I just watched (for the 4th time) the movie titled 21 last weekend on HBO, inspired by a true story.
http://www.youtube.com/watch?v=ZRzZX2aN3I0
The story is about the most gifted student in MIT who is very good in numbers, who later joined a team lead by their professor, gambling in Vegas on weekend specifically on the Black Jack (21) card game...
So what's the catch here? One thing I love about this movie is because the sense of discipline that the professor (Kevin Spacey) imposed on his students when they are out for business in Vegas...
His tagline is always - "Remember, we do not gamble, we count cards..."
Statistically speaking, the black jack game is beatable. It is a game of probability, just like trading which is far more easier than this Black Jack...
Looking at the complexity of probabilities that they have to go through in order to beat this game, I can't stop thinking then why do us traders couldn't figure out the probability in trading? Isn't trading is much simpler?
Later after looking back at the movies... I discovered some answers...
The main answer is due to emotions... fear vs greed...
For instance, when you start letting your emotions overtaking your decision rather than pure rationale, statistic and signals, you are making judgment base on what you feel rather than what you see. Just like when Ben went too far and thought he could beat it all and let his emotion took control, when the sense of greed is conquering his mind, he purely forget about the fear factor until later when he was caught by the Loss Controller (Laurence Fishburne) of the Casino.
Bang! By that time... it's already too late to pull out...
If only they stick to their TECHNICAL plan of their operation without greed and emotions, they would have stay unnoticed under the radar for a very long time... reaping all the potential profits along the way...
So, in summary, I believe the best lesson we traders could learn from this movie is to appreciate the importance of operating in a discipline & mechanical manner rather than emotional manners.
As human though, I must say that this is rather easy said than done... you knew it's wrong but you still do it... and that's the real problem.
And unlike black jack, the probability of price movements in the market is very much depending on human's behavior rather than static number written on the cards. That is why the game of trading is yet to be cracked by anybody since even the investment tycoons (ie George Soros & Warren Buffet) made a huge loss once in a while when they got it wrong.
Unless you can strictly adapt the self-discipline definition as below, I guess the battle will continue...
Self discipline (Wikipedia)
Self-discipline refers to the training that one gives one's self to accomplish a certain task or to adopt a particular pattern of behaviour, even though one would really rather be doing something else. For example, denying oneself of an extravagant pleasure in order to accomplish a more demanding charitable deed. Thus, self-discipline is the assertion of willpower over more base desires, and is usually understood to be a synonym of 'self control'. Self-discipline is to some extent a substitute for motivation, when one uses reason to determine a best course of action that opposes one's desires. Virtuous behaviour is when one's motivations are aligned with one's reasoned aims: to do what you know is best and to do it genuinely gladly. Continent behaviour, on the other hand, is when one does what one knows is best, but must do it by opposing one's motivations.[3] Moving from continent to virtuous behaviour requires training and some self discipline.
Just like soldiers who are sent in troops and battalions of thousands of people, if they are not disciplined and systematic on the battlefield, they will lose regardless of how many are sent to the war zones...
In short - > System & Discipline Rules in whatever you do!... or you are subject to your own failures... Agreed?
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