The Trader's Reason vs. Emotion
by Terry S. Brown
In the late 1970s and early 1980s, Victor Sperandeo had a brilliant track record day trading stocks,
commodities and especially the Standard & Poor's 500 and NYFE futures. He had an idea. "I was trading
well and by a strict set of rules," says Victor, "making a lot of money when I was right and losing only a
little when I was wrong. I figured that if I could do it, then I could train others to do it. I wanted to
franchise my methods and had visions of becoming the McDonald's of the financial markets."
It didn't work. Of the 39 traders he trained, only five made money and went on to pursue independent
careers in trading. All were taught the same details of Sperandeo's methods. All were given free access to
any information in his office, including direct or phone contact with Victor himself. Each of them could
have mirrored Victor's trades. But most of them blew out within six months, some lasted longer, some
less. Sperandeo was perplexed. He wanted to know why so many had failed.
He quickly realized that knowledge and intelligence had little to do with success in the markets. "One of
the five who made money barely knew the alphabet," he recalls. "Seriously, he was about as literate as a
fifth-grader, but he always closed a losing position, and he let his profits run. On the other hand, one of
the traders who failed could consistently and correctly answer 98% of the questions on Jeopardy.
Knowledge alone is not enough to make money in the markets."