When asked what he thought the average trader did wrong, Tom Baldwin, who in the days before electronic trading was the largest individual trader in the Treasury bond pit, replied, “They trade too much. They don’t pick their spots selectively enough. When they see the market moving, they want to be in on the action. So, they end up forcing the trade rather than waiting patiently. Patience is an important trait many people don’t have.”
Perhaps the most famous book about trading ever written was Reminiscences of a Stock Operator by Edwin Lefèvre, which was published in 1923 and still remains remarkably pertinent now 90 years later. The book is a fictionalized autobiographical account of the trading experiences of a protagonist widely assumed to be Jesse Livermore. The book so accurately captures the mind-set of a trader that I recall when I first read it 35 years ago many people mistakenly assumed Edwin Lefèvre was a pseudonym for Jesse Livermore.
There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time.
From Reminiscences of a Stock Operator by Edwin Lefèvre
In Reminiscences the narrator states, “There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time.” ...