Success Takes Time

[Soultrader 12]

New article that can through my email and thought Ide share with you all.

 

Success Takes Time

 

© Trader Insight, Mental Edge News

 

In my interviews with traders, I've often asked them to identify barriers to financial success. Over and over again, the need to be right and the need for immediate success get in the way of trading profitably. As one trader put it, "The two most common obstacles to successful trading are ego and impatience. Ego in that no one wants to admit they're wrong, even if the market is telling them that they are. And impatience in that…most people don't engage in consistent results-producing behaviors; they go for homeruns." Another trader said, "You have to be able to be honest with yourself about what you're doing. In many areas of life, it is important to be right. In the markets, it's not about being right. It's about managing risk and making sure the odds are stacked in your favor. If being wrong about a trade hurts you personally, then you're never going to make it as a trader. You can't let errors faze you. You just can't care. It's a little bit like rolling a die. You never quite know whether the next trade is going to be a winner or a loser. But if you stick to your plan and remain disciplined through a series of trades, more likely than not, you'll be in the plus column."

 

When your money is on the line, it's natural to want to be right. When you're wrong, you lose. But the need to be right can often get in the way of successful trading.

 

Most people hate being wrong. They hate being wrong so much that they lie to themselves about being wrong. But seasoned traders know that if you are obsessed with being right, you will never be honest enough with yourself to hone your trading skills to the point that you master the markets.

 

The need for perfection is usually admirable, but putting too much pressure on yourself can often spell disaster when trading the markets. The difference between the master trader and the novice is that novice traders are thrown off their game by repeated setbacks, while the master trader just brushes off mistakes and keeps going. Being wrong can hurt. It often feels like we are being punished for being a poor student, a bad child, or an unproductive worker. If you are not careful, you can imbue being wrong with too much personal significance. It can have symbolic meaning. The trick, however, is to remove the symbolism, and neutralize the emotions to the point where you just say, "So what, of course I'm wrong. That's what I expected. I'll just get over it and move on." When you are wrong and make a mistake, you need to get back in the game as soon as possible and try to turn things around. That's often easier said than done, though, especially when you have a lot on the line. But there's a lot you can do psychologically to set yourself up for success and avoid failure.

 

The first thing you need to do is make trades, experience being wrong and see that being wrong is not so bad. The more you face the unpleasant reality of being wrong, the more you will see that being imperfect is not so bad. If you believe that you must be absolutely right and can never be wrong, however, you'll feel ill at ease.

 

If you're wrong, you lose, right? That may be true, but the fact is that you cannot always be right, so expecting perfection will get you nowhere. You'll feel upset as you frequently fail to meet your expectations. How can you cope? First, you need to trade with money you can afford to lose. Second, you must use risk management to help you survive the learning curve.

 

Rather than make the same mistake as unsuccessful traders who choke under pressure, remember that you don't always have to be right to make a profit overall. Even by using a very simple set of risk management rules, and following them mechanically, you can come out ahead. The lesson is not to use such rules mechanically, but to consider how some simple planning and risk management can prevent emotions, such as anxiety and fear, from negatively impacting your trading decisions. When you are first learning to trade, risk management can help you survive, stay in the game, and allow you to hone your trading skills. As you gain more skills, you can risk a little bit more on trades you have identified as high probability setups and fine-tune your stop-loss or exit rules. But in the meantime, consider keeping your goals modest, with the main goal of minimizing risks, building skills, raising self-confidence, and refining your method.

[Jakew 10]

The text perpetrates the same risky psychic attitude it would like to teach to avoid.

 

It says "mistake", "error", "being wrong" = losing on a trade. It is hard to teach the ego to not be so bitter about a properly taken loss on a properly taken trade when... Mistake, error is something else than trading properly.

[PYenner 10]

Reflects my experience.

 

Impatience- waiting for the market to come to you, waiting more hours for the trade to develop or come out of drawdown, hard to maintain perspective and avoid kneejerk reactions that may or may not be justified. But if you can't out wait the market then you have given the market one more way of out smarting you. Part of me wants to be playing the market like a video game, full on, non-stop, no waiting, no real sense, but fun instead. The market has its own inconvenient time scale and it is not what I would chose it to be.

 

Perfection- As the Doc says, its about probabilities and certainty or 100% probability isn't available. Relying on something you know to be imperfect is easier said than done. Very easy to lose the plot and confidence with it. Keeping an overview on yourself is more difficult than following the market. The market is on a chart in front of your face, your view of your thinking is not nearly so visible.

 

Agree with Jakew too.

[PYenner 10]

Full honesty seems to go against human nature.

It is as if we need some lies, some indulgences in order to avoid feeling hard done by or robotic.

The things we want are the most difficult to be honest about, most reluctant to set aside.

[torero 10]

What I learned from trading, I apply to my daily life, it's a total eye opener and made my life much easier and happier. Honesty with oneself, accepting mistakes and responsibility, patience, humility, and of course hard work and a bit of luck. Something the real world don't really advocate or don't reward for applying these attributes. Two worlds apart.

[Jakew 10]

Reflects my experience.

 

Impatience- waiting for the market to come to you, waiting more hours for the trade to develop or come out of drawdown, hard to maintain perspective and avoid kneejerk reactions that may or may not be justified. But if you can't out wait the market then you have given the market one more way of out smarting you. Part of me wants to be playing the market like a video game, full on, non-stop, no waiting, no real sense, but fun instead. The market has its own inconvenient time scale and it is not what I would chose it to be.

 

 

I couldn't agree more. Patience = selectivity is the name of the game.