LONE WOLF TRADER

Depending on your personality type, you may find yourself in a trading group looking for interesting trades. The interaction with other traders can provide social stimulus and much-needed advice when you are beginning your trading business. Watching other traders and how they maneuver in a trade can be valuable for what to do and what not to do.

However, when it comes to market analysis and trading, you will find that some of the best traders are independent thinkers. I recently read the account of Nicolas Darvis, professional dancer and author of How I Made $2,000,000 in the Stock Market. The book details his trading account during his worldwide dancing tour in the late 1950s. What Darvis discovered was that when he was in the United States and had daily access to the news and headlines, opinions, rumors, etc., his accounts suffered. When he traveled abroad and was often outside of any news for weeks, his accounts climbed higher.

Because he worked at clubs, he generally worked late into the early mornings and slept during market hours. It’s hard to get shaken out of a market when you’re sleeping. He instructed his brokers to never call him. He removed any analyst commentary from his viewing. He purposely fenced himself in from any outside influence. He amassed a fortune.

I became a lone wolf.

                           Nicolas Darvas

Often the best trades are in opposition to the masses. In fact, some trade the opposite of headlines, and that’s why they watch the news. Railroads are about to strike, buy Union Pacific! It happens repeatedly.

Independence is a common trait in great traders.  Isolation often leads to extraordinary profits. You must follow your own light. And your light may have dimmed by listening to all the experts out there. Learning to trust yourself and your own inner whisper more than outside chatter with never ending news headlines is paramount.

I have always played a lone hand. I have to do my own seeing and my own thinking.

                           Jesse Livermore

Personally, I have experienced the benefits of limiting my access to my accounts at times, to my great benefit. Had I seen the market at times, I would have certainly been enticed to exit some trades at significant losses. Once you can accept that anything can happen in the markets — and I mean anything — placing your high-probability trades on and not touching them becomes much easier.

I trade my plan and no one else’s. This allows me to take complete responsibility for my trading results. I cannot blame a trade gone awry on the Fed, headlines, activist investors, another short trader, etc. On the other hand, I can take comfort that I am not in the group-think mentality and following the cow path to the slaughter house. There will be times I am right and times I am wrong. Either way, it’s all me, and I am good with that decision.

Enuf said.