What brought you here to explore trading? What keeps you going? Desire… Right? Then why does desire to take profits out of the markets work against us time and again? The answer is both simple and complicated. Desire itself is needed else we wouldn’t be doing anything in life, however what brings us down when trading is, desire magnified, which becomes Greed. Well Greed is Good, but in the right portions.
The two twins, Greed and Fear, which we can see as the 2 twins ruling the markets work at different times and it looks as though when one is active the other is resting. It feels as though they are on a round the clock duty one working at a time.
Every single trader out there even if they are just executing trades based on a Model based system or even in the trading pits, is influenced by these emotions at some level. Especially when self interest comes into play there is no escaping these.
Then the question is how do we eke out profits from this profession? What are the characteristics that define successful traders? If you want to find answers to these questions you have to ask “Yourself” the following questions and “Pay” attention to the answers with no prejudice, no distortions of the truth and without deceiving yourself.
What does money “mean” to you?
How important is it for you to be “right“?
What is your definition of “success“?
What does a “loss” in a trade mean to you? you see it as a cost of trading or a personal failure?
All these questions can and should only be answered by you, since those are subjective questions with very unique answers and which will be very personal. These will form the mental makeup of yourself and gives you a good indication as to the chances of you being monetarily profitable or not (Please note I am not defining it as a success or failure)
Fear with a ,measured down connotation, is better than greed since that will keep you from getting into trouble and keeps you safe, Greed is good because that makes you go past your debilitating fear to take a trade. These two twins need to be tamed and used to your benefit to make trading a profitable enterprise. Yes it is possible. Here is the third element, consistency that eludes 98% of the traders or more. Most are consistently inconsistent since consistency is a result of discipline and that is the elusive dream to many.
Insanity is defined as doing different things and expecting same results. Sure you can get the same result which is “Inconsistency” when you act in unpredictable ways. Discipline and trading cannot be mutually exclusive if you ever want to make anything out of yourself in the trading enterprise. If you think otherwise I would tell you to give the money to charity or climb a roof top and throw the cash to wind, you will have at least satisfaction or fun and you will save yourself a lot of pain
Discipline in simple terms is knowing exactly how you will react under a given set of circumstances. The biggest challenge to many traders is with planning their trades, let alone the execution of their planned trades. Even if they muster the courage to execute their plan once or twice, they stop following their systematic approach at the first sign of a losing trade since they start questioning themselves. This is a direct result of how they perceive trading in the first place and the expectations. If you defined an unprofitable trade or for that matter any number of trades as a “Loss” or as a sign of failure then you have a mental makeup which is inconsistent with how markets operate. On the contrary if you look at a trade that went against you as a cost of doing business or as an opportunity to know how much more you need to learn or even as just an opportunity to reverse your position, then you will be with the perfect mindset to be profitable.
A trader aspiring for profitability should have his eye on consistency discipline and execution
Adapt, change and tame the twins to attain consistency in your results.
