What I Learned Losing a Million Dollars (Jim Paul, Brendan Moynihan)

Trader's Library #2 · Speculation classics and biographies. The best book about how people lose, because it teaches you what not to do.

Author: Jim Paul, Brendan Moynihan · Original: What I Learned Losing a Million Dollars · Year: 1994 · Usefulness for traders: ★★★★★

What it's about

The story of a Chicago Mercantile Exchange trader who, after a run of success, lost more than a million dollars in soybean oil futures within a few months because he couldn't accept a loss. The second part analyses why people lose in the markets.

What it gives a trader

The authors reach an important conclusion: there are many ways to make money, but only one way to lose it – personalising a position, treating it as part of yourself and your ego. The book teaches planning the exit before the entry and telling trading apart from gambling.

Lessons for traders

• a trader who's right but losing is still a trader who's losing
• when a position becomes part of your ego, you stop seeing the market (the endowment effect, Atlas of biases #40)
• an exit plan made before the entry separates emotions from decisions
• a winning streak is the most dangerous moment (the hot hand, Atlas of biases #2)

What to watch out for

Short and direct. The part on crowd psychology is simpler than in academic books.

Discussion

The discussion takes place in Hetman Capital Club (in Polish). Join the discussion in the Club →

Navigation

← #001 Reminiscences of a Stock Operator (Edwin Lefèvre) · Library index · #003 A Man for All Markets (Edward O. Thorp) →

Educational content, not investment advice. The book description is my own summary and assessment, not quotations. Edition details were checked in catalogues and bookshops, and where there was doubt I said so plainly.