
So our trying leads to “burnout”.
Silent resignation that the world will not bend to our every whim and that markets are not there to be beaten or understood, just accepted.
Burnout leads to acceptance, and acceptance to truth.
And the truth is: the markets pay those that wait. Those that wait for setups and then those that wait in profit.
We can accept that rationally at first, it’s super easy to see. But rationally only gets us so far. Our emotions take over and we see charts moving all over the place and we are like the girl in Indiana Jones and the Last Crusade. This one:
The emotion of wanting something is strong. We all know the movie, right after this, Indi almost falls for the same thing. The emotion of what we think we want can take us out. Rationally we know we are in danger and should do something, but emotionally we think we can extend it and do it.
So profitability comes when acceptance of truth comes in.
If it hasn’t happened yet, it will. Trust me. I never thought burnout would happen to me but it did. I hated trading for a while because it stressed me out to try and beat the market every day. I did it. For a while. But it burnt me out. And led me to truth.
You will have to submit to the principles that govern wealth creation in the markets for ages.
Unless your an HFT bot for GS. Then you can disregard this entire post.
Have a great day.