As they grew in size, they likely came to a point where they could influence less liquid markets. Did the lower relative liquidity cause them to leave familiar markets, or did they learn to become more profitable because of their increased size?
Asset-based fees can have the hazard of incentivizing a manager to raise funds at the expense of performance (fees). Assuming these wizards have avoided that fate, are they great because a) they managed to adapt and generate returns that attract new money while others fail to transition to bigger size or b) were they more "honest" and saw the limits to their abilities/markets/risk management limits and stayed at a size where they knew they could generate the returns that attracted their investors in the first place?
The following user says Thank You to bijeremiad for this post:
At one point in their careers, the market wizards were retail traders possibly committing common beginner mistakes. How did they go about realizing the "losing" behavior (being part of the herd) and who/what helped them along the path to thinking like a professional trader?
Question for Jack - Trading and how a trader views his self
Question for Jack:
How do successful traders view themselves and how does it affect their trading?
Some examples to consider in light of the above:
Trader X may feel he is capable of / deserves earning $10,000,000 and hence trades for a hedge fund with a large capital base. Trader Y feels he will be satisfied with $1,000,000 and hence trades a few lots from home.
Trader X is disciplined and can manage multiple open positions and hence can considerably make more money. Trader Y is either indisciplined or considers other prorities and hence manages a single or at most two positions.
Trader X feels money is important and trades for 14 hours each day throwing his work-life balance off but is by nature a workaholic. Trader Y wants to touch the market and wants to make whatever possible in the first hour and then call it a day. (sometime Trader Y makes much more than Trader X inspite of being in the market for a shorter period).