Paul Tudor Jones once shared a story that I think about a lot. When he was 38 and already one of the best traders in the world, he had a terrifying realization... that he had no idea why he'd been so successful.
There are two unpleasant experiences that every trader will face in his lifetime at least once and most likely multiple times.
First, there will come a day after a devastatingly brutal and agonizing stretch of losing trades that you'll wonder if you will ever make a winning trade again. And second, there will come a point when you begin to ask yourself why it is you make money and if this is truly sustainable.
In a moment of frightening enlightenment, I knew that I really did not know exactly how and why I had made all the money that I had over the prior 17 years. This threw my confidence for a jolt. It sent me down a path of self-discovery that today is still a work in progress.
What he found was that he’d spent years building up bad habits (what he calls “inimical traits"). He was talented enough that they stayed hidden for a long time until the market finally exposed them and it led to the worst year of his career in ’93.
Many of us are blind to key psychological elements of ourselves; that’s why people go to therapists or get outside help for any number of problems. That was what happened to me in 1993. Then, a combination of people helped me discover that my trading style had incorporated some inimical traits, completely unbeknownst to me. These bad habits were responsible for the worst year of my career, and the only one that came close to being negative for my trading accounts.
First, this shows that you may never fully understand the source of your own success, which means you may not be able to reproduce it reliably. And second, it’s a reminder that most people are far less self-aware than they think. It took Paul 20 years and a group of people around him to call out the bad habits that had been setting him up for serious failure.
As he put it:
It's not so easy to see yourself, and it's even harder to clearly describe what you might see in yourself.