John Arnold on What It Takes To Be a Great Trader

Added on by C. Maoxian.

Born in 1974, Arnold is a fellow Gen-Xer.

“I think at least for my style of trading there was a number of characteristics that I thought were important. One was having this right balance between confidence and humility. There's a confidence level that's required to say the market's wrong because the market's usually right. Right? But there requires to be humility of saying sometimes I'm wrong and the market's right. And if you don't get those in balance, then you know you're going to blow up very quickly.

I think another trait from good traders is almost this detachment from emotions. And so there's this phrase that fear and greed determine markets. And those are two very strong emotions. And I've seen traders who, when they're in that high stress period, either because of fear or greed, they change their pattern. They change their process. And so, for better or worse, I think I'm classified by being able to be detached from my emotions.”


“My parents used to ask me, what do I want to be when I grow up? And I said, I want to be a millionaire when I'm 30. And they said, no, that's not a job. What do you want to be? I don't know. But I want to get to be a millionaire when I'm 30. And in 1989, I'm 15 years old and Liar's Poker comes out. And this is a very famous book. It tells the story of eighties Wall Street through the lens of Salomon Brothers’ bond trading desk. And, you know, this is like the first introduction I have to what Wall Street is. Reading this book, I'm like, that's where the game is. It's like the Willie Sutton line about why do you rob banks? It’s because that's where the money is. Well, why do you want to go work for a bank? Because that's where the money is. In 1995, I didn't get the Wall Street job. And so the closest thing I got was a job at Enron, which was I was developing this merchant bank around the natural gas industry, which was in a very interesting time in the mid-nineties. And I said, Oh, that's the closest thing I got. I go do that for a couple of years in Houston and go back to business school and figure out what I want to do.”


So we compounded over ten years over 100% a year on average.”