This is a Guest Post by AK of Fallible
AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.
Failure in trading can actually be a GOOD thing. Don’t believe me? Well you don’t have to take my word for it because Jack Schwager, the author of Market Wizards, will help explain it to you in the video above.
It’s easy to give up in markets. You may have been successful in other areas in your life, but when you trade for the first time, it’s usually a big slap in the face. The whole thing looks easy, but nothing could be further from the truth. When you think it SHOULD be easy and it isn’t, your ego gets bruised. And this is tough to overcome for a lot of people. But the key is that you keep going, learning, and iterating after the initial failure.
In the video above Schwager talks about how so many of the legendary investors he interviewed didn’t find success right away. They failed over and over. But they had the internal belief that they would indeed become successful at trading one day. So they kept at it. And sure enough… they became successful.
There are even benefits to failing in the beginning. One of them is that you truly learn risk control. The emotional pain you feel when you blow up your first account teaches you how important controlling your risk is. There’s no substitute for feeling that pain and the lesson it gives you. Paul Tudor Jones himself said he never hires anyone who hasn’t blown up an account for that same reason.
Now of course losing is okay as long as you’re trading small. You obviously don’t want to trade and lose your entire life savings. And that’s why you start out small as you learn.
There are other benefits of losing as well. Watch the video above to learn more!
And as always, stay Fallible out there investors!