The Delusional Trader

By Adrienne Toghraie

©2009, Reprinted with permission of Traders World Magazine (

Psychologists would tell you that being in a delusional state means that you are psychotic – obviously not a good thing, especially when you need to know what is really going on in the world. But, strangely enough, sometimes it can work for a trader.

Jack is a trader who is a genius at deluding himself. He thinks that he cannot fail, when it is clear that he does so over and over again. He thinks that there is no challenge he cannot overcome, when there are obstacles in front of him that no mortal can clear. Nevertheless, Jack has already done the impossible many times over in his life and he is an inspiration to everyone he meets.

Jack was born with a terrible, painful, disabling, genetic disease that has brought him to the hospital so many times that he has lost count. But, he has never been afraid, despite the fact that, until recently, the life expectancy for others with his disease was in the early twenties. In fact, he says that he is grateful for the disease because it has taught him so much about himself and forced him to be completely self reliant. More delusion – how could he possibly benefit from so great a handicap?

And here’s another delusion: Jack never sees himself as different from others. He says that he leads a normal life. He decided that the things he wanted to do as a child were the result of a “pure mind” and so he set about to do them. In the face of chronic illness that would put any of us into a constant state of depression, Jack put himself through college and then through graduate school. But, because he has convinced himself that he leads a normal life and that he is no different from everyone else, he is never depressed, although fully 75% of the people with his disability suffer from severe depression.

What is the result of all this positive delusion for Jack? His life works; in point of fact, it works very well. He is successful in his trading and in his personal life. He has countless friends who care about him and take care of him when he needs it. No, he cannot trade everyday, because he is often sick and in and out of the hospital. But, he trades very well on the days that he does trade. His sleep schedule has been thrown into chaos so that he now goes to sleep around 5:00am and sleeps until 11 or 12:00 noon. His solution is to trade in markets that are active when he is.

Jack’s delusion has paid off very well for him. It has allowed him to face bitter realities with a Teflon coating that has protected him from cynicism and giving up in the face of difficulty. It has allowed him to believe in himself when logic would have him running for cover. And it has inspired him to solve problems creatively and to be grateful for all his successes, regardless of how small they may be.

The realist trader

On the other hand, recently I met with an ex-trader named Nick who is at the opposite end of the delusional scale. Nick is a pure realist. He sees things very clearly and prides himself on his ability to scope out the truth, as hard and unpleasant as it may be. This quality should be a very beneficial one for a successful trader. The problem is that Nick has taken it to its logical conclusion. He is able to see the problems in every situation. The result is that he has been virtually paralyzed by his vision of a world filled with obstacles, problems, impending catastrophes, etc. All of this awareness makes it impossible for him to take risks of any kind. This means that he lives in an antiseptic world that is risk-free and static. He has no wife, no children, and few friends and associates. He works from home so he rarely sees other people and he limits his interactions as much as possible. Trading did not work for him because he could see all of the reasons not to make it work. The markets were unpredictable, the institutions had a corner on the buy and sell transactions, and the future of commodities was fi lled with potential market collapses. A realistic failure of a trader!

Making delusion work for you

The study of history shows that great men and women were hailed as great achievers because they decided not to be realists. As the Great Deluded, they attempted the impossible: With ragtag armies of farmers and civilians, they created a democracy by freeing themselves from the most powerful military machine of their time; they built bridges and tunnels and canals and skyscrapers and pyramids that defi ed all the engineering logic of their time; they sailed tiny wooden ships to the end of the world and did not fall off ; they walked on the moon.

At a certain point in every trader’s career, he must decide to be either a realist or a “delusionist.” When the odds are clearly stacked against him, when the markets are in turmoil, when the industry is undergoing dramatic changes, he has to decide whether to fold his hand or stay in the game. This is when delusion can work for you – when you can see a way out (when realistically speaking, there is none) or believe that you are Teflon-coated and can endure whatever comes your way. This form of delusion is very important. It is what protected those who survived the Nazi concentration camps and continues to protect survivors of all the natural and man-made disasters. Like Jack, it provides you with the emotional buoyancy to fi nd that creative solution to an impossible problem. And if your critics say you are delusional, who cares? You get to laugh all the way to the bank.

Adrienne Toghraie, Trader’s Coach,