My top 10 qualities for speculating success
Here is my personal list
1- Adversity
This is the biggest one. 1 & 2 are the biggest one.
You know what we call those that have low adversity?
Starts with an L. Ends with osers.
You should not flinch when you get unlucky, when things are working against you.
You should love this! Makes it harder! Great! You should welcome difficulties.
Every year millions of clowns come and "give it a go". They are great for providing liquidity to markets, filling my orders.
And every year millions of clowns do what good little quitters do and never come back.
There should be a rage burning in you. You will not stop until you have reached your objective. NOTHING WILL STOP YOU.
"Awww but life has been so hard to me and bla bla bla" ==> GET OUT THEN! There is no place for those here.
You should be borderline masochist. Each time the market hits you you come back asking for more.
Losses will not discourage you. You will NEVER EVER give up.
You will NEVER EVER break and make a mistake because losses made you feel bad or wins got you excited.
Nothing will stop you except total success.
2- Always want to compete / Will to win
It is necessary to want to win. And think hard (not work hard) about how to stay at the top once you get there. Always maintain a competitive edge as Warren Buffet says.
All you care about is total victory. Every day you obssess about markets, and think about what you need to be the best.
This is true in everything, but especially here, it's a highly competitive game.
You want to know everything about trading (unlike the pathetic clowns crypto hodlers that only care about "will price of my loterry ticket go up" they are really the ultimate example of what not to do).
Gamers that become the best are seen as kids that play all day long non stop and rage at their teammates when they mess up, and rage when they lose.
You have to rage when you mess up. Rage when you have a losing spree. "Trade like a robot beep beep no emotions" PUAHAHA what a joke are they serious?
Rage when you don't succeed and do what it takes to be. Review your trades over and over obssessively. If you have to shoot yourself in the leg and lose 5% of your account to learn you lesson do it (not financial advice).
Winning should matter more than life itself.
Top athletes are taking plenty of drugs that will ruin their lives past 35 and they know it. They do everything to be the best, and accept the sacrifice of their older years.
Luckilly with speculating you don't have to suicide :D
You got to have a competitive mind. You got to absolutely want to win.
You should feel good when you are having success and see the other suckers blow up and quit.
Going on tradingview, myfxbook, checking the profiles of accounts that were active (and usually argued alot) a few years ago, and seing they have been offline for 12 months or more should put you in a state of euphoria. You should feel your heart starting to pump faster, and get a rush off seing other inferior traders fail miserably, while you are approaching the top of your game.
90% of traders will fail within two years, and within five years 99% will no longer be trading.
You need a winning mindset. You are not here to "give it a go" (makes me vomit). You are not hoping to win. You are here to win.
If you remove all the delusional unintelligent, gamblers, "I'll give it a go", and only keep the "I'm here to win", stats are waaaaaaaaaaaay better than 10% and 1%.
3- IQ: Systematic intelligence
Some say it does not matter.
Some clowns even say it is counter productive. I'm going to go to town on them. I'm going to write a lengthy paragraph on this "taboo" subject.
How does the ability to process and understand more make you a worse speculator?
They use really stupid flawed dishonest logic "oh well they overanalyse everything".
Maybe flipping a coin is the best strategy? Just really sad excuses.
People with higher IQ make more money... Income goes up in a straight line with IQ...
Maybe speculating is the big exception?
People with higher IQ are more disciplined... And discipline = much better results.
I have a hard time imagining someone having great intuition and thinking the opposite of every one without being smart and without analysing/reading a lot. Makes 0 sense.
Other studies tell a similar story. At the top there are professors, MD, research (or number 2 after geniusses), finance is around the top but not like "150" on average they are a little high but not crazy high.
A few findings:
We find that low-IQ investors are more likely to herd in their buy vs. sell decisions but IQ has little influence on sell vs. hold herding.
High-IQ investors’ portfolio holdings outperform low-IQ investors’ portfolios.
Low IQ investors portfolio are less diversified.
erim.eur.nl/fileadmin/erim_content/documents/grinblatt_wp11.pdf
==> Low IQ investors refuse to take losses (baghodlers), herd into hype stocks (I extrapolate), go all in in a few investments. And obviously get not as good returns.
People of low intelligence keep repeating the same mistakes over and over. It's the same in every discipline.
The same patterns repeat over and over and they keep getting scammed over and over and never notice the pattern.
Just like a pattern in an IQ test... It might not be the perfect intelligence test but it sure is the perfect "pattern recognition" test.
Another quote from Warren Buffet:
"Success in investing doesn't correlate with IQ once you're above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing."
See? He never said "Oh ye sure buy total garbage when there is blood on the street and don't worry you can be mentally retarded and reach the top 5% investors".
Bookworms are seen as smart and they don't make good traders. All those "expert bookworms" economists and other, aren't making billions, and this shows it takes more than being a nerd to make money. People that think this implies being dumb is a strength are honestly too stupid to trade.
"High-IQ investors also exhibit superior market timing, stock-picking skill, and trade execution."
papers.ssrn.com/sol3/papers.cfm?abstract_id=1364014
16% of the population has an IQ above 115. 25% has an IQ above 110. That's a good start.
IQ is not all it takes. But if you are under 110, sorry, you're going to have a really hard time. Why not try something else?
In an academic environment, past the first few years, people with an IQ under 115 are considered stupid. You see very little of them.
Finance is not a university, but it is a cognitive intensive activity. As IQ goes up you get diminishing returns, but the flipside is as you go down intellectual abilities become a exponentially growing handicap.
And having some diploma is pretty useless. Being street smart, not gullible, is way more important...
People (especially on the lower end of the scale) really hate this. It's a big taboo. They cannot stand being less intelligent. Always finding excuses and trying to comfort each other.
But facts are facts. Nature is cruel.
From some paper, IQ had a very high correlation with training success in the military and performance at highly complex jobs, but it was much lower for creativity and leader effectiveness. Abraham they say wasn't that bright (the US were pretty small back then thought). Athletes are not exactly famously smart. Probably all of the celebrities climate activists are pretty low too... "Useful idiots" (Lenin quote).
Don't trust internet tests.
The problem here is every one thinks they are borderline genius (I remember reading a study where only 2% of respondents claimed they were below average), and even if they find out the truth they'll be in denial.
I guess we need them to lose & baghold and add to losers so we may get filled and win :)
Someone has to take the opposite side of my trade.
4- Emotional stability
Not caring what others think. Also having a big ego (but that doesn't get in the way).
Includes being self aware (is this emotional intelligence?).
I'll just quote Warren Buffet here:
"You don't need a lot of brains in this business. I've always said if you've got an IQ of 160, give away 30 points to somebody else, because you don't need it in investments. What you need is emotional stability. You have to be able to think independently, and when you come to a conclusion you have to really not care what other people say. Just follow the facts and your reasoning. That's tough for a lot of people. But that part, I was just lucky with. I was born that way."
One of Jesse Lauriston Livermore biggest loss was in cotton when he listened to someone giving him troll advice (guy was selling while advising to buy), he somehow got himself manipulated when he knew, and he said he knew, the facts were telling him otherwise.
Lmao imagine changing your mind on something because some brainfart that thinks he knows something tells you he is 100% sure. LOL! Here ego CLEARLY protects you.
I'm cracking up, I just think of absolutely moronic crypto investors when they try to convince common sense people, with their risible ridiculous logic.
Most often than not they make zero sense, contradict themselves even, and don't even know it.
Ignore the herd mocking you because they are too stupid to understand what you do. They're nothing more than cattle on route for the slaughterhouse where they will be turned into delicious steaks.
5- Discipline
Straightforward...
If you are not disciplined, you will NEVER be a successful speculator. Or investor. Maybe you can (barely) make it as a spread trader or arbitrage that I don't know.
Just take the good setups avoid the bad ones. Get in when you should get out when you should don't get out when you shouldn't.
Idk I am trying to find something to say about this...
Removing a stop loss because "I really can't take a loss now" or moving to breakeven because "I want to feel relieved" or getting out early of a winner sending all the right signs or suddenly going 25 leverage in Apple puts after losing your money to make it back "it's within my personal risk tolerance" is plain retarded. That's it. Nothing more to it. Literally retarded.
6- Logical not "emotional"
It's all about processing clean facts logically.
Funny but a study found that traders with more prenatal T, by checking their fingers ratio (the higher the prenatal hormones the smaller the ratio - index is smaller - the lower the empathy the higher the systemizing abilities).
content.time.com/time/business/article/0,8599,1871066,00.html
Empathizing & systemizing abilities are as far as I know exclusive, the more you have of 1 the less of the other.
High systemizing abilities are required to make it.
I will also add the E-S theory is a better predictor than gender of who chooses STEM subjects according to some psychologists.
Obviously, they get alot of hate (from the idiotic "we're all perfectly equal" club).
I mean... it's obviously true. Or let's say very very probably true.
IQ tests are very much designed to test for intelligence & systemizing abilities rather than "all" intelligence, which is all we care about as speculators.
Being able to work quickly with numbers is going to be more useful than being able to detect how someone feels.
7- High appetite for risk
Don't pay too much attention to this, it will make more sense later.
Speculating is literally about taking risks. If you don't want to take risks I don't even know why you are reading this.
Maybe you'll win maybe you'll lose. You have to want to gamble that money on each bet and risk losing it, to sometimes get returns.
And when a great opportunity presents itself, when the conditions are right, you should WANT to risk big. Within reason.
When Stanley Druckenmiller told George Soros about a short opportunity and that he risked more than usual, Soros told him he was crazy and that was terrible risk management - because with such an opportunity he should have gone with way more size at least double what he did. They still only risked 2% there, but it was way more than usual.
Lists of famous traders are full of examples of really big bets (400 leverage against the nzd...), sometimes they go wrong but sometimes they go right.
Jesse Lauriston Livermore is known for making alot of really huge bets. He made - inflation adjusted - 1.5 billion USD when he shorted the US stock market in 1929.
He kept having huge gains and huge losses even going into debt after going from nothing to big multi millionaire. He took it too far XD
8- Being risk averse, reasonable
HAHA!
It really is important to be reasonable, risk averse. You want to avoid losing everything. You want to avoid wasting your capital into garbage bets.
You shouldn't be so risk averse than when an opportunity presents itself your just freeze and cry yourself to sleep.
When the opportunity comes, hit the gaz, become a degen gambler - within reason.
"Contradictions" like this is part of why over 95% don't make it. And here neo-cortex, basically consciousness, is going to make a huge difference.
The more "advanced" a being is the more self aware and can learn to naturally have qualities that are or appear completely opposed.
A smarter mind also is a more agile mind.
A strict set of rules you follow like a machine can help... It's not the ultimate solution, the holy grail. It's a crappy suboptimal fix when all hope is lost.
Machines themselves... They replace humans at hft frontrunning firms that buy orderflow from robinhood, they use algos for market making, they execute statistical arbitrage at quant funds. They're not speculating and they aren't going to anytime soon / ever. Oh good luck with EAs LOL. Big obvious frauds.
9- Patience
There are several aspects to this
First, 7 & 8 continuation, you have to avoid risking money on random movements, and wait for the right setup, no matter how long it takes, you might even completely miss out and not see another setup for a long while.
Second, once you are in, let it run, don't be in a hurry to get out (WHY?). I don't even know why anyone would want to get out. It feels good to be in a winner. It's just dumb & cowardly. WEAK.
Thirdly, it's going to take time to get good and grow an account. Deal with it. Or join the wallstreetbets autists and pray to get lucky, and inevitably end up blowing up and maybe you'll end up on CNBC making anchors laugh.
10- Being interested
Obviously... Is it even worth adding to the list? Yes, because 10 is a nice number.
Haven't seen many masters that were in "for the lulz and lamboz" and were bored to death by markets.
1- Adversity
This is the biggest one. 1 & 2 are the biggest one.
You know what we call those that have low adversity?
Starts with an L. Ends with osers.
You should not flinch when you get unlucky, when things are working against you.
You should love this! Makes it harder! Great! You should welcome difficulties.
Every year millions of clowns come and "give it a go". They are great for providing liquidity to markets, filling my orders.
And every year millions of clowns do what good little quitters do and never come back.
There should be a rage burning in you. You will not stop until you have reached your objective. NOTHING WILL STOP YOU.
"Awww but life has been so hard to me and bla bla bla" ==> GET OUT THEN! There is no place for those here.
You should be borderline masochist. Each time the market hits you you come back asking for more.
Losses will not discourage you. You will NEVER EVER give up.
You will NEVER EVER break and make a mistake because losses made you feel bad or wins got you excited.
Nothing will stop you except total success.
2- Always want to compete / Will to win
It is necessary to want to win. And think hard (not work hard) about how to stay at the top once you get there. Always maintain a competitive edge as Warren Buffet says.
All you care about is total victory. Every day you obssess about markets, and think about what you need to be the best.
This is true in everything, but especially here, it's a highly competitive game.
You want to know everything about trading (unlike the pathetic clowns crypto hodlers that only care about "will price of my loterry ticket go up" they are really the ultimate example of what not to do).
Gamers that become the best are seen as kids that play all day long non stop and rage at their teammates when they mess up, and rage when they lose.
You have to rage when you mess up. Rage when you have a losing spree. "Trade like a robot beep beep no emotions" PUAHAHA what a joke are they serious?
Rage when you don't succeed and do what it takes to be. Review your trades over and over obssessively. If you have to shoot yourself in the leg and lose 5% of your account to learn you lesson do it (not financial advice).
Winning should matter more than life itself.
Top athletes are taking plenty of drugs that will ruin their lives past 35 and they know it. They do everything to be the best, and accept the sacrifice of their older years.
Luckilly with speculating you don't have to suicide :D
You got to have a competitive mind. You got to absolutely want to win.
You should feel good when you are having success and see the other suckers blow up and quit.
Going on tradingview, myfxbook, checking the profiles of accounts that were active (and usually argued alot) a few years ago, and seing they have been offline for 12 months or more should put you in a state of euphoria. You should feel your heart starting to pump faster, and get a rush off seing other inferior traders fail miserably, while you are approaching the top of your game.
90% of traders will fail within two years, and within five years 99% will no longer be trading.
You need a winning mindset. You are not here to "give it a go" (makes me vomit). You are not hoping to win. You are here to win.
If you remove all the delusional unintelligent, gamblers, "I'll give it a go", and only keep the "I'm here to win", stats are waaaaaaaaaaaay better than 10% and 1%.
3- IQ: Systematic intelligence
Some say it does not matter.
Some clowns even say it is counter productive. I'm going to go to town on them. I'm going to write a lengthy paragraph on this "taboo" subject.
How does the ability to process and understand more make you a worse speculator?
They use really stupid flawed dishonest logic "oh well they overanalyse everything".
Maybe flipping a coin is the best strategy? Just really sad excuses.
People with higher IQ make more money... Income goes up in a straight line with IQ...
Maybe speculating is the big exception?
People with higher IQ are more disciplined... And discipline = much better results.
I have a hard time imagining someone having great intuition and thinking the opposite of every one without being smart and without analysing/reading a lot. Makes 0 sense.
Other studies tell a similar story. At the top there are professors, MD, research (or number 2 after geniusses), finance is around the top but not like "150" on average they are a little high but not crazy high.
A few findings:
We find that low-IQ investors are more likely to herd in their buy vs. sell decisions but IQ has little influence on sell vs. hold herding.
High-IQ investors’ portfolio holdings outperform low-IQ investors’ portfolios.
Low IQ investors portfolio are less diversified.
erim.eur.nl/fileadmin/erim_content/documents/grinblatt_wp11.pdf
==> Low IQ investors refuse to take losses (baghodlers), herd into hype stocks (I extrapolate), go all in in a few investments. And obviously get not as good returns.
People of low intelligence keep repeating the same mistakes over and over. It's the same in every discipline.
The same patterns repeat over and over and they keep getting scammed over and over and never notice the pattern.
Just like a pattern in an IQ test... It might not be the perfect intelligence test but it sure is the perfect "pattern recognition" test.
Another quote from Warren Buffet:
"Success in investing doesn't correlate with IQ once you're above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing."
See? He never said "Oh ye sure buy total garbage when there is blood on the street and don't worry you can be mentally retarded and reach the top 5% investors".
Bookworms are seen as smart and they don't make good traders. All those "expert bookworms" economists and other, aren't making billions, and this shows it takes more than being a nerd to make money. People that think this implies being dumb is a strength are honestly too stupid to trade.
"High-IQ investors also exhibit superior market timing, stock-picking skill, and trade execution."
papers.ssrn.com/sol3/papers.cfm?abstract_id=1364014
16% of the population has an IQ above 115. 25% has an IQ above 110. That's a good start.
IQ is not all it takes. But if you are under 110, sorry, you're going to have a really hard time. Why not try something else?
In an academic environment, past the first few years, people with an IQ under 115 are considered stupid. You see very little of them.
Finance is not a university, but it is a cognitive intensive activity. As IQ goes up you get diminishing returns, but the flipside is as you go down intellectual abilities become a exponentially growing handicap.
And having some diploma is pretty useless. Being street smart, not gullible, is way more important...
People (especially on the lower end of the scale) really hate this. It's a big taboo. They cannot stand being less intelligent. Always finding excuses and trying to comfort each other.
But facts are facts. Nature is cruel.
From some paper, IQ had a very high correlation with training success in the military and performance at highly complex jobs, but it was much lower for creativity and leader effectiveness. Abraham they say wasn't that bright (the US were pretty small back then thought). Athletes are not exactly famously smart. Probably all of the celebrities climate activists are pretty low too... "Useful idiots" (Lenin quote).
Don't trust internet tests.
The problem here is every one thinks they are borderline genius (I remember reading a study where only 2% of respondents claimed they were below average), and even if they find out the truth they'll be in denial.
I guess we need them to lose & baghold and add to losers so we may get filled and win :)
Someone has to take the opposite side of my trade.
4- Emotional stability
Not caring what others think. Also having a big ego (but that doesn't get in the way).
Includes being self aware (is this emotional intelligence?).
I'll just quote Warren Buffet here:
"You don't need a lot of brains in this business. I've always said if you've got an IQ of 160, give away 30 points to somebody else, because you don't need it in investments. What you need is emotional stability. You have to be able to think independently, and when you come to a conclusion you have to really not care what other people say. Just follow the facts and your reasoning. That's tough for a lot of people. But that part, I was just lucky with. I was born that way."
One of Jesse Lauriston Livermore biggest loss was in cotton when he listened to someone giving him troll advice (guy was selling while advising to buy), he somehow got himself manipulated when he knew, and he said he knew, the facts were telling him otherwise.
Lmao imagine changing your mind on something because some brainfart that thinks he knows something tells you he is 100% sure. LOL! Here ego CLEARLY protects you.
I'm cracking up, I just think of absolutely moronic crypto investors when they try to convince common sense people, with their risible ridiculous logic.
Most often than not they make zero sense, contradict themselves even, and don't even know it.
Ignore the herd mocking you because they are too stupid to understand what you do. They're nothing more than cattle on route for the slaughterhouse where they will be turned into delicious steaks.
5- Discipline
Straightforward...
If you are not disciplined, you will NEVER be a successful speculator. Or investor. Maybe you can (barely) make it as a spread trader or arbitrage that I don't know.
Just take the good setups avoid the bad ones. Get in when you should get out when you should don't get out when you shouldn't.
Idk I am trying to find something to say about this...
Removing a stop loss because "I really can't take a loss now" or moving to breakeven because "I want to feel relieved" or getting out early of a winner sending all the right signs or suddenly going 25 leverage in Apple puts after losing your money to make it back "it's within my personal risk tolerance" is plain retarded. That's it. Nothing more to it. Literally retarded.
6- Logical not "emotional"
It's all about processing clean facts logically.
Funny but a study found that traders with more prenatal T, by checking their fingers ratio (the higher the prenatal hormones the smaller the ratio - index is smaller - the lower the empathy the higher the systemizing abilities).
content.time.com/time/business/article/0,8599,1871066,00.html
Empathizing & systemizing abilities are as far as I know exclusive, the more you have of 1 the less of the other.
High systemizing abilities are required to make it.
I will also add the E-S theory is a better predictor than gender of who chooses STEM subjects according to some psychologists.
Obviously, they get alot of hate (from the idiotic "we're all perfectly equal" club).
I mean... it's obviously true. Or let's say very very probably true.
IQ tests are very much designed to test for intelligence & systemizing abilities rather than "all" intelligence, which is all we care about as speculators.
Being able to work quickly with numbers is going to be more useful than being able to detect how someone feels.
7- High appetite for risk
Don't pay too much attention to this, it will make more sense later.
Speculating is literally about taking risks. If you don't want to take risks I don't even know why you are reading this.
Maybe you'll win maybe you'll lose. You have to want to gamble that money on each bet and risk losing it, to sometimes get returns.
And when a great opportunity presents itself, when the conditions are right, you should WANT to risk big. Within reason.
When Stanley Druckenmiller told George Soros about a short opportunity and that he risked more than usual, Soros told him he was crazy and that was terrible risk management - because with such an opportunity he should have gone with way more size at least double what he did. They still only risked 2% there, but it was way more than usual.
Lists of famous traders are full of examples of really big bets (400 leverage against the nzd...), sometimes they go wrong but sometimes they go right.
Jesse Lauriston Livermore is known for making alot of really huge bets. He made - inflation adjusted - 1.5 billion USD when he shorted the US stock market in 1929.
He kept having huge gains and huge losses even going into debt after going from nothing to big multi millionaire. He took it too far XD
8- Being risk averse, reasonable
HAHA!
It really is important to be reasonable, risk averse. You want to avoid losing everything. You want to avoid wasting your capital into garbage bets.
You shouldn't be so risk averse than when an opportunity presents itself your just freeze and cry yourself to sleep.
When the opportunity comes, hit the gaz, become a degen gambler - within reason.
"Contradictions" like this is part of why over 95% don't make it. And here neo-cortex, basically consciousness, is going to make a huge difference.
The more "advanced" a being is the more self aware and can learn to naturally have qualities that are or appear completely opposed.
A smarter mind also is a more agile mind.
A strict set of rules you follow like a machine can help... It's not the ultimate solution, the holy grail. It's a crappy suboptimal fix when all hope is lost.
Machines themselves... They replace humans at hft frontrunning firms that buy orderflow from robinhood, they use algos for market making, they execute statistical arbitrage at quant funds. They're not speculating and they aren't going to anytime soon / ever. Oh good luck with EAs LOL. Big obvious frauds.
9- Patience
There are several aspects to this
First, 7 & 8 continuation, you have to avoid risking money on random movements, and wait for the right setup, no matter how long it takes, you might even completely miss out and not see another setup for a long while.
Second, once you are in, let it run, don't be in a hurry to get out (WHY?). I don't even know why anyone would want to get out. It feels good to be in a winner. It's just dumb & cowardly. WEAK.
Thirdly, it's going to take time to get good and grow an account. Deal with it. Or join the wallstreetbets autists and pray to get lucky, and inevitably end up blowing up and maybe you'll end up on CNBC making anchors laugh.
10- Being interested
Obviously... Is it even worth adding to the list? Yes, because 10 is a nice number.
Haven't seen many masters that were in "for the lulz and lamboz" and were bored to death by markets.
Feragatname
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