The other day I was speaking to my friend Bruce who has been a successful
trader over the years. He started trading in a new office with a guy (Mr. X) who
has been a real moneymaking machine for quite a while. However, their styles
differ. Bruce’s new trading “mentor” is a notorious shorter, while Bruce could trade from either side but likes going with the trend. Since Mr. X has made a
ton of money in the markets, Bruce thought he would try following his trading
style. So while the market has been “strong as a bull” lately, Bruce has been
shorting almost nonstop and losing money all the while. Now he is pissed off
at himself because if he had kept to his trading style he would have cleaned up
during this time period. Mr. X is unfazed by a little losing streak, because he’ll
make it up by trading more aggressively once the market does turn. But this is
not Bruce’s style. He doesn’t like big equity swings and needs constant winners
and reinforcement all the time. Needless to say, after a little losing streak he
started to press just a bit and traded beyond his normal risk parameters, hoping
to recoup some losses. Even when going back to his own style of trading he
deviated from his normal trading plan in that he traded a bit too aggressively.
This all stemmed from his trying to use a trading style that was someone else’s,
no matter how good that person was.
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