Trading success: is there a magic formula?
By Paul Reid
12 January 2024
Ever wondered if trading is right for you? Perhaps the real question is: are you right for trading? Is there a magic formula that makes one trader successful while others struggle?
Some believe a specific mindset or character separates the top traders from the rest. Others insist that it’s nothing more than getting the proper education. Then there are those who say “money makes money” and that you'll never make any if you don’t have much to begin with. And let’s not forget plain and simple luck: the right place at the right time is a must, right? With all that in mind, I have a story to tell you, and it starts in Omaha, Nebraska, in the USA.
A boy was born into a world gripped by the shadows and despair of the Great Depression. With a sharp mind and a curiosity as boundless as the prairie skies, this boy began his journey not with a silver spoon but with a desire to conquer certain numbers that seemed to control grown-ups like strings on a puppet. Numbers that dictated who worked until they died and who lived a better quality of life.
At the tender age of six, while other children played with toy soldiers and marbles, he chalked up numbers on his grandfather's grocery store signs, already playing with profit margins and costs.
Everybody knew the boy was a little different. His favorite pastime was business, selling gum and soda pop, his young eyes gleaming with the thrill of every profit. At 11, while others his age were lost in comic books, he took his first daring dive into the stock market, investing in three shares of Cities Service preferred stock for himself and three for his sister. His life was already on a clear trajectory, but his path wasn’t paved with gold.
As a teenager, he knew the bitter taste of rejection from Harvard Business School. But in the hallowed halls of Columbia, two wizards of investing, Benjamin Graham and David Dodd, changed everything. They gave him focus and structured purpose, and his knowledge grew until his understanding of what drives the markets was almost supernatural.
In the years that followed, he faced down the dragons of risk and market volatility and year after year, emerged victorious while others around him faltered. Soon came bigger dreams than simply trading the markets, and he started his first partnership. His office was his bedroom and his partners were his family — humble beginnings by all accounts.
Years passed by and his eye for investing grew even sharper. He could feel the flow of the economy, ride the tides of trends, and preempt the winds of change. The partnership flourished, and with guile, he took control of a struggling textile firm, transforming it into a mighty fortress and a beacon of success that shone across financial realms.
Milestone after milestone, his wealth soared to the heavens, yet his feet stayed firmly on the ground, his frugal lifestyle a testament to unyielding principles.
When the world began to ask who this titan of investment was, he was already a self-made billionaire. He was none other than Warren Buffett, the Oracle of Omaha.
So why am I telling you this? At the beginning of this article, I spoke about a magic that makes one trader better than the other.
a specific mindset or character
the right education
plain and simple luck
money making money
Warren Buffet had the right mindset from the start, that’s for sure. His character and ambition led him to pursue the right education, even when early attempts failed. The lessons learned helped him recognize the great potential of a struggling New England textile company when others didn’t. Some say he was lucky, but most successful people say they make their own luck.
Berkshire Hathaway became a money maker, from which Buffet built an empire and acquired a net worth of over $121 billion (USD), and he did it thanks to having all four aspects of success on his side. But he didn’t start with all of them. Initially, he only had the right mindset, which set him on the road to acquiring the other three.
So again, I ask: is trading right for you, and are you right for trading? If you’ve got the right mindset, it’s time to start learning, and the best way to ‘learn’ is to ‘do.’ And with Exness’ 24/7 support and educational materials at your fingertips, you need only time and the eye to spot the opportunities around you. Change starts within.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.