Trading for a Living

I quote a small little excerpt from Dr Alexander Elder's book - Trading for a Living below. Dr Alexander Elder is a professional stock trader living in New York and has written several books to share his views on trading.

"Many losers think that they would be successful if they could trade a bigger account. All losers get knocked out of the game by a string of losses or a single abysmally bad trade. Often, after the amateur is sold out, the market reverses and moves in the direction he expected. The loser is ready to kick either himself or his broker: Had he survived another week, he might have made a small fortune!

Losers take this reversal as a confirmation of their method. They earn, save, or borrow enough money to open another small account. The story repeats: The loser gets wiped out, the market reverses and "proves" the loser right, but only too late - he has been sold out again. That's when the fantasy is born:"If only i had a bigger account, i could have stayed in the market a little longer and won."

Some losers raise money from relatives and friends by showing them a paper track record. It seems to prove that they would have won big, if only they had had more money to work with. But if they raise more money, they lose that, too - it is as if the market were laughing at them!

A loser is not undercapitalized - his mind is underdeveloped. A loser can destroy a big account almost as quickly as a small one. He overtrades, and his money management is sloppy. He takes risks that are too big, whatever the size of his account. No matter how good his system is, a streak of bad trades is sure to put him out of business." - Trading for a Living