This is such a great quote from George Soros that I wanted to share it today.
“What is there to say? Risk taking is painful. Either you are willing to bear the pain yourself or you try to pass it on to others. Anyone who is in a risk taking business but cannot face the consequences is no good.”
That sums it up so well. Holding positions is torturous and some ways to mitigate it are:
- Using stops
- Managing position sizes
- Managing/avoiding leverage
- Staying informed
- All the other ways you manage stress in life, like meditation
Stanley Druckenmiller said he was a better trader than his mentor Soros but that Soros’ superpower was his ability to bet big on a good idea. To some extent, that’s innate. At the same time, it’s a muscle that can grow by trading small, building confidence and knowing when everything is aligned.
One thing that few people talk about is anticipating the pain and I find it to be radically effective. You may believe with the highest conviction that the euro is going to 0.90 or that the US dollar has topped but if you position accordingly, you have to remember it won’t be a straight line. It will be a windy, painful road with headlines and price action that go against you. Before you ever put on the position, anticipate the pain that will go with the journey and embrace that it’s part of the path. When it comes, it won’t be a surprise and that will give you a bit more fortitude to withstand it.