ZF Capital

There is no freedom from risk. There is no freedom from fear. There is no freedom from pain. There is no freedom from the possibility of failure. But there is freedom in acceptance of all of these as part of life, and moreover, as the least important part of life.

– Victor Sperandeo, Trader Vic — Methods of a Wall Street Master

To be a successful trader, you have to be able to admit mistakes. The person who can easily admit to being wrong is the one who walks away a winner.

– Victor Sperandeo, The New Market Wizards by Jack Schwager

Consistent profitability is a corollary of the preservation of capital. Now what do I mean by a corollary? A corollary is an idea or a principle which is a direct consequence of another more fundamental principle. In this case, consistent profitability is a corollary of the preservation of capital because capital isn’t a static quantity-it is either gained or lost. To gain capital, you have to be consistently profitable; but to be consistently profitable, you have to preserve gains and minimize losses. Therefore, you must constantly balance the risks and rewards of each decision, scaling your risk according to accumulated profits or losses, thereby increasing the odds of consistent success.

– Victor Sperandeo, Methods of a Wall Street Master

Lorenzo Ghiberti, the fifteenth-century sculptor, had all the character traits necessary to be a great day trader: dedication, focus, concentration, determination, and willpower to complete a task. Ghiberti spent 48 years sculpting four bronze doors for the Baptistery of San Giovanni in Florence, Italy. Imagine working on a single project for 48 years. With no one to talk to for most of the day, the painstaking work would seem endless.

In many respects, the willpower and mind-set of a trader is not too different from that master sculptor. Both work alone, in focus, concentrating on minor detail, forming the details in their minds, then bring it forth. They are both very individual, solemn businesses, and the results are rather slow and plodding, yet they can add up to a masterpiece.

– Victor Sperandeo, Trader Vic II: Principles of Professional Speculation

A doctor can evade the truth that he or she made a mistake and tell the relatives of a deceased patient, “I did my best, but….” A lawyer can drink too much the night before his final address to the jury, and when he loses, convince himself and his client that the jury was biased. But a trader has no one to convince, no one to lie to. The market is the final judge, and it issues its verdict every day. I therefore think that understanding how the false pride system works can be crucially important to a successful and lasting career as a trader, speculator or investor.

– Victor Sperandeo, Methods of a Wall Street Master

Neurotic traders use trading for the “high” it gives them. These people have a need to be always on the edge. They trade during the day, bet on professional sports at night, go to the racetrack on weekends, and even plan their vacations around gambling. For them, the thrill is in the bet, not the outcome. Their mind is always on the next game, the next trade, wherever money can be won or lost. They have no goal beyond the moment…That is the underlying psychology of impulsive behavior, and it is the exact opposite of the healthy psychology of successful traders.

– Victor Sperandeo, Trader Vic II: Principles of Professional Speculation

My objective as a trader has always been to obtain and maintain the freedom secured by financial independence: consequently, my goal has been to make money consistently, month in and month out, year after year. I have always approached my career as a business, and a prudent businessman wants to first cover his overhead each month and then concentrate on achieving a steady growth in earnings. Rather than striving for the big hit, I protect capital first and work for consistent returns, and take more aggressive risk with a portion of profits. Not accidentally, the big hits still come along; but they come along without excessive risk.

– Victor Sperandeo, Trader Vic – Methods of a Wall Street Master