Tom went from trading his own money, to forming TrendStat and managing other peoples money. At the peak of his career, TrendStat managed $600million dollars of capital.
Tom is one of my favorite Market Wizards on the psychology of trading. Here are my favorite quotes from his interview in this book.
“I realized that every time I had a loss, I needed to learn something from the experience and view the loss as tuition at the College of Trading. As long as you learn something from a loss, it’s not really a loss.” – Tom Basso
“When your account has these massive swings up and down, there’s a tendency to feel a rush when the market is going your way and devastation when it’s going against you. These emotions do absolutely nothing to make you a good trader. It’s far better to keep the equity swings manageable and strive for a sense of balance each day, no matter what happens.” – Tom Basso
“I probably do more mental exercises now than I ever did. Each morning while I’m driving to work, I make a conscious effort to relax. I mentally rehearse any conflict that might happen that day. The process of mentally organizing and relaxing before I get to work helps me start my day in a very positive frame of mind.” – Tom Basso
“Also, it helps if you view your life as a movie. If you go to a video store and rent a horror movie, you’re voluntarily letting yourself be horrified, and it’s not stressful because deep down you know it’s just a movie. What if you had the same attitude about life?” – Tom Basso
“I think investment psychology is by far the most important element, followed by risk control, with the least important consideration being the question of where you buy and sell.” – Tom Basso
All these quotes are from Jack Schwager’s book “The New Market Wizards” one of my all time favorite trading books.