You are being cocky because you are dabbling with small money, when you play with big money, your emotions will immediate change and that is when you will make mistakes.
That's precisely why I don't play with big money, not that I have so much anyway. I wonder though, if I was playing with someone else's "big money", if you could keep those emotions in check.
Seems to be the way all hedge funds operate, maybe can even charge membership fees too.
Also, losing client money is just as emotionally difficult and stressful and guilt inducing--maybe more so--than losing your own for anyone with a half normal sense of responsibility and fiduciary duty.
Trader B makes $1m in years 1 and 2. That’s too low to trigger a bonus, but his firm is up $2m.
The system doesn’t reward trader B so he has to choose: do what’s right for the firm, or take big risks in the hope of a bonus
(Simplifying dramatically)
While some trades using this method may not work out, the idea that he must make mistakes simply because he is risking larger amounts is not at all a given. Some people have no sensitivity to such things.
I know a couple of advantage gamblers that sometimes play $10,000+/hand on blackjack, and it might as well be $5 to them - not because they are super wealthy, but because they know they have an advantage, and understand that the math will work out over the long term. Whether they win or lose on a given hand, or wind up winning or losing on a given day, is meaningless to them and they rarely get emotional about it. The same certainly applies to many stock traders.
There are also Black Swan-like events of stock exchanges and entire markets disappearing completely, like it happened in Russia after 1917 and in China after WW2.
If something like the Russian revolution comes along then all bets are off, it pretty much doesn't matter what you did with your money as long as you didn't flaunt it.
I think I could argue both sides pretty convincingly. It is easy to see in hindsight, not so easy in the thick of it.
Buffett in 1988 prior to his net worth increasing a lot.
These obvious moments do happen sometimes. Not always, but they can give an edge to knowledgable people paying attention (most HNers know tech better than the average stock analyst/trader). I remember the night Trump won, the futures market reacted like the world ended. While the world might end at some point in the future, it certainly was not going to end the next day.
With that said, these moments do not happen frequently enough and turn out correctly for the investor to consistently make money.