The first step in dealing with any addictive pattern is identifying it–and identifying it as a problem. Here are a few questions that you might ask yourself:
* Have there been times when I told myself to stop trading, but still found myself placing trades any way?
* Do I find myself overtrading by putting on positions with too large size or by trading during periods when nothing is happening?
* Have my trading losses created problems for me in my relationship(s), or have they caused financial problems for me?
* Have people close to me told me that I need to stop trading?
* Is the pain from losing more extreme than the satisfaction from winning?
* Do I find my moods fluctuating with my P/L?
* Do I trade simply out of boredom sometimes?
* Do I find myself preoccupied with trading outside of market hours at the cost of other work and relationships?
Notice that, for many of these questions, you could substitute the word “drinking” or “gambling” for “trading”. The dynamics of addictions are the same across the board. If you answered yes to three or more of these questions, I would suggest that trading has become a problem for you.
How does one deal with addictive trading? The first step is to identify it, but the second–and harder–step is to acknowledge that you need help for it. It’s pride that tells us we can handle it on our own through will power, but addictions wouldn’t occur in the first place if will power were sufficient to prevent consequences. (more…)
Archives of “consequences” tag
rssTrade To Win, Not To Lose!
When athletes are consumed by not losing rather than by winning, the game is over, often before it has even started. The same precept applies to trading. As crazy as it sounds, most traders aren’t making the money they could be — and the reason, I’d argue, is the fear of losing it. Traders are far too worried about giving money back. This paralyzing phobia can transform talented, elite professionals into disappointing underperformers.
How many times have you been up in a trade and started to think about the money? Your head tells you to bank it quickly and then play it safe. After all, you made your mark for the day, or even the week, so your job is complete. That’s not the mark of a trader; that’s the mark of an accountant.
Trading is an occupation based on fleeting moments of opportunity. (more…)
10 COMMANDMENTS FOR MAKING MONEY
1. BELIEVE IN THE DIGNITY AND MORALITY OF BUSINESS: Making money is much harder if, deep down, you suspect it to be a morally reprehensible activity.
2. EXTEND THE NETWORK OF YOUR CONNECTEDNESS TO MANY PEOPLE: Befriend many people who are a rung or two above and below your financial level, then find ways to help them achieve their desires. You will have discovered the secret of Partnership Power.
3. GET TO KNOW YOURSELF: To change the way others see you, first you have to learn to see yourself as others see you.
4. DO NOT PURSUE PERFECTION: Neither neglect the imperfect nor expend yourself on futile pursuit of perfection, while failing to make the most of less perfect circumstnaces.
5. LEAD CONSISTENTLY AND CONSTANTLY: Learning to lead is important, but it may not be what you think it is. Leadership is not a noun; it is a verb. It is not an identity; it is an action. Don’t try to become a leader, just do it. Just lead.
6. CONSTANTLY CHANGE THE CHANGEABLE WHILE STEADFASTLY CLINGING TO THE UNCHANGEABLE: Convert change from enemy to ally by understanding when to enjoy the exhilaration of change and and when to fight it and steadfastly defend the unchangeable.
7. LEARN TO FORETELL THE FUTURE: Who is wise? One who can tell what will be hatched from an egg that has been laid. Not he who can see the future-that is a prophet. Wisdom is seeing tomorrow’s consequences of today’s events.
8. KNOW YOUR MONEY: Your money is a quantifiable analog for your life force-the aggregate of your time, skills, experience, persistance, and relationships.
9. ACT RICH: GIVE AWAY 10 PERCENT OF YOUR AFTER TAX INCOME: Through the mystical alchemy of money, giving charity jump-starts wealth creation.
10. NEVER RETIRE: Integrate your vocation and your identity by thinking of life as a journey rather than a destination.
If you have not figured it out yet you soon will: learning to trade inside the charts finds its firm foundation outside the charts. It is all in the way you think and in what you believe about money and wealth creation.
Parsons’ Rules
Bob Parsons is the founder of GoDaddy.com. GoDaddy is the domain name site with those obnoxious Superbowl ads — and the company that made Parsons a billionaire.
(I guess when you’re a billionaire you can get away with an awful looking earring.)
Many years ago, I came across “Parsons’ Rules” — a list of 16 rules for success in business and life. They struck me as pretty damn good.
I was reminded of Parsons’ Rules while tinkering with another project this weekend, and realized they also apply to trading.
So here they are (original list here):
1. Get and stay out of your comfort zone. I believe that not much happens of any significance when we’re in our comfort zone. I hear people say, “But I’m concerned about security.” My response to that is simple: “Security is for cadavers.”
2. Never give up. Almost nothing works the first time it’s attempted. Just because what you’re doing does not seem to be working, doesn’t mean it won’t work. It just means that it might not work the way you’re doing it. If it was easy, everyone would be doing it, and you wouldn’t have an opportunity.
3. When you’re ready to quit, you’re closer than you think. There’s an old Chinese saying that I just love, and I believe it is so true. It goes like this: “The temptation to quit will be greatest just before you are about to succeed.”
4. With regard to whatever worries you, not only accept the worst thing that could happen, but make it a point to quantify what the worst thing could be. Very seldom will the worst consequence be anywhere near as bad as a cloud of “undefined consequences.” My father would tell me early on, when I was struggling and losing my shirt trying to get Parsons Technology going, “Well, Robert, if it doesn’t work, they can’t eat you.”
5. Focus on what you want to have happen. Remember that old saying, “As you think, so shall you be.”
6. Take things a day at a time. No matter how difficult your situation is, you can get through it if you don’t look too far into the future, and focus on the present moment. You can get through anything one day at a time.
7. Always be moving forward. Never stop investing. Never stop improving. Never stop doing something new. The moment you stop improving your organization, it starts to die. Make it your goal to be better each and every day, in some small way. Remember the Japanese concept of Kaizen. Small daily improvements eventually result in huge advantages. (more…)
Eight questions
1. Are you willing to face your failures without recrimination?2. Do you delude yourself with notions and rationalizations that you are limited by the nature of the marketplace or the tape?
3. Are you willing to acknowledge your successes, or are you afraid that others will be disappointed or hurt if you tell them you have succeeded?
4. Do you hold back from succeeding because of some childhood notion about not deserving to win?
5. Do you hold back in your trading because of a reluctance to let it be as good as it can be?
6. Are you held back by imagined restrictions placed on you by other obligations?
7. How much do you distort reality because of fear of the consequences?
8. How willing are you to commit 100 percent to being in the game?
Ray Dalio Principles
Afew gems taken from Ray Dalio’s Principles. Here’s the link to the ‘Principles’ Ray Dalio founder of Bridgewater Associates published:
- I remained wary about being overconfident, and I figured out how to effectively deal with my not knowing. I dealt with my not knowing by either continuing to gather information until I reached the point that I could be confident or by eliminating my exposure to the risks of not knowing.
- While most others seem to believe that learning what we are taught is the path to success, I believe that figuring out for yourself what you want and how to get it is a better path.
- How much do you let what you wish to be true stand in the way of seeing what is really true?
- How much do you worry about looking good relative to actually being good?
- The most important qualities for successfully diagnosing problems are logic, the ability to see multiple possibilities, and the willingness to touch people’s nerves to overcome the ego barriers that stand in the way of truth.
- Know what you want and stick to it if you believe it’s right, even if others want to take you in another direction.
- In a nutshell, this is the whole approach that I believe will work best for you—the best summary of what I want the people who are working with me to do in order to accomplish great things. I want you to work for yourself, to come up with independent opinions, to stress-test them, to be wary about being overconfident, and to reflect on the consequences of your decisions and constantly improve.
Trade To Win, Not To Lose!
When athletes are consumed by not losing rather than by winning, the game is over, often before it has even started. The same precept applies to trading. As crazy as it sounds, most traders aren’t making the money they could be — and the reason, I’d argue, is the fear of losing it. Traders are far too worried about giving money back. This paralyzing phobia can transform talented, elite professionals into disappointing underperformers.
How many times have you been up in a trade and started to think about the money? Your head tells you to bank it quickly and then play it safe. After all, you made your mark for the day, or even the week, so your job is complete. That’s not the mark of a trader; that’s the mark of an accountant.
Trading is an occupation based on fleeting moments of opportunity. They’re here one second, gone the next and entirely out of anyone’s control. The best traders love this, and even crave it. When the action is on, they’re prepared and trained to strike hard, as they have no idea when the next great trade will appear.
It’s akin to fishing: You can be out on the water all day and not get a bite, but when you hit a school of tuna, you better have your rods ready and baited to maximize the opportunity. All that matters, ultimately, is how many pounds of fish you caught, not how long it took to reel them in.
The key is to force yourself to step outside your comfort zones.
- Develop guidelines that will require you to increase your position size.
- Should you fail to follow your rules you must impose severe consequences.
The goal is not to change your personality or eliminate your fear, but rather the purpose is to get you out of the comfort zone of hording money.
Money in itself is useless, unless it is put to use!
Warp Speed or Turtle Speed?
A lot of statistics are published about the number of traders that are ’successful’ even though we don’t always receive their definition of successful.
Whether it is 70% or 95% of new traders that are said to lose all of their capital in the first 30-60 days, the real question is WHY??
In almost every case that I hear about when a person states that they quit trading because they lost all of their money in the first 30-60 days so they got discouraged and said that trading was not for them, these individuals attempted to move too fast when they started. They had acquired very little, if any, type of training and then jumped into a live account without any direction or plan.
Anyone who steps into the trading world (or any endeavor) without training to acquire the skills needed to approach the new program is setting themselves up for a very challenging situation and generally more failures than successes.
You can approach a new situation in life at warp speed and take the consequences or at the speed of a turtle and build your skills and experience so as to eventually acquire warp speed movement, but with turtle-like results, which is what the turtle always experienced when he raced the rabbit….. Success!!
Truth
“Truth kills those that run from it “-Persian proverb
Traders must be able to face the truth.Great traders have learned these lessons early in their careers.Roy Longstreet in his classic book view points of a Commodity Trader started that “the first mistake teaches -then second mistake kills !”
Facing the truth in trading is necessary to prevant the consequences.Truth is necessary at all levels of trading.It is just as important to the novice as it is to the seasoned veteran.The main difference lies in the ability to face the truth.
Truth seems so somple !But the psyche can do amazing tricks through rationalization.Some of these tricks seen to have no other purpose then to prevent you from seeing the reality of the truth.The Bible states -“The truth shall set you free “Every religion has a saying echoing the same theme.Overcoming not facing the truth can be accomplished by writing down the pros and cons of telling the truth.Once it is committed to paper the decision should become self-evident.