The art of trading: can anyone trade?

The argument over whether it’s possible to learn the art of trading or whether you must be born with certain skills have probably been around since the first exchange appeared. Some people are sure that trading is nothing more than big-money gambling, and that success in the market is just a matter of luck. One amazing experiment conducted in the USA during the early 1980s proved convincing: literally anyone can be taught to trade.

Skill or talent?

On one ordinary Chicago night in 1983, the partners and co-owners of a prosperous financial firm, William Eckhardt and Richard Dennis, were debating this interesting topic. Will was unyielding, claiming that success in the market is impossible without inborn instincts, intuition and certain psychological traits. Rich, on the contrary, insisted that anyone can trade: it’s all just a matter of good initial training, competent tutors and self-discipline. It ended up with the friends striking a bet – fortunately, they had enough money to test their ideas out in an experiment…

Dennis was one of the most renowned traders in Chicago at the time – he wasn’t called the King of Futures for nothing. He had started trading back in high school, and earned his first million by the time he was 25. He sincerely believed that he had achieved success with nothing but persistence and hard work – and generally anyone could duplicate his feat. Richard got his college friend Eckhardt involved in trading, and the latter quickly shot up: he was a long-time member of the CME’s Top-20 Traders list during the eighties. However, William liked to think it was not just thanks to his knowledge and friend’s support, but the skills he was born with.

A strange team

But let’s go back to our historic bet. All of the major newspapers published an ad the next morning inviting traders to work for a prestigious fund. The conditions were truly fabulous – a fixed salary plus a good share of the profits. Previous work experience didn’t matter. Thousands of candidates responded; Dennis and Eckhardt selected only 14. Only two members of the team had some trading experience, and it generally had not been very positive. All of the others had never traded before, even though some could be professionally linked to the market, with a bit of a stretch: a financial consultant, a stock exchange clerk, an accountant… and two professional card players. The experiment also involved a designer, an actor, a security guard and a guy fresh out of high school.

The participants passed an intensive two-week training course, after which they were immediately handed real live money for trading, with minimal oversight. The novices were instructed to follow a simple strategy: monitor the trends and manage risks thoroughly. The results were impressive. Within a year after the strange team started working – absolutely everyone made money, some raking in some incredible profits. Was it a coincidence? Hardly – over the next four years, the experimental team earned an average margin of 80% per year!

Everything is in our hands

One of the students, Curtis Faith, later wrote a book titled “Way of the Turtle” which immediately became a worldwide bestseller. “Turtles” is the nickname Dennis gave his students: he said he would raise traders the way Asians raise sea turtles. And he was actually good at that. For example, Faith earned more than 30 million dollars over four years! And that wasn’t the top result among the group. All of the “turtles” became millionaires and are still pursuing their financial careers to this day. This means – to the great joy of all novice traders – Richard Dennis won the bet.

“This was easier than I expected”, Dennis said later. “I proved my point convincingly, but… I’m even upset it turned out to be that simple.” His friend Eckhardt no longer argues: “Fortunately, I was wrong: anyone with at least average intellectual skills can trade successfully. Of course, learning all the rules is not enough – you have to make yourself follow them to the letter… But I am certain anyone could do this.”

So it turns out, everything is in our hands. Here is another disarmingly simple piece of advice from Eckhardt: “If you keep losing money – you must be doing something wrong. Analyze your trades, and you will most likely see your mistakes. All you need is to stop doing things that lead to losing money – and you will end up in the black,” Richard advises.

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