For Part 1 of this interview between our CEO, Rick Lane, and Ray Cahnman, Chairman and Founder of TransMarket, see Wizards of Today’s Markets: Ray Cahnman, Part 1.
Rick: Would you say that—we’ve all made bad trades and probably learned more from those than from the good trades—but would you say that [your narrow escape with the back month mortgage spreads] is the story that underscores your approach to the rest of your career?
Ray: That was the worst, and there’s no question that you learn more from your bad trades. You make a good trade and the question you have to ask yourself is, was it skill or luck? And if I had to do it all over again, would I do it the same way? When you have a losing trade, you can’t beat yourself up too bad. If you did everything right, and you still lost, you’d say, “Well, if I had it over again, I’d do it the same way.” In any sport, in any game—trading, tennis, any competitive sport—you learn more from your losses than from your wins. If you win, you kind of chalk it up—that’s on the scoreboard—and you go on to the next. The loss—you have to go back and re-analyze what happened and what you did wrong. And that’s especially true in trading. And you try and avoid making the same mistake twice.