“It takes courage to be a pig.” — Stanley Druckenmiller
Why do some win in the market and some lose? Some thoughts on winning and losing:
Winning Trader’s Traits
- Calm
- Disciplined
- Confident
- Organized
- Excellent recordkeeping
- Business like approach
- Professional demeanor
Losing Trader’s Traits
- Emotional
- Undisciplined
- Anxious
- Disorganized
- No record keeping
- Wants action and excitement
- Amateur demeanor
More on Losers
A primary reason for trading failure is the ease one can begin trading. Just complete forms, send money to a broker and you are ready. Or are you? There is no check into your trading abilities, psychological strengths/weaknesses or money management skills.
Think about the education required for other professions. Look at the education an attorney, a doctor or even a craftsman must go through. Trading is no different you need to learn first. People risk thousands of dollars trading, but often don’t possess the experience, education and organizational ability to trade right. A trader’s goal must be to become efficient and profitable. This is only achieved through education, constant self-evaluation and examination of results.
Read the Zero-Sum Article that explains more on winners and losers.
What These Traits Actually Measure
Druckenmiller’s “it takes courage to be a pig” is the compressed statement of what separates the winning trait list from the losing trait list. Being a pig, holding a winning position long past the point where it is comfortable to hold it, requires the confidence and discipline that the winning traits describe. The losing traits, emotional, anxious, wants action and excitement, describe the profile of someone who will exit winning positions too early to relieve the psychological discomfort of watching accumulated profits fluctuate.
The contrast between the two lists is not a personality judgment. It is a behavioral description of the specific patterns that systematic rules are designed to address. The losing trader’s emotionality and lack of discipline produce exactly the decisions that systematic pre-commitment prevents: exiting before the stop fires, overriding the entry signal based on current market feeling, and abandoning the approach during drawdowns when anxiety peaks. The winning trader’s calm and discipline are what make rule-following possible in the conditions that most strongly demand deviation from the rules.
Excellent recordkeeping appears on the winning list for a specific reason. A trader who does not keep records cannot evaluate whether their results come from their system’s edge or from variance. They cannot identify the specific conditions where they deviate from the rules. They cannot distinguish a losing period that is within the system’s expected distribution from a losing period that indicates something has changed. Recordkeeping is the feedback mechanism that allows constant self-evaluation and examination of results, which the page identifies as the only path to becoming efficient and profitable.
The ease of beginning trading is the inversion of what every other skilled profession requires. An attorney spends three years in law school after four years of undergraduate education before being permitted to practice. A physician spends four years in medical school plus three to seven years of residency. A tradesman completes years of apprenticeship. A trader completes forms and sends money. The barrier to entry is near zero. The knowledge and discipline required to trade profitably is comparable to any other skilled profession. The gap between the barrier to entry and the knowledge required is where most retail trading losses originate.
Frequently Asked Questions
What does Druckenmiller mean by “it takes courage to be a pig”?
That holding a winning position through its full extent, capturing the maximum available profit from a trend, requires resisting the psychological pull toward taking profits early. The trader who exits a winning position because they are uncomfortable watching accumulated profits fluctuate is not being prudent. They are being emotionally driven. The pig who holds through the fluctuation, who has the confidence that their rules define the exit correctly and the discipline to wait for the exit signal, captures the full trend. It takes courage because holding feels wrong, even when it is right.
Why is recordkeeping in the winning trader’s traits list?
Because without records, a trader cannot distinguish their system’s performance from their execution’s performance. Records reveal when rules were followed and when they were overridden. They document the specific conditions that triggered deviations from the system. They allow comparison between actual results and what the system would have produced if followed consistently. Constant self-evaluation and examination of results, which the page identifies as the path to profitability, is impossible without the data that recordkeeping provides.
Why is the low barrier to entry in trading a problem rather than an advantage?
Because it allows people to begin trading with real capital before they have developed the knowledge, psychological preparation, and risk management discipline that profitable trading requires. Every other skilled profession requires demonstrated competence before practitioners are permitted to practice. Trading has no such gate. The low barrier to entry means that most new traders begin risking real money during the period when their skill level and psychological preparation are least developed, which is the combination most likely to produce large early losses.
Trend Following Systems
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