The Mind of a Trader – Paul RT Johnson Jr.

“Great traders focus on their system and let the profits take care of themselves; poor traders focus on the outcome and let the system take care of itself.”

That sentence pretty much sums up the logic behind Alpesh Patel’s entire chapter interviewing floor trader Paul RT Johnson Jr in his book The Mind of a Trader. It also embodies the mindset I have spent the past eight years working to develop. Everyone I have read from Jesse Livermore to Gerald Loeb to Steve Burns has emphasized this idea of focusing on your system, whatever your system may be, and not concerning yourself with the outcomes. Although I agree with this in theory, I have also found it is quite difficult to actually do.

I found the first third of this chapter to be the most interesting. Patel and Johnson discuss the three types of fear associated with trading: Missed Opportunity Fear, Fear of Success, and Fear of Losing. Because I have been conditioned to cut my losses quickly, I have never really experienced the Fear of Losing. I don’t struggle with a Fear of Success either. If anything I have a fear of not being successful.

The fear that really stuck out to me was the Missed Opportunity Fear. One thing that I have noticed after each of the past three Follow Through days is that I do start to worry that the market is going to take off without me. Johnson says that you should “Remind yourself that in trading, to be successful means waiting for just the right moment.” I have always struggled with being impatient and it appears to be one of my biggest trading flaws. It is something I will work to improve.

The chapter concludes with a discussion on being passionate and really loving what you are doing. I think this has a broad application for anything you do. My problem has never been a lack of passion, but rather the opposite. I feel like I have too many things that I am passionate about. I have never had the problem of having to force myself to analyze the market. My problem is generally finding the time to do it. I view the entire market as a huge multiplayer game that I am completely addicted to. I can’t wait to get more experience points and start racking up rubees.