Читать книгу Trend Following - Ritholtz Barry - Страница 12

Wide swaths of the population think as investors in search of a bargain. However, if you were to learn the most consistent market winners call themselves traders, you would want to know why. Simply put, they don’t invest – they trade.

Investors put their money, or capital, into a market, such as stocks or real estate, with the assumption that value will always increase over time: “I am long and never wrong!” As value increases, their investment and psychological reinforcement also increase. But investors have no plan when their value drops. They hold on to their investment, hoping the value will go back up. Investors succeed in bull markets and lose in bear markets – like clockwork.

This is because investors have zero plan to respond when losses mount. They always choose to hang tight and continue to lose. And if mainstream press continually positions investing as good or safe and trading as bad or risky, average investors will be reluctant to align themselves with trading. Better to trust the mutual fund, and government systems, and fall asleep.

A trader, on the other hand, has a defined plan or strategy to put capital to work to achieve profit. Traders don’t care what they buy or what they sell as long as they end up with more money than their starting capital. They are not investing in anything. They are trading. It is a critical distinction.

Trader Tom Basso believes a person is a trader whether or not he or she is trading. Some mistakenly think they must be in and out of the markets every day to call themselves traders. What makes someone a trader has more to do with their perspective on life more than making a given trade. For example, a great trader’s perspective must include extreme patience. Like the African lion waiting days for the right moment to strike its unsuspecting prey, great trading strategy can wait weeks or months for the right trade with the right odds, and only then pull the trigger.

Additionally, and ideally, traders will go short as often as they go long, enabling them to make money in both up and down markets. However, many traders won’t or can’t go short. They struggle with the counterintuitive concept of making money on market declines. I would hope the confusion associated with making money in down markets will dissipate, but it won’t. Human nature believes in only up.