Even the World's Greatest Traders Make Mistakes

Consistently making the right moves at the right times in the market is a formidable challenge.

Think again if you believe even the most seasoned traders are immune to making rookie errors. One of the best global macro traders in history, Stanley Druckenmiller, went long technology stocks in 2000 and lost billions because he failed to recognize the bubble's peak in time

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He knew he should have restrained himself from making the purchase, but the fear of missing out (FOMO) got the better of him. It was just human nature, and he didn't learn anything from his error. The truth is that we are all susceptible to making errors in judgment due to our emotions.

Market timing is another trap into which even seasoned traders can fall. Consistently making the right moves at the right times in the market is a formidable challenge.

In the short term, the market can be extremely volatile and noisy due to its inherent disorder. Another well-known and successful global macro investor, Jim Rogers, freely admits that he has a terrible track record when it comes to predicting market movements.

When there was a huge bull market in the old days, and he decided to be bearish, it was one of his biggest timing mistakes. Indeed, while most people lost big, he tripled his investment. He maintained his pessimism, and when the market began to rise, he shorted the six stocks in which he believed most strongly.

After two months, he was completely exhausted. A question: was he off base？ Not at all; within two years, each of those six businesses had collapsed. The lesson to be learned is that it pays to time the market and control risk, but even being right doesn't guarantee success.

You can see from these two extremely successful traders that making mistakes is inevitable in trading, regardless of how good you are or how much experience you have. What matters is how well you can learn from your errors and correct them quickly.