The Traders Journal

The Complete Olympian & The Complete Investor

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45Team USA versus Spain vying for the Gold Medal in Olympic Basketball. Sensational!  Score: 107 USA to 100 Spain.  You didn’t have to be a sports fan to have been caught up in the thrill of Olympic competition during this very competitive game. Much has been written already about the USA team, its players and the games. On a personal level as a trader, I immediately related to Coach K’s comments about his captain, LeBron James. I can’t give you an exact quote, but I can accurately paraphrase his words to this effect: LeBron is this team’s leader and took responsibility for the team on his shoulders.  He’s a complete player.  These past couple of Olympics, he’s dedicated himself to his craft and addressed every aspect of his game to the point where he has no weaknesses.  He has also become a true student of the game which has contributed to him becoming a complete player.

 


My point is that to become a “complete investor,” you must be willing to look at the total picture and consider your trading from 30,000 feet. This weekend, I was energized by attending the ChartCon 2012 event in Seattle.  I used the opportunity to speak one-on-one with nearly four dozen fellow investors.  This was an above average crowd of learned investors in contrast to the novice investors I encounter in my college introductory stock market class.  As I stepped back and pensively considered the stark dichotomy between the two groups, I came away with six impressions describing the journey we must all take to become complete investors.  The metaphor is a view from 30,000 feet.

 

  • When you query complete traders as to their reasons for attending the conference, the most common and basic response is that they are there looking for actionable ideas with which they can make money.  The novice investor usually answers that they are there for education.
  • It’s a bit like a secret handshake, but when I ask experienced attendees if they’ve read Reminiscences of a Stock Operator, they usually answer with a number representing how many times they’ve read it.  The novice asks for the name of the author.
  • Complete traders tend to have a very elegant, relatively simple basket of indicators that they understand intimately and embrace completely.  The novice investors seem to be in an indicator-collection mode, believing that their probability of success will increase with the addition of just one more indicator.
  • One attendee chatting with another will quickly gravitate to a discussion about protecting assets, exit strategies and risk control money management rules.  The novice will want to chat about which equities to buy.
  • Complete traders have a business orientation towards investing.  They have explicit routines and a disciplined frame of mind to follow their plan.  Novices are more random in orientation to both investing and specific routines.
  • Complete investors are familiar with market history.  They have either studied the markets in detail or are intimately familiar with its cycles and stages.  The novice is best described by the famous line in the movie “Gumball Rally” when the Italian driver seats himself in the sports car, then tears the rear view mirror from its mounts and tosses it out the window, declaring “what’s behind me doesn’t matter.”

I’m drawing this extreme contrast between the complete investor and the novice to better illustrate observations from the conference. The truth is I’ve created two fictional investors to illustrate a journey taken by most of us in the investor community.

In closing – just as I did at the conference – I’d like to recommend the book Trading in the Zone by Mark Douglas.  For both the newbie as well as the experienced investor, this book offers a truly high-leveraged educational experience that will impact your investing result almost immediately.  Sooner or later, you’ll agree with me that investing and trading are mostly all about you – the investor self. 

As Marlon Brando said in the film Apocalypse Now, “It is judgment that defeats us.”

Trade well; trade with discipline!
-- Gatis Roze

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Gatis Roze
About the authors: , CMT, holds an MBA from the Stanford Graduate School of Business and is a past president of the Technical Securities Analysts Association (TSAA). He is also the co-author of Tensile Trading: The 10 Essential Stages of Stock Market Mastery (Wiley, 2016). A full-time investor for over 25 years, Gatis has taught sold-out investment courses throughout the Pacific Northwest and beyond since 2000. Learn More

Grayson Roze
is the author of Trading for Dummies (Wiley, 2017) and Tensile Trading: The 10 Essential Stages of Stock Market Mastery (Wiley, 2016). He has worked in the financial services industry for StockCharts.com since 2012, and now serves as the Business Manager for the company. He holds a Bachelor's degree from Swarthmore College. Learn More
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