Season 1,

82: How to Lose Money by Ignoring Your Own Rules with Laurens Bensdorp

September 27, 2017
MP3

This is a lesson that everyone in business needs to learn. Often we know the right thing to do, but we don’t do it. In this episode, we tackle how to overcome this dilemma.

Laurens Bensdorp is the founder and CEO of Trading Mastery School and author of the book The 30 minute stock trader. After reaching the pinnacle of success in two different industries, Mr. Bensdorp poured himself into mastering securities trading, and over the last 14 years has amassed a trading record that places him in the top 5% of all traders while simultaneously developing a clientele of students who have learned to replicate his success.

Time Stamped Show Notes

[2:00] In the investing world, you need to have specific rules for when to buy and when to sell stock. Laurens strategy is to run his numbers through his computer platform.

[4:35] It’s easy to become a stock trader and to become a successful trader and beat the benchmarks is difficult and one needs to study a lot.

[6:50] While consistently losing money, Laurens noticed his need for a system to survive in the investing area.

[8:00] The way Laurens came up with his system was educating himself and using various resources, so he created a software to backtest how his decisions would turn out.

[9:00] There were a couple of weeks with day trading successes. But the lack of buy and sell decisions with statistical evidence came to shine when losing money.

[10:22] After the dotcom boom, stocks went down hard and because of his lack of a system, within a month the losses were significant.

[12:30] It’s important to know the difference between a bull market and skills; when the market goes down, that’s the difference between winning and losing.

[14:05] Money being part of the decision pattern, thinking irrationally comes easy. Laurens losses more than 70% of his equity which led him to being afraid of knowing when to buy and sell.

[16:16] One must be cautious about confusing a market that’s going well with skills, and work with the perceptions when money is made because it’s easy to get lost in it.

[20:00] Failing Forward Segment

  • What is the bottom line reason of this failure? – “I thought that it was easy and that I was smart enough to beat the market and that one would not need to educate oneself to be a top trader.”
  • What is the single most important lesson you learned from this? – “I need to have a strategy that I can have confidence in trading. And I can only have that when I have a quantified strategy in which I know exactly when to buy, when to sell and thus I can see how that specific strategy has worked in bull markets, in bear markets, in sideways markets and in volatile and non-volatile environments and that feedback can give me the confidence that I can trade it.”
  • What are the major ways you protect yourself from future failures? – “I have a strategy which involves multiple sub-strategies. It starts off with the belief that we do not know what the market is going to do. It can go up, it can go sideways, it can go down. And one needs to be prepared for any kind of market environment.”
  • Who do you turn to when you need help? – “Mostly to myself and to my computer. Any kind of question that I have about the market, that is something that I can find in the programs that I have written.”
  • What advice would you give to someone in a similar position? – “Stop trading if you do not have a system and specific buy and sell rules, because sooner or later you’re going to lose your money. One needs to educate oneself to really know what’s going on.”

[29:40] If you’re doing something that is costing you money or is causing you pain, stop doing.

[29:55] Laurens now trade in his own account and in a small investment fund. He coaches people on how to become successful and profitable in the market through his Business Trading Mastery School.

[30:00] Read about Laurens 6 months mentoring program to develop your automated trading system that suits your personality at https://tradingmasteryschool.com.

[31:26] In The 30-Minute Stock Trader book, Laurens describes trading systems and styles on how to beat the market. You can find it in Amazon.

To hear this episode and many more like it on your mobile device, you can subscribe to How To Lose Money via iTunes or Stitcher.

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