I have a routine. I have been doing it for years so it is something of a second nature to me. Having CONTROL is about as good as it gets for a trader and is ultimately the final goal of a long learning curve. When a trader is in control of their actions and feels that he/she has a harness on their trades and portfolio, there is rarely a better feeling.
Having control could be considered a two part event. In the beginning you have your market and trade management knowledge, and in the end you have the actual application of it.
The first part of this event might be finding your groove or understanding all the
components of trading as a whole. It means digesting information and interpreting it into tangible, successful price forecasting. When you know you have it, you know you have it. When you don't understand why something is happening, you simply don't have it. End of story.
For me, I want to understand it all. I don't enjoy opening up a chart and not seeing a reason why something is happening. There is always a reason. I start by cracking open my news feeds and reading furiously. I draw lines and find technical references, price patterns, etc. There is always an explanation for every tick on that chart, and I want to know what it is. If I need better resources, I find them.
Too much? First off, I realize that there is no way for me to know the drivers of every single tick. It's ludicrous to think so and impossible. But this desire to understand has led me to an education that I can't get in a school or have taught to me by anyone else. Most other people could never explain to me the level of insight I seek or have the patience to do so, I realize that. I know full well of any gaps that exist in my knowledge so I go out and read, read more and absorb until I feel satisfied with the answer. If I question a writer's knowledge or ability, I keep looking until I don't.
If you don't know why something is or could be occurring, most likely you will find yourself in trouble if you try to take action on it. It is why, if I don't understand something, or my level of conviction is low, I find it nonsensical to try to do anything with it. It's like trying to drive with a blindfold on. Someone is going to get hurt. Other pedestrians, or just me.
It Begins With Honesty
In order to control your actions, you have to have some starting points with which to work. In no particular order of relevance, here are some quick things I wrote down about myself:
- I know the damage I am capable of, as well as the success.
- I know what bothers me and things I don't like, so I am quick to stay clear of them. Bad feelings lead to more bad feelings if I don't listen to my subconscious.
- I know that when I get overzealous, bad things happen. When I enter the market with ease, good things happen.
- I know when I see something, I usually only have a small window of time to take advantage of it.
- I know that if I don't work hard I lack knowledge. And when I lack knowledge I lack confidence in what I do, and a poor outcome is usually right around the corner.
- There is no need to impress myself or others. When I worry about what others are doing, I slow down, not speed up.
- I know what bothers me; conflict is one of those things. When my actions are poor the potential for conflict arises.
- If I have a bad habit and can't get rid of it, I try to work around it instead. Completely getting rid of the habit is far from easy and can take too much time. Keep working at it, but don't expect a solution overnight. I deal with what I have.
- I am driven by certain things, but realize that time is an issue. There is oftentimes only so much that can be done.
I have come to the point where these little things embedded in my brain are basically second nature and I don't feel the need to ‘fight' them anymore. People will tell you that you need to change certain things about your personality in order to become a successful trader. To me this sounds ridiculous. You just need to be honest with yourself and work hard, understand where your gaps are, and fill them up.
I know several full-time successful traders. Every single one of them is honest. They don't lie to others and they don't lie to themselves.
Trading Is Very Personal
I always tell others: don't simply seek out a ‘system' with fixed rules, think you will apply it and have it work successfully. This is an extremely rare event, if it ever happens at all. We like to listen to others that might seem to have more knowledge than us but at the same time, we can't expect to be that person. We are all 100% unique, thus our actions are as well.
Uncertainty Is A Natural Part Of Trading
You just have to deal with it. But there are times where your conviction levels go through the roof. You know damned well that should should be trading. You are comfortable with what you see. Are you taking action?
There are other times where your
conviction level is low, or not there at all. There is a split second cue in the back of your brain that says “I don't know what is going on here”. Are you listening to it and backing off? Or are you letting your conscious mind, emotions/greed etc. take over?
The probability for a successful outcome shares a positive correlation with what level your ‘conviction meter' is. If its high, your chances of a successful outcome increase. If low, you can imagine just as poor of a result.
Listen to your level of conviction. If it is strong, act upon it. If weak or in question, don't do anything at all. Typically, you have a short window of opportunity to decide where you stand. Take advantage of it.
Stop Asking Why, and Just Figure It Out
As I said earlier, conviction and/or confidence is gained through knowledge. Are you trying to take the easy way out or are you truly putting in the hard work required to propel you ahead? I know full well that people can be extremely lazy sometimes and don't like to work. I also know that most people that would have an interest in trading like things like science, technology, etc., and have analytical brains that generally like to seek out more knowledge.
Put your focus on what matters most and if there is something about the markets/price movements, etc., that you don't understand, find out the answer. Read the news. Read definitions of words you don't understand. If macroeconomics are your weakness, get more materials on the subject. Just do it yourself and you will prevent a lot of frustration, pain and anguish.
A 6 Step Process
Control is the ultimate goal. Getting control is, in my eyes, a 6 step process:
1. Honesty of yourself leads to the desire to learn.
2. The desire to learn leads to knowledge.
3. Knowledge leads to understanding.
4. Understanding leads to confidence.
5. Confidence leads to conviction.
6. Conviction leads to control.
It takes time, and not simply created overnight. That's the reality. So relax, you have plenty more years ahead. Go at your own pace, get the knowledge you need and focus on doing it right. You will be saving yourself from a lot of pain and anguish in the future.
Shift your concentration. Get away form the charts and start filling in your knowledge gaps.