Financial markets are vast, and the ways we can interact with them are almost limitless. However, a few things are clear: there are far more losers than winners in the market. The ways to lose, especially as active traders, are much easier to find than the ways to win. One of the most important things a trader needs to do to put him or herself in the winners’ circle is to clarify who that person wants to be as a trader.

Or, to put it another way, what do you want from the market?

You get what you want

Ed Seykota famously said “Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.” If you google this quote, you’ll find the trading community has responded to it with the full range of human emotion. You’ll find self-proclaimed experts (who are no doubt net losers in the market) confidently proclaiming things like “…the quote is mostly bullshit and should be disregarded…” while others spend a lot of time plumbing the depths of possible meanings. It’s easy to get lost here.

I think I can confidently go on record with some insight into this quote, based on my experience going through Ed’s Trading Tribe process in New York City many years ago. He means, exactly and literally, what that quote says, and he means it to extend beyond financial markets. The results you and I are getting from our life experience is exactly what we want.

Now, this thinking leads to some detours that might be unacceptable to some of you. For instance, if you have an important client meeting, but the car won’t start and the highway is blocked that morning so you miss the meeting—guess what? On some level, this was the result you wanted and all of it, yes, even the protestors blocking the highway, was your responsibility. (And if you protest that this is silly, the response you’ll get (trust me) is that you could have taken a different path or set the meeting at a different time.)

How does it work?

We’re not going to create a whole philosophical framework for reality in less than a thousand words today. Chances are, you already have one that works for you, so let’s work with it. Do take a bit of time to clarify that view—is the world all cause and effect and only material things are real? Is it all consciousness and maybe more malleable than anyone thinks? Somewhere in between?

I think Ed’s conception of this quote suggests a worldview further toward the latter, but if that offends you, embrace the message of radical responsibility. That’s the bottom line, anyway. You ultimately get what you want, so it’s important to understand what you want.

How does it work for traders?

This can play out in obvious or not-so-obvious ways. I often tell the story of a good friend of mine who loved to develop systems; that was the aspect of trading that really excited him. He loved the research, the detailed coding and refining, and creating a system that would beat the market. When we met, he had done that about ten times, in different markets and different timeframes.

But he was net losing as a trader. Why? Read this again: he loved to develop trading systems. Once he moved them into production (even though a robust algorithmic process includes ongoing development), he was far less interested and resentful of the time suck. He also did not enjoy trading! So he found subtle ways to sabotage his winning systems and put himself where he wanted to be: right back at the drawing board creating a new system.

I fixed him easily. How? I simply paired him with another trader who was an incredibly poor system developer, but who was well capitalized and had the iron discipline to follow a set of rules. You can easily see this was a match made in heaven. (Last I heard, many years ago, they’d blown through several sets of expanded financial goals and were retiring.)

What do you want?

Do you want to trade because it is the last bastion of conflict in your civilized world? Is it a way to express your masculine drive to expand and conquer? Do you want to show the world how smart you are? Or show your parents or some teacher or coach who didn’t understand your potential? Do you want excitement? Do you want to solve the puzzle? Do you want to fight? Do you want to be exposed to suffering that is not physical and is limited in time, for whatever reason? Do you want the feeling of potential and possibility, and to be able to fantasize about winning the lottery?

Most of us aren’t very aware of our true drives and motivations. I can tell you that some of those motivations in the previous paragraph are more naturally aligned for success than others. But, if you truly understand who you are and what you want, any of those motivations could be harnessed to lead you to success. In my next blog post, I’ll suggest some ways to gain that understanding, without decades of therapy or climbing a mountain to find the guru.