I like many other much smart people than me have opined at great length and depth about why traders fail. There are of course the usual suspect’s poor psychology, poor money management no system. All of these undoubtedly contribute to the downfall of many traders. However recently I was rereading the book A Man For All Markets which is a biography of the original quant Edward Thorp. This is the man who wrote the book on card counting generated a proof on options pricing before Black and Scholes and used to it make a fortune instead of winning a Nobel Prize and who went on later to become a very successful hedge fund manager.
One of the things that dawned on me on rereading this book was simply how entrepreneurial he was in the way he saw the world. He was constantly on the lookout for new ventures that he could turn his considerable intellect to and turn a profit. It then slowly dawned upon me that when I began to think about the profiles of successful traders I had read about one of the things that marked them as successful was that their worldview and its accompanying psychology was that of an entrepreneur.
Successful traders bring with them a certain spirit and that spirit has an accompanying psychology that is both very robust and very introspective in terms of dealing with the flaws that we all have. You have a package that combines a curiosity about business with a psychology that is quite capable of taking responsibility for one’s own actions. Individuals who struggle with trading seemed to lack this curiosity as well as a sense of responsibility.