Archive for June 2013
Followers of my blog will know that I’m a big believer that trading has more to do with the decision process than any indicators of the market. Ultimately, we need to be happy with the decisions we are making regardless of the financial outcome. So to help traders be happier with their trading results, I came across an article from the Finerminds Team that inspired me to come up with my own list of 15 things we should give up to be happier traders.
Trading is one of the most challenging and stressful activities know to man. Yet there are those among us that are drawn to it like moths to a flame. The decisions we make in the market are of our own making and hence our responsibility. Being conscious about our choices and reasons for trading are some of the things we can do individually to become better traders. To foster conscious choices, here are 15 things to eliminate from our trading routine for happier trades.
1. Give up the need to be right. Being ‘right’ is a well know human attribute. Unfortunately, the market doesn’t care if we are right. The market is only concerned with what the market does. How many times have we hung onto a trade well past the point of common sense only so that we can be proved ‘right?’ This is not the rationale mind talking buy rather our egos. A number of well know traders have said, “do you want to be right or do you want to be profitable?” Getting out of our own way is often the first decision to more profitable trades. Which leads me to the next point.
2. Give up your need to control. There are only 2 things we have control over as a trader; 1) how much money we’re placing on a trade and 2) our expectations of the results. After the trade has been placed, we are at the mercy of the market. The best of trading plans can be laid asunder by the capricious nature of the market. Control is something that we have very little of as we engage with the market.
3. Give up on blame. I speak to a lot of traders that are very quick to blame something else for their results. An indicator, a platform, an advisory service, a broker are just a few of the areas of that take the responsibility for trading results. Own the results you are getting. The beginning of improved performance starts with taking charge of the decisions we are making, acknowledging the flaws in those decisions and putting a strategy in place to address those flaws.
4. Give up your defeating self-talk. What is your state of mind when you sit in front of your computer to trade? What is the chatter that is going on in your head as you execute trades? Are you defeating yourself before you even get started? Our minds are incredibly powerful tools, if we use them for correctly.
5. Give up your limiting beliefs. What we believe has a great deal to do with our success as a trader. Limiting beliefs often show themselves in words like can’t, would have, should have, could have. Being aware of this talk is a first step in the awareness of our responsibility of the decisions we’re making.
“A belief is not an idea held by the mind, it an idea that holds the mind.” Elly Roselle
More to come.
If it weren’t already clear, trading requires a high degree of concentration. Especially as a day trader, the market can move in literally a blink of the eye. As a coach, some of the simplest answers for a trader’s performance have been to turn off the phone, shut down the email, and put a do not disturb sign on the office door. Early in my own trading career, it took several loosing trades and a few words with my spouse to understand that I can’t be a part of a discussion about dinner when I’m looking at charts.
If that didn’t already convince you, an article by Joanne Cantor, PhD, gives us even more evidence that our multi-tasking society has no place in the trading world. Don’t Speak ‘Til You See the Whites of Their Eyes talks about the limited capacity of our brain to do a number of tasks at the same time. When we’re engaged in the market and risking money in the process, that capacity becomes even more taxed.
This interesting article came to my attention from one of my clients . There must be something in the air because this topic has come up in a couple of different places. I want to thank Stephen Crane for sharing this article with me.
The topic is the subject of many conversations I have with my clients. The conversations usually begins something like ‘trading is not about the money, its about the trade.’ That sparks a lot of conversation around the purpose of money and how do we use it in our trading. Money is a way of measuring our trading results but shouldn’t be a goal of our trading. If we focus on making better trading decisions, the money will follow. But focus on making money, what ever the motivation, is a recipe for losing money in the market.
My previous posting on money management is a different way of looking at how we should look at managing the money of a trade. So this article is yet another reason to have a new way of thinking about the money in our trades.
Here is the article, Forget About the Money, Focus on the Price Action. I hope you enjoy. I look forward to your thoughts.