A Three-Legged Stool
I couldn ' t sleep , and I didn ' t wait for the alarm to go off . I got up at 3:30 in the morning and drove across the Golden Gate Bridge to the Pacific Exchange . I arrived so early that I took the very best spot in the pit , one I had never before occupied . I had been trading long enough to know that I had just declared war on its prior occupant . When the markets finally opened , I was a screaming buzz saw , buying and selling anything and everything as each option series opened . The other traders in the pit must have thought I was mad , never having seen such aggressive trading from me before . That year , I went on to make many times my initial internal limitation .
A Three-Legged Stool
There are three critical areas that must be mastered to become a consistently profitable trader : mind method and market . Think of a three-legged stool that is useless without all three legs . But not all the legs are equal . If the trader ' s mental state is at his or her prime , money can be made with a loosely developed trading method and elementary knowledge about a particular market . But no matter how well honed the trader ' s methodology , not matter how deep his domain expertise is in a particular market , unless the trader ' s behavioural responses are in their prime state , it is very difficult for him to make consistent profits .
After years of training floor traders to trade the firm ' s proprietary account , it became obvious that a trader ' s mental state was the " sine qua non ," or essential element , of trading profits . Every trader in the firm would go through the same training process , whether experienced or novice . A particular methodology was taught to each trader , and depositions and trading activity were reviewed from this trading method .
Granted , each trader was in a different option pit and traded different stocks , but it became apparent that no matter which pit a trader was in , a consistent behaviour determined profitability , not the particular markets . During the 1990s , this methodology ground out exceptional returns year in and year out . Yet some traders were consistent losers . Because the firm absorbed 100 percent of all the losses of the failed traders , it became apparent that solving this problem would add significantly to the bottom line of our trading firm . We hired a hypnotherapist to work with all of our traders . After several training cycles , three critical areas of trader behaviour emerged that had to be fixed . These were labeled barrier busting , mind machines and loving life .