You will all remember Société Générale’s ‘rogue trader’ scandal when it broke costing the bank £3.6bn. When it came to light immediately there were questions about the impact it would have on the global financial world. The stock market went through a period of turmoil however analysts where split on whether the cause was down to the actions of the trader. The incident led onto other huge financial institutions revealing huge losses and talks of an imminent recession were talked about.
Other interesting facts were also revealed about Jerome Kerviel’s activities. The big one was that he didn’t personally profit from this trading, therefore it begs the question why would he engage in activities which resulted in the bank losing 6 million euros? If there is no profit for him then why do it?
The reason is that successful traders aren’t driven by financial incentives and instead it can be placed with the experience. They do it for the buzz, the thrill and excitement of playing the game (a serious game), they love what they do and will have a passion for trading day in day out. They will love competing with others and performing better than them.
Traders love the game and the way they work isn’t in currency terms and more points, they are playing a maths game and are looking for that advantage over the competition.
The game for a trader can be described as about being right or wrong, it doesn’t matter whether a trader losses 1 million or 10 million, it is the same feeling for a trader. The feeling of being correct or not is always the same.
To be a successful trader and to do it long term the key is accepting when you make a loss and being able to emotional recover and continue trading, the best will do this almost immediately.
The key to success for traders is when they do make mistakes is to make sure they accept that it was a mistake and that they understand where they went wrong so they don’t make the same mistake and to properly assess an opportunity. Traders hate to miss an opportunity and will take more of a risk, often trader’s trade out of boredom knowing full well that the return isn’t great but will do it anyway. If they were to hold off sometimes they would probably make a lot more money but as we know, it’s not about the money.
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