Archives of “self doubt” tag

rss

Managing Risk

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Over the years I’ve been fortunate enough to get to know thousands of market participants. Some are long-term investors others are scalping pennies per trade on thousands of shares while others manage millions of other people’s money. The interesting theme I picked up on with nearly every one of them is that they each experienced panic and uncertainty at certain times in the market. Oftentimes, this panic stems from the inability to make sense of the market, to gain control of market participation. Thoughts such as whether or not too much capital is at work or perhaps not enough or even whether or not to be in the market at all seemed to consume them.

This ambivalence can consume and debilitate even the best market participants. The uncertainty or self-doubt about market participation is common yet finding a solution is not. The greater the level of uncertainty felt the higher the odds are that risk is being misperceived. Here are some questions that I’ve asked to assess whether risk was real or perceived:

  • What are your reactions, both physical and emotional, to a losing trade? A winning trade?
  • Have you rationalized recent losses?
  • Has your out-of-market homework/research fallen behind?
  • Do you monitor your positions by dollars or percentages?
  • Have you ever not taken a trade that made sense simply because you were burned before?
  • Has the number of indicators you use to enter/manage/exit a position increased/decreased lately?
  • Do you know the Beta of your portfolio?
  • What would others say about you when asked about your risk management?

In a sense, managing risk involves managing the emotional side of trading so that the focus can be on the cognitive side of trading. As an example, if I’m concerned with the direction of the market because my traditional analysis methods are giving unclear signals then it probably doesn’t make much sense for me to participate. My biases will impact the data, whether it’s of a technical or fundamental nature, and lead to poor decisions. If I’m unable to clearly define what sectors are leading and which are lagging and, more importantly, why they are moving in the direction they are, then my risk is skewed. It’s times like these that large losses can accrue as objectivity is clouded by subjectivity.

I’ve always used sleep as a gauge to help me know if I’m in-line with real risk. If I’m able to sleep at night and wake up excited to participate in the market then I know that the odds are good I’m managing my risk. If I’m unable to get a good night’s sleep and lay awake wondering about positions I have on the odds are good that my risk management is off. Yea, I’m pretty simple.

Trading Recipe!

  
  Education
#  #  #  #  #  #

RecipeforsucessThe recipe for success in trading are as follows:

  • *Identify a signal
  • *Take immediate action
  • *Feel good no matter what the result, as long as the trade is consistent with your technical bias based on sound probabilities

On the other hand, experiencing hesitation or self-doubt, just at the moment of action, is the recipe for failure!

Simple Formula For Performance.

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Potential is what everyone has inside them, it is the education, learning, development, support and time put in that enables one to continually develop their capabilities. This can increase, at least until either physical or mental limitations constrain further growth. 
Interference is what detracts from potential to reduce performance. This can be down to any number of reasons, perhaps environmental or external factors, physical or mental hurdles or limitations, poor execution of process, inadequate self-management. Many of these can be deatlt with in some way; however, the greatest threat in most cases is from attitude and mindset. Perhaps it could be something as simple as seeing yourself failing and recalling the look of an angry parent, a doubting physical education teacher or a school bully from your younger years who always told you that you did not have what it takes. – This creates that painful memory which instils that moment of hesitation or self-doubt just when you least need it. – Who hasn’t at some time during their trading had that pang of self-doubt, or lacked the self-belief or confidence just at a crucial moment, and then looked back with regret and heartache, in some cases leading to a whole cycle of self-doubt and poor decisions, execution and position sizing.

The 'Self-Factors' of Successful traders

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #
  •  – Knowledge of oneself and how one acts and behaves in situations and environments.
  • Self-Belief; – Self-Confidence – assuredness in one’s actions, judgments and abilities.
  • Self-Trust; -The ability to have faith in oneself under duress and pressure.
  • Self-Reliance; – Ability to depend on one’s own capabilities, judgment, and resources , and acceptance that nobody else is responsible for profits and losses.
  • Self-discipline; – A structured approach that keeps a person focused and grounded against negative forces and pressures.
  • Self-Control; – Is the ability of exert mind muscle and will-power to overcome the negative effects which can so easily distract and distort perceptions and judgments.
  • Self-Motivation; – Describes the initiative to undertake risks and activities when the mood and environment have been counterproductive.
  • Self-Esteem; – High regard, respect or value for one’s self, but not to the level of being conceited, or having an over-inflated opinion of their worth.
  • Self-efficacy; – Belief in one’s own competency and ability.

In summary, successful traders take responsibility for their own actions, but rarely beat themselves up. – If I was to sum it up succinctly, they know themselves, they like themselves, they believe in themselves, and above all – ‘they are comfortable in their own skin’.  (more…)

Trading Recipe!

  
  Education
#  #  #  #  #

recipe_card_chef
 
*The recipe for success in trading are as follows:

  • *Identify a signal
  • *Take immediate action
  • Feel good no matter what the result, as long as the trade is consistent with your technical bias based on sound probabilities

On the other hand, experiencing hesitation or self-doubt, just at the moment of action, is the recipe for failure!

Patience & Confidence

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

The market, as much as anything in life, has a way of transforming us from cool, calm, collected individuals into irrational, impulsive, disoriented speculators. Clearly it’s in our best interest in terms of long-term profitability to spend the majority of our time in the former group rather than the latter.

Acknowledging when things aren’t going our way is the first step to becoming a more patient trader, but it’s having the patience to wait things out until we find a more harmonic rhythm that contributes immeasurably to our success.

It’s the losing positions that invariably do traders in. A number of the bigger losers many traders experience come as a result of not being patient and waiting on the right opportunity. Many of us tend to press when things aren’t working out, or we’ve just had a losing trade.

Traders can begin to play catch-up and go on an emotional tilt. It’s the paradox of trading in many ways. The same competitive drive we use to achieve our success has components that can hasten our failure.

When going through my daily checklist, I send out to members of my mentoring program, I always emphasize that the markets provide a multitude of chances to trade. One need not force action when the setups aren’t right. Traders who get into positions with “the best of it” or “an edge” significantly increase their chances for success in the long run.

Confidence comes from a number of sources and is developed through successful implementation of a strategy. It is also a byproduct of the unwavering belief that what you are doing will be successful. This is critical because, at the moment of truth, when you are in a position, self-doubt has a way of creeping in. It’s tempting to deviate from your plan at these times.

While I’m not suggesting that you be inflexible in your position management, I am saying that having belief in what you are doing goes a long way toward your success. In fact, it’s the confidence in your trading skill set that can give you the ability to make a decision to get out of a position, knowing that things aren’t working out. This conviction is a hallmark of great leaders and inspires others.

Accept Ambivalence

  
  Education
#  #  #

If you are contemplating a trade, you may have mixed feelings about it. Some indicators will signal a buy and others a sale. When you make a trading decision, though, such ambivalence and self-doubt should disappear. If you trade often enough, ambivalence will also fade from being an issue. Experience teaches you that.

After your trading day ends, you may want to continue practicing so that each trade becomes rote. To trade decisively, push aside any feelings of ambivalence and make a decision to trade or not.

Mental Toughness

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

MENTALTOUGHNESSYou must eliminate “Human Emotion” as much as possible in this business. It is paramount to success.  Unless you are adapt at predicting the future, your mind is a far weaker ally than all the tools in your toolbox.

Using a Star Wars analogy: the Jedi were superior in mind control and were able to play tricks with weaker minds. Humans are emotional bunches who are not fully prepared for the forex market.

Really once you overcome fear, self-doubt, emotions, and attachment to money you, will be on your way to long term success. Depending on how much power those words have over you, will determine amount of time needed to develop needed skills for growth.

Remember you will learn how to control fear, self-doubt, emotions, and attachment to money as those are human emotions buried inside each of us since birth. Abundance is our birthright, yet many never reach full potential. (more…)

Kiev, Hedge Fund Masters

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

I took notes on Kiev’s book when I first read it, and I’m going to select four self-therapeutic passages from them for this post. I suspect that most of my notes are quotations, but I don’t think it’s important to check their accuracy, though I will provide page references.

* * *

By establishing a vision, you have promised to achieve something. The promise means you are giving yourself permission to begin to act in the realm of the impossible, to create all kinds of openings. In that one promise, you begin to abandon self-doubt and the need for approval. This way of being in the world lets loose huge reserves of energy and creates enormous possibilities. Yet none of this can happen until you take the first step forward in pursuit of a goal with no guarantee of outcome. (p. 218)

Living in the gap makes you vulnerable. Once you’re out there, on the cutting edge, you’ll suffer breakdowns as well as breakthroughs. Although it will not always be comfortable, living in the gap between where you are and where you want to be will make your days far more interesting and action packed than if you traded with the intention of avoiding pain and discomfort. (p. 229)

It is useful to note when an activity becomes tedious, dull, and routine and leads to withdrawal and avoidance. This is the time to consider whether you are facing obstacles and are retreating behind your survival needs or whether these feelings signify that you have reached your goal and now need to raise the stakes. (p. 236)

The development of mastery is, in a sense, an existential and experiential methodology, directed at what is and what can be. You invent your own future through commitment to a goal, identifying what is necessary to produce specific results, and learning how to handle the unknown. (p. 247)

Greed and Fear Are Two Sides of the Same Coin

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Merriam-Webster’s dictionary defines greed as simply “… a selfish and excessive desire for more of something (as money) than is needed.” Greed is often referenced as one of the main contributors to trading loss. Greed mangles the mind by distracting the trader from what matters most in the trade, which is quite frankly to protect your capital by prudent planning and following rules. It also distorts your judgment regarding high probability strategies and effective follow-through.  Additionally, it is the other side of the fear coin; that is, greed can arguably be thought of as a fear of not having “enough.”  Of course, having enough is a purely subjective notion, but for the reasonable person, someone who wants more, more, more as in getting every cent in a move, or wanting more than one’s share, is considered “greedy.”  Whether we’re talking about the fear of loss or the fear of not having enough, either way it is a very difficult emotional challenge to getting the trading results that you want.  Now, the question is what do you do about those bouts with fear/greed that takes your trading effectiveness south?  The important thing of course, is to manage your fear/greed one trade and one incident at a time.

Managing errant emotions is one of the most important trading skills that you can develop. Emotions are an inextricable part of being human and cannot be totally taken out of the trading equation.   However, you wouldn’t “want” to take emotions out of your trading even if you could. Yes, negative emotions throw a monkey wrench into your process; for instance, anxiety, fear, greed, guilt, self-doubt, impatience, apathy, to name a few are what mangle your thinking.  (more…)

Go to top