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Reality versus Fantacy

Reality 🆚 Fantacy

If a friend with little farming experience told you that he planned to feed himself with food grown on a quarter-acre (1,000 square meters) plot, you’d expect him to go hungry. One can squeeze only so much from a small piece of land.There is, how- ever, a field in which grown-ups let their fantasies fly—in trading.
A former employee told me that he planned to support himself trading a $6,000 account. When I tried to show him the futility of his plan, he quickly changed the topic. He was a bright analyst, but refused to see that his “intensive farming” plan was suicidal. In his desperate effort to succeed, he’d have to take on large positions—and the slightest wiggle of the market will quickly put him out of business.
A successful trader is a realist. He knows his abilities and limitations. He sees what’s happening in the markets and knows how to react. He analyzes the markets without cutting corners, observes himself, and makes realistic plans. A professional trader cannot afford illusions.
Once an amateur takes a few hits and gets a few margin calls, he swings from cocky to fearful and starts developing strange ideas about the markets. Losers buy, sell, or avoid trades due to their fantastic ideas. They act like children who are afraid to pass a cemetery or look under their bed at night because they are afraid of ghosts.The unstructured environment of the market makes it easy to develop fantasies.
Most people who grow up in Western civilization have several similar fantasies. They are so widespread that when I studied at the NewYork Psychoanalytic Institute, there was a course called “Universal Fantasies.” For example, many people have a fantasy in childhood that they were adopted.This fantasy seems to explain the un- friendly and impersonal world. It consoles a child but prevents him from being aware of a reality he’d rather not see—that his parents aren’t that good. Our fantasies influ- ence our behavior, even if we aren’t consciously aware of them.

In talking to hundreds of traders, I keep hearing several universal fantasies.They distort reality and stand in the way of trading success.A successful trader must iden- tify his fantasies and get rid of them. 

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