We live in an extremely competitive society and everyone wants to benchmark themselves with the very best. However everyone cannot be a Mukesh Ambani, a Sachin Tendulkar, a Rakesh Jhunjhunwala or a Tom Basso. Fortunately we don't have to be to live a happy and prosperous life
I doubt Warren Buffett spends sleepless nights thinking that in the last 5 years he has made less than 20% while Jim Simons has exceeded 60. In Investing and Trading, even 'mediocrity' is actually quite good.
In a seminar Samir Arora pointed out that even if your Portfolio was made up of Stocks which were 150th best, you would handily outperform the Nifty by as much as 9% and generate a CAGR of over 25%.
His take- nobody knows what will do well in the Markets and it is easier to identify what will not do well than what well. So if you cut out the obvious losers and end up with an average of 150/500 on the Nifty, you will handily outperform the Index and even most Professionals
Why shouldn't the same philosophy apply to Trading? Cutting out the most obvious flaws in our Trading will yield a far more satisfying result than trying to emulate the Trading style or Returns of some of the Marqee Traders- much of which is questionable in the first place
While this may not help those who are Trading methodologies without an edge- save to reduce their losses- it can have a mind boggling impact on the Performance of Profitable Traders. Personally the area I am focusing on is cutting down my big losers
Analysis shows that had I cut down just my 5 biggest losers to half the loss suffered, I would have added a full 4% to my Performance. Many such small tweaks can make all the difference. Identifying and cutting down mistakes is easier and more productive than learning new tricks
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