Market Wizard Ari Kiev

market wizards

market wizardsIn Stock Market Wizards, Jack Schwager continues his theme of closing each of his books with a trading psychology interview. In this book, he interviews Ari Kiev, who works with Steve Cohen‘s traders, as well as Olympic athletes. Kiev provides some excellent insight into success in general that can be applied to any aspect of life.

Top Five Quotes From Market Wizard Ari Kiev:

One of the therapies for depressed and suicidal patients is to help them become more self-reliant and assertive. These same skills are applicable to athletes and traders as well. – Kiev

This was the first of a number of interesting comparisons Kiev made between athletes, traders, and other psychiatric patients. The big take-away for me was a reminder that regardless of what you are doing, it takes an enormous amount of effort to become a world-class talent.

More specific to this reference, I can see why Kiev would want to encourage traders to become more self-reliant and assertive. This would give them a feeling of control and responsibility for their outcomes. This would likely remove the buy and hope aspect of trading and force the trader to focus on the things that they can actually control, like risk and position size.

If you’re going to make it, then you have to start today to do those things that are compatible with what someone who is performing at that level is doing. Most people don’t believe it is possible and settle for not succeeding, or at least not succeeding at the level they have chosen. You have to be willing to put yourself on the line and go for it, even with the thought that you will feel humiliated if you don’t make it after you have promised that you would. – Kiev

This quote had a big impact on me. It makes perfect sense and reminded me of little league coaches telling me that you’ll play how your practice. Kiev takes that a step further by adding that you have to believe success is possible or you are doomed from the start.┬áIn the interview, he discussed how he forces traders to set lofty goals for themselves and then use those goals to determine what they need to accomplish on a daily basis.

This is one of the biggest struggles I face in both trading and life in general. The name of this site was actually a derivative of the fact that I didn’t like talking about stocks at work because I was afraid people would point out what I didn’t know. That type of fear has held me back for years, so it is enlightening that Kiev commented on it.

Promising the result commits you to doing it and leaves you no alternative but to do it if you are going to live by your word. Letting others know that you have set a goal and are committed to achieving it makes it more likely you will achieve that goal, whether it is in the realm of athletics, trading, or something else. – Kiev

This goes hand-in-hand with the previous quote. Forcing the traders he works with to commit to a goal makes them more committed to achieving it than if they didn’t set a goal. This is a common practice when it comes to goal setting, however goal setting is not really a common practice in trading.

I’ve done a terrible job of setting goals with respect to my trading. At this point, I don’t even have a time frame to begin trading again. I’ve been talking for months about starting a weekly podcast interviewing traders in an attempt to learn more, but still haven’t started that.

Ideally, I’d like to release my first podcast episode by September 1 and start trading a systematic strategy on January 1. The problem is that setting those goals scares me. It’s much easier to not commit to them and then not have to deal with the disappointment of coming up short.

Some traders have trouble maintaining the discipline that made them successful once they get ahead by a certain amount. – Kiev

I was a perfect example of this last weekend in Atlantic City. I thought I had a pretty good system lined up. I had planned to play roulette, making table minimum bets that had a 50% chance of winning and payed 2-1. I figured that doing that, I could break even long term and cash in on free drinks while I played, which would have been a net positive.

The problem was that when I hit a lucky streak and found myself with a bit more money, I started increasing my bet size. This reckless altering of the system led to the inevitable losing streak wiping me out. Whoops.

The thing is, I’d like to say “lesson learned” and move on, but I’m not sure I learned my lesson. I think that kind of recklessness is built into my nature. When I trade, I will need to always be on high alert in order to avoid falling prey to letting my discipline slip.

Being preoccupied with not losing interferes with winning. Trading not to lose is not a good strategy. You need to trade to win. – Kiev

This defines my trading in the summer and fall of 2012. Every time I purchased something I was scared that it was heading down, and pretty much everything I bought went down. The problem was that I let that mess with my head and was trading scared, which exponentially impacted my results.

Coming back to the table with a proven systematic strategy, a risk management and position sizing plan, and enough capital to weather any negative trades, I am now much more likely to win because I am trading to win rather than hoping not to lose.