Posts Tagged ‘constancy’
Here are the last 4 items from the series.
11. Give up your excuses. This relates back to point 3. Excuses are another way of placing the power of your decisions onto to someone or something else. Who’s making these decisions? Is someone one going to take the credit for a trade gone well? Beginning to understand your trading results starts with an honest evaluation of our decisions. These are hard decisions. If it were easy, we would have a higher success rate then 10%. Stop making excuses for your results. Use your results as information to make better decisions. They aren’t good or bad. Just information.
12. Give up the past.
13. Give up your expectations. These two concepts need to be presented together, because they are two sides of the same coin. Trading is about the present. The here and now. What happened in with the past trade is over and done. Your results are your results. They are neither good nor bad. The next trade hasn’t happened and therefore has no bearing on the present. You might reach that target and then again you might not. All that matters is what you are seeing, right now and what you are going to do about it, right now. The more focused you can be about what is happening in the present, the happier you will be with your results. This leads me to the most important give up.
14. Give up your attachment to results. Trading is not about the money. Let me repeat that: Trading is not about the money. Money is the result of our trading decisions. Money is an indicator of where we need to make improvements in our trading decisions process. If we are losing money, where are we losing? What adjustments do we need to make to loose less? If we’re profitable, what can we do to consistently be profitable? What adjustments do we need to make to enter the market at the right time? To exit at the right moment? What changes do we need to make to our perceptions, expectations, cognitive process to be happier with our decisions?
The challenge in trading is an inner challenge. That’s both good and bad news. We have the ultimate responsibility. How we handle that responsibility has more to do with our success or failure than anything else.
Continuing the conversation, here are the next 5 items on my list.
6. Give up complaining. Do you find yourself complaining about your trading? What are the results of those complaints? How are you dealing with the feeling of those complaints? Awareness of those feelings leads to acknowledging those feeling which can lead to action in dealing with those feelings.
7. Give up the luxury of criticism. Criticism of trading results are often tied to point 1 which is the need to be right. Listen, we don’t have any control over a trade once it’s in the market. Sometimes we just get it wrong. That doesn’t mean that everything you’ve worked for is flawed and needs to be revamped. We were just on the other side of the market. Stop, reevaluate your position, and move forward. Make it that simple.
8. Give up your need to impress. Who are you as a trader? Does you’re trading meet your goals and expectations? This phrase should be in front of you every time you sit at your trading screens. It does not matter what anyone else does in the market. It only matters what I do in the market. Repeat that to yourself on a daily basis. The only person you’re measuring is you. If you only get 2 ticks or 2 pips or 2 cents out of the market, you have accomplished something that 80% of the population has no idea how to do. There will always be traders that can get more. Who cares! What are you able to do?
9. Give up your resistance to change. If you think about it, this is very counter intuitive to tradeing. If nothing changes, then we don’t make any money. But as the old adage says, ” we are creatures of habit.” Once we set a pattern, we tend to want to stick with it and not make adjustments. Unfortunately, that doesn’t work in our field. Our trading methods depends upon recognizing market conditions and taking advantage of them. Trading 10 years ago, when I started is very different than it is today. If we’re resistant to change then we are resistant to our ability to take advantages in the market. Nothing is forever and that holds special truth as traders.
10. Give up on your fears. Fear is a reaction to our perceptions. Change the perception, we change the use of fear. For example, the experienced skydiver will have a different gauge for fear then the novice. Fear can be healthy and useful element in our trading, but only if we understand what it is telling us. Fear is not the issue but how we react to it.
More to come.
In today’s market, with the advent of high frequency trading platforms, it is even more important to clarify the reasons for entering the market. Super computer trading platforms are designed to take advantage of market movement in fractions of a second. The idea is to make $.01 on a stock trade 40,000,000 times. If you think about it, what clearer value could there be for a trading strategy. Tiny profits many times over and over again.
To get a better idea of this, 60 Minutes’ Steve Kroft hosted a segment on the secretive world of high frequency trading. It’s a small peek into who might be on the other side of our trades.
Most marketers of trading methods spend a lot of time telling you how to get in the market. (They also spend a lot of time telling you how great their methods are but that’s a discussion for another posting.) Volumes are written regarding the perfect setup, the perfect entry, the perfect execution of a trade. These approaches treat trading methods like on/off switches. The setup conditions exist means on, if not, off. If you don’t have a setup you don’t place a trade. Although the absence of a setup is a common sense answer to avoid trading, it is not the only reason to stand aside. Once you have a tradable opportunity, now you need to determine if it is a good opportunity.
Since all decisions require an emotional commitment, the need to feel good about a trading decision is very important. There are two ways of accessing a trade’s viability; internally and externally. An internal point of view looks at the trader and their state of mind. I’ll talk more about this in the next installment. Risk assessment addresses the external considerations for qualifying if a trade setup is a good one.
Not all opportunities are created equal. If that were true, the act of trading would be much easier. Hence, in my coaching practice I’ve had hundreds of conversations that sound something like, “I followed the rules, but the trade went against me. The strategy said this was a setup. What did I do wrong? Where did I miss read the rules? Can you explain the trading rules to me again?” Bright, intelligent, well-educated, successful individuals become completely befuddled following a simple set of rules. This is akin to being able to fly an airplane but can’t follow instructions to scramble eggs. It’s no wonder that frustration levels are very high.
Assessing the risk of a trade is vital to your success as a trader. Traders need to be very selective about which trades are worthwhile. This is due to the fact that methods are designed to take advantage of specific market conditions. If the market doesn’t cooperate, then the method is going to fail. The responsibility falls on the trader to determine if this is the right market to trade.
So here are some questions to consider just before you enter the market:
- Is this trade worthy of my money?
- Are there any upcoming news announcements that could affect my trade?
- Does the stop placement and target seem reasonable?
- Are there any historic price levels I need to consider that could effect my trade (i.e. support/resistance, trend lines, price patterns?)
- What is the relationship between my price target (or my expectations for the trade) and historic price action?
At the end of the day, this is your money. The trading method you spent money on or the advisory service you pay a monthly fee isn’t going to reimburse you for bad trades (if one exists, please let me know.) Trading should be about choices in line with your values. The clearer you can be about your choices, the happier we will be with our trading results, regardless of the financial outcome. Better decisions will lead to better results over time, and keep you trading longer.
In a previous posting, I talked about trading as an art form. I based that statement from my experience as a musician for many years. Trading has more in common with the arts then it has with math and probabilities. The less judgment I can place on myself in my music, the better I’m going to express myself. As a trader, the less judgment I place on the results of my trading, the more likely I am going to be able to trade successfully.
In my travels, I found this article from Dennis Palumbo on Commitment to the Creative Life. In it he talks about the struggle people have in keeping commitments in their working and social life. Now Mr. Palumbo is a licensed psychotherapist and many of his clients are in the creative world of writers, actors and directors but the bullet points he specifically cites are Constancy, Resilience, Fluidity, Openness to Surprise, and Patience. Do these sound familiar? These are the exact same things that I strive for as a trader on a daily basis.
He also mentions that Love is the foundation of commitment and without it the struggle is eventually meaningless. I think this is an interesting thought that warrants future exploration.
I encourage you to read the article. Here’s a quote from it.
“A commitment to the creative life, in the end, means that you accept, with as much grace as you can muster on any given day, its myriad demands and delights, failures and triumphs. Of course, like in any committed relationship, sometimes it seems like you’re doing all the giving.” Dennis Palumbo.