A good speculator is a lonely man
What does it take to become a successful speculator? It is likely that everyone would have a different answer to this question. But, Victor Niederhoffer has a very interesting take on this. In the preface to his book, The Education of a Speculator, Niederhoffer writes, “Join me in seeing how humdrum everyday experiences, combined with the wisdom of immortals, can help you appreciate and maybe even learn the nitty-grity of buying low and selling high.”
Buying low and selling high only sounds simple. It is never simple to execute this strategy and most speculators know that. As Niederhoffer points out, “A corresponding desire to stay in the middle afflicts most speculators, myself included, in their order placement. I am too frightened to buy something in the market when it goes straight down, and too frightened to sell it when it goes straight up. But after it has retracted a good part of the move, I am all to ready.” It is comfortable to be with the herd in the middle. Niederhoffer quotes what Francis Galton wrote some centuries back: “The vast majority of persons have a natural tendency to shrink from the responsibility of standing and acting alone. They exalt the vox populi… even when they know it to be the utterance of a mob of nobodies.” More than anything else, a good speculator needs to be a lonely man.
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