The Primacy of Discipline (w/ Rick Bensignor) | Mental Game of Trading


My name is Rick Bensignor. I’m CEO and founder of the Bensignor Group. This is a company that consults to institutional
Wall Street portfolio managers. Also, last year, started an individual investor
newsletter to help them get access to models that typically only institutions have. And I also do performance coaching for financial
advisors on the Street. So when we talk about discipline as a trader
and kind of preparation for what you do, I think it’s very rare to see somebody approach
the markets any differently than they approach life. Trading the markets is done in a very similar
fashion as the way you approach life. You tend to be a gambler in life or a gambler
in the markets. You don’t find a gambler in life, somebody
who takes risks a lot, and then comes the marketplace, and is super conservative. Conversely, if you’re pretty darn conservative,
you don’t generally go to the market and start betting the house on things or trading you
know, lots of commodity futures. The way you run your life is generally the
way you trade. So discipline is super important, because
it is the belief in yourself, in your capabilities, that ultimately leads to the success or the
failure you have. Part of the success that
the best traders have is actually getting out when they say, this trade is not working. They don’t hem and haw, they don’t start praying,
they don’t go to church or synagogue. They just get out. That’s a discipline that over time, you prove
to yourself that you can stick to what you set out to do. Because lots of trades– if you have the mindset
that what you’re committing capital to is intended to be a short term trade– this is
not something I’m going to have on a year from now. This is taking advantage of some anomaly in
the market that’s got something mispriced. And I think in the next few weeks or few months,
whatever I’m buying here, I can sell out to here. But I have no idea long term if it’s a good
buy or not. But there’s money to make here. So I go with the intention of this being a
trade. If the trade starts going against me, but
it’s still within the parameters that I set out when I first got into it, I’m still OK,
even if it’s down against me. But if it starts going against me more than
I would have ever anticipated, I need to get out. And what most people do is go, eh, this will
be an investment. We’ll hold this, it’ll come back. Well, sometimes that works. But take an aim like GE now. Let’s say you’re long at 30 bucks, and you
say it’ll come back but it’s trading at 10. It may or may not come back, I don’t know. But if you had known at 28 it was time to
get out, because it was only supposed to be a trade to get to 35, and it’s not working,
you’ve got to have the discipline to just get out. The more you take your losses and show yourself
that you have discipline and you’re readily willing to take losses, the more success you’ll
have over time, because you trust yourself. You know that if you get in a sticky situation
you still have the fortitude to act rashly and get it out when your gut is telling you,
this is just not working. So this idea of discipline actually ends up
being a tremendous ingredient to success. And you will rarely find any trader on Wall
Street who’s made good money who does not have discipline.

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