Jack Schwager’s interview with Steve Lescarbeau from Stock Market Wizards provides another fantastic look at a brilliant trader. Without ever discussing the system he uses, Lescarbeau is able to offer up some very insightful advice for traders studying any approach. Much like Mark Minervini, I was very impressed by Lescarbeau’s passionate drive to be the very best stock trader in the world.
Top Five Quotes From Market Wizard Steve Lescarbeau
“I think that a physical science degree is as good if not better than a financial degree because it trains you to be analytical. If there is anything I am really good at, it’s being a researcher. I’m not a particularly good trader.” – Steve Lescarbeau
I found it ironic that Lescarbeau doesn’t consider himself a good trader, despite the fact that Schwager later notes that Lescarbeau has the most impressive returns of anyone Schwager had interviewed.
I like Lescarbeau’s point that having a physical science degree taught him to be analytical. I have a similar background and can absolutely see the relation. Also, similar to Lescarbeau, I am finding that I prefer doing the research to actually trading. Trading makes me very nervous, but research is relaxing for me. This is a big part of the reason I have shifted my focus to system trading.
“The same qualities that make you a successful person in whatever you’re doing are going to make you successful in trading. You have to be very decisive, extremely disciplined, relatively smart, and above all, totally independent.” – Steve Lescarbeau
I like to think that I have all of those qualities, yet I never think of myself as very successful. I probably just haven’t gotten there yet.
“I may take partial profits on a position, or not go fully long on a buy signal, but I will never hold after a sell signal.” – Steve Lescarbeau
I’ve often seen quotes about following your rules without fail, but also knowing when to break them. That was always confusing to me, but I really like the way Lescarbeau presents it. He is only willing to break his rules on the conservative side, thus protecting his capital. He never breaks his rules to take on more risk. This is a brand new concept for me, and I really like the idea.
“Ninety percent of my success is due to not doing things that are stupid. I don’t sell winners; I don’t hold losers; I don’t get emotionally involved. I do things where the odds are in my favor.” – Steve Lescarbeau
I have a similar quote I say all the time at work. Nothing I do there is very complicated, I just show up every single day to do the work. Lescarbeau seems to look at trading in a similar manner. If you simply avoid the mistakes that most people make, you’re already ahead of the game.
“Don’t confuse activity with accomplishment. I think one mistake novice traders make is that they begin trading before they have any real idea what they are doing. They are active, but they are not accomplishing anything. I hardly spend any time trading. Over 99 percent of my time is spent on the computer, doing research.” – Steve Lescarbeau
This is exactly what I have been doing for the past few month (hence so few posts). Instead of continuing my losing streak, I decided to take a break and bury myself in research for a while. I’ve looked into dozens of trading systems and indicators. Before I can trade successfully, I need to find an approach that fits my needs. It helps that I enjoy the research.