A) absolute trust in myself to do what’s necessary when it’s necessary, B) discipline to follow my rules/method even when it’s going through a rough period (which all methods do), C) the unquestioning belief that I don’t know what’s going to happen next and that trading is just a probabilities game, D) that my success isn’t about the system/method – it’s about me and my attitude toward the market and trading, and E) the complete confidence that I really can make consistent profits from my trading over time.
Archives of “attitude” tag
rssOnly You Can Control Your Trades
Just to be very clear, the term be in control does not mean controlling the market. In fact, I have not met anyone who can control the market. From all the traders that I’ve spoken to and the books that I’ve read, all professional traders tell the same thing –
“Take control of your trades and let the market do what it does best.”
Can you see the attitude that professional traders carry with them? Professional traders take control of what is within their control and focus on making those controls work. In actual fact, they even expect the market to be random. They put so much effort in making the trade perfect that it doesn’t bother them when the market doesn’t go their way.
Now, let’s come back to our world. If the professionals take full control of their trades, don’t you think you should be doing the same thing? If you know that you should be in control of your trades, then, can the market be at fault in any way? I hope the answer is no and I hope you realised that you are in control of your trades and not the market.
Trading Wisdom
The most important thing is to have a method for staying with your winners and getting rid of your losers. By having thought out your objective and having a strategy for getting out in case the market trend changes, you greatly increase the potential for staying in your winning positions. The traits of a successful trader: The most important is discipline – I am sure everyone says that. Second, you have to have patience; if you have a good trade on, you have to be able to stay with it. Third, you need courage to go into the market, and courage comes from adequate capitalization. Fourth, you must have a willingness to lose; that is also related to adequate capitalization. Fifth, you need a strong desire to win. You have to have the attitude that if a trade loses, you can handle it without any problem and come back to do the next trade. You can’t let a losing trade get to you emotionally. If a trade doesn’t look right, I get out and take a small loss.
How I Look At The Markets
The markets are a science. Plain and simple. Some like to look at fundamentals and guess what will happen next. I like to look at the numbers. The facts. The only thing you can trust. Billion dollar hedge fund manager David Harding views the markets similarly:
Our approach to markets is a science. It is an unpublished science, but it is a real one. You would have thick leather-bound volumes of papers on it if there were a willingness to “open the kimono,” as the horrible modern expression has it. The process of trading our system is like repeatedly drawing different colored balls from the statistician’s apocryphal bag. As we draw out a ball it becomes part of the track record, and we put it back in the bag, but there is no guarantee that the balls will come out in the same order in the future.
Trend following is speculation in its purest form–find an edge and exploit it consistently over time. That attitude is critical for any entrepreneurial success. Throw the lottery mentality away. Forget the one hit wonder luck the press propagates to the masses of lemmings
How can you avoid the four poisons of the trading mind: fear, confusion, hesitation and surprise?
Replace fear with faith—faith in your trading model and trading plan
Replace confusion with the attitude of being comfortable with uncertainty
Replace hesitation with decisive action
Replace surprise with taking nothing for granted and preparing yourself for anything.
Always Be Learning
When you love to do something, you enjoy learning more and more about it. Most active traders would rather trade than do just about anything else. Do we enjoy the learning? Depends upon how we come upon it. When something is a core value, our fascination with learning more about it is endless. You can’t get enough of it. However, when we learn through painful experience, such as the hard knocks of trading, enough certainly is enough.
Losses are tough. Errors and mistakes are bothersome. And, yet there’s almost always a lesson in there if you remain alert to improving. I’ve always said that mistakes are okay if you acknowledge them and learn from them. James Joyce said, “Mistakes are portals of discovery.”
As I trade and make mistakes, I say to myself, “I don’t have to do that again.” And I feel reassured and optimistic about the future. Of course, I do, “do that again”. We all do. There are certain default attitudes and positions we naturally fall prey to. But with an attitude of learning, we do it less and less until we (hopefully) stop repeating the unhelpful thinking and behaving. (more…)
There is A Solution for Everything…..
There was a father who left 17 camels as an asset for his three sons.
When the father passed away, his sons opened up the will.
The Will of the father stated that the eldest son should get half of 17 camels while the middle son should be given 1/3rd (one-third). The youngest son should be given 1/9th (one-ninth) of the 17 camels.
As it is not possible to divide 17 into half or 17 by 3 or 17 by 9, three sons started to fight with each other. So, the three sons decided to go to a wise man.
The wise man listened patiently about the Will.
The wise man, after giving this thought, brought one camel of his own and added the same to 17. That increased the total to 18 camels.
Now, he started reading the deceased father’s will.
Half of 18 = 9. So he gave the eldest son 9 camels
1/3rd of 18 = 6. So he gave the middle son 6 camels
1/9th of 18 = 2. So he gave the youngest son 2 camels.
Now add this up: 9 plus 6 plus 2 is 17 and this leaves one camel, which the wise man took away.
The attitude of negotiation and problem solving is to find the 18th camel i.e. the common ground. Once a person is able to find the common ground the issue is resolved. It is difficult at times. However, to reach a solution, the first step is to believe that there is a solution. If we think that there is no solution, we won’t be able to reach any!
Mental Toughness
The mental part of the game. Its an aspect of trading that can easily be ignored, we all choose how we approach this game. Some see failures as opportunities to learn and progress, while others see them as outright failures and road blocks which should be avoided at all costs. Its all about attitude.
I feel that trading should be ‘easy’ It should be effortless and without conflict. If we are going to be in this game for 20+ years. I feel its important to make the experience as easy as we can. We shouldn’t be ‘fighting’ with the market, in the boxing ring, hoping, fearing and stressing.
There is RISK management, but SELF management is equally as important. When we are actively trading the market, we are free to make buy and sell decisions whenever we want. The tough part is consistently making the correct buy/sell decisions. These decisions come with conflict!
Taking Profits
So this is the hardest part of trading. It can be made simple if we accept a few hard facts.
1. You will never sell at the top.
2. Your going to be wrong when you sell.
This is fact. As soon as you sell, the stock will probably keep going up. You may look at it 5 months later and its up 100% since you sold it. Point is, when you sell, your probably going to be wrong. This creates a conflict.
As humans, we do not want to be wrong. We seek perfection, we want to nail the top! It can help explain why people run up stocks 20% to watch them come all the way back down to break even. The reason why they did not sell is because they are afraid to be wrong. By selling you are forced to draw a line under your mistake. But being wrong in the stock market is inevitable. (more…)
DIFFERENCE BETWEEN THE CONSISTENT WINNERS AND EVERYONE ELSE
I don’t think I could put the difference between the consistent winners and everyone else more simply than this: The best traders aren’t afraid. They aren’t afraid because they have developed attitudes that give them the greatest degree of mental flexibility to flow in and out of trades based on what the market is telling them about the possibilities from its perspective. At the same time, the best traders have developed attitudes that prevent them from getting reckless. Everyone else is afraid, to some degree or another. When they’re not afraid, they have the tendency to become reckless and to create the kind of experience for themselves that will cause them to be afraid from that point on.
Essentials of a Winning Psychology
Four fears that block a winning psychology:
- Fear of Loss
- Fear of being wrong
- Fear of missing out
- Fear of leaving money on the table.
Realize that trading is based on probabilities, as such, every trade is unique. In other words, the past does not equal the future.
Probability thinking manifest other states and beliefs:
- Because we know that we will succeed in the long run and because we know we will protect ourselves no matter what the market does, we acquire the state of “self trust” and the state of being “carefree”.
In turn these states allow us to remain…. (more…)