I recently read a newer edition of Reminiscences of a Stock Operator by Edwin Lefèvre. Buried at the back is a Q&A with Paul Tudor Jones. It is one of the best descriptions I’ve read of what investing and trading feel like.
There are two unpleasant experiences that every trader will face in his lifetime at least once and most likely multiple times.
First, there will come a day after a devastatingly brutal and agonizing stretch of losing trades that you'll wonder if you will ever make a winning trade again. Second, there will come a point when you begin to ask yourself why it is you make money and if this is truly sustainable.
That first experience tests an individual's grit; does he have the stamina, courage, guts, and smarts to get up and engage the battle again? That second moment of enlightenment is the one that is actually scarier because it acknowledges a certain lack of control over anything.
I think I was almost 38 years old when one day, in a moment of frightening enlightenment, I knew that I really did not know exactly how and why I had made all the money that I had over the prior 17 years. This threw my confidence for a jolt. It sent me down a path of self-discovery that today is still a work in progress.
Many of us are blind to key psychological elements of ourselves; that's why people go to therapists or get outside help for any number of problems. This very thing happened to me in 1993, 17 years into my career, when a combination of people helped me discover, completely unbeknownst to me, that my trading style had incorporated some inimical traits.
These bad habits were responsible for the worst year of my career and the only one that came close to being negative for my trading accounts. It's easier for someone on the outside to understand why people do what they do than it is for people to figure it out themselves. Individually, each of us probably thinks we are just about perfect, which of course is why marriage was invented to kill that delusion.