Way of the turtle

Live By the Ego, Die By the Ego
This is the major reason why beginning traders are drawn to dis-
cretionary trading. Discretionary trading feeds the ego; it is trading
that relies on one’s judgment, in contrast with systematic trading,
where trading decisions are made by using rules that specify exactly
when and how much to buy and sell. So when you use your judg-
ment to trade and you win, the ego wins. You can then brag to your
friends how you are the master of the markets.
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Way of the Turtle

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I see this particular behavior constantly on online trading
forums—especially the broad-based ones that attract new traders.
You regularly see posts from individuals bragging about how they
bought just before a run-up, or they have found the Holy Grail and
have a 90 percent accurate system, or they have been trading for
three months and have made 200 percent. They invariably have
done this by trading with too much leverage, so they might have
turned $5,000 into $15,000; however, they run a very high risk of
losing that $15,000 because they are trading too aggressively. A few
months later, you may see the same traders post that they have
blown up their account and lost everything. These individuals were
trading to feed their egos, and as the saying goes, live by the ego,
die by the ego.
There are many successful discretionary traders, but there are
far more unsuccessful ones. The biggest reason for this is that the
ego is not your friend as a trader. The ego wants to be right, it
wants to predict, and it wants to know secrets. The ego makes it
much more difficult to trade well by avoiding the cognitive biases
that hinder profits.
An example from the Turtle days will bring this point home.
The Great Ping-Pong Battle
Some people may find this hard to believe since trading seems like a
very exciting job to outsiders, but most of the time when we were
trading we did absolutely nothing. We were bored. The markets were
quiet most of the time. In short, the Turtles had a lot of free time on
their hands.
Mastering Your Demons
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Fortunately, we had a Ping-Pong table, and so Ping-Pong was
our game. Almost all of us played it at least once a day. We played
so much that one day we had a note posted to our door from some-
one in the large insurance office adjacent to ours threatening our
deaths because they did not like the fact that we got to play games
all day while they had to do work (presumably they did 
not like
their work).
I had never played the game seriously before, but I soon devel-
oped reasonable skills and started beating some of the better play-
ers after a few months. I adopted the Chinese-style pen hold grip,
which allowed me to switch between forehand and backhand more
easily—that was better for my aggressive spin-filled style.
But there was one Turtle who was much better than any of the
rest of us, one we all knew we could not beat. He had been playing
for a long time, and we all watched in awe when he played. He gen-
erally had no problems beating us 21 to 10 or by an even larger
margin, and we knew he was just toying with us. He beat us without
breaking a sweat.
After a few months of play, one of the Turtles suggested that we
have a tournament. In a group full of competitive traders, this was
serious stuff. We all felt that the tournament probably would really
be about who was second best since there was no doubt who was
the best player; however, we wanted to see who would be champ.
When the tournament began, the weaker players were weeded out
one by one until we were down to the strongest eight players. With
the exception of the best player, we were all pretty close in skills.
I decided to change my style for the tournament. Instead of
going for kill shots whenever I had a chance the way I normally did,