Highlights of this Chapter
Chapter 4 of The Mindless Investor was an interesting look at how Tyler got his start and progressed as a trader and we highly recommend taking a look at it. In keeping with the more instructive nature of this series of reviews, we chose to move ahead to chapter 5, which builds on the idea that trading success is more about self-mastery than market mastery. Understanding that systematic, methodical training can make you a successful trader is possible and it all starts by looking at the world the way a trader would.
Key Point #1: To be a trader, break free of the “investor” mindset
In order to be a successful trader, you have to be willing to move in and out of a position when given the right signals to do so. Because traders speculate on price movements, they pay attention to the price “noise” investors try to avoid.
Key Point #2: Successful trading takes dedicated training
While timing markets is often considered hard to do, in reality many things are hard to do until one knows how to do them. Anyone with money is allowed to participate in the markets, however that easy access is dangerous for most people and their capital. The biggest hazard for most traders is not having committed the time, effort and discipline it takes to learn how to trade well.
Key Point #3: Take it one step at a time
Learning the “what” of trading well is far simpler than learning the “how”. One of the biggest cautionary notes is that before stepping into any kind of speculative activity, know how much you can afford to risk. Take time to learn and become confident at what trading involves before taking bigger risks in the market.