Nice to see you’ve made it here. It’s not easy, sometimes even unpleasant to examine what’s “between your ears”. I find it amusing as there’s always something hidden in there to reflect upon. Being close to 70 first, I’m happy I can remember it let alone to learn something from it; second to be honest with myself. Everything I’ve done in life, the positive and negative, makes me what I am; damn proud and happy to give back.
Well without further ado let’s start to put this all into perspective and get started. I’ll start with the most realistic event you’ll experience; you’re going to lose; deal with it. This part of the overall six segments then addresses how you’ll make it real. You’re at a point where the marathon is just beginning. Set a pace you are comfortable with and stick to it. Remember the tortoise beat the hare; I’ve never had any innate speed when it came to sports. Perhaps that’s why I played golf. I started when I was six years old and didn’t play my first actual round of golf on a real course until I was eleven. Those who taught me didn’t want me to become discouraged; they wanted me to learn all of the fundamentals before hitting the links. That’s what I want you to do; begin with a “paper” or “demo” account then step up to a “real” account. Hone your skills, after all the only thing you have to lose is money and you have plenty of time to learn how to do that.
You’re Going to Lose
Failure is often due to a lack of harmony between your rules and personality traits. A big part of your investing and trading rules includes dealing with the taking of wins and losses. Traders often take a winning trade off the table too soon. Everyone likes to win, but when you have a winner on the table, let it run. You might not have as many victories to celebrate; that’s OK. Over time you’ll understand that letting that winner run, taking a larger, less frequent profit, is better than trying to manage and select a larger bunch of little ones. In acting in this manner you will build your self-confidence knowing that your actions, your analysis was the correct strategy to follow. It’s alright to be wrong but when you’re right, have faith in yourself, let your profits grow.
If you begin to lose money, get out. Just as you let your winners run, chances are if your initial decision is wrong there’s little that can happen going forward to change that direction. Never add more funds to your account to maintain any losing position. Take a small loss instead of letting a small loss turn into a big one. Offset the position and get into cash. Besides, you’ll often think more clearly after you’re out of a losing position versus watching a mistake get costlier.
Over time traders learn that they are going to lose; not every trade is going to be a winner. It’s funny, becoming a better loser is a significant part of becoming a better trader. It’s hard to imagine a world where everyone just wins. Theoretically, for every winner there should be a loser. In a zero sum game, the only entity to always makes money and wins is the clearinghouse; they make money every time you enter a trade regardless of whether you enter winning or losing trades. Remember you are not a clearinghouse, you’re a trader. In learning how to lose you should better understand the process but far too many traders think they always have to be right. Trust me, that is not going to be the outcome; if you think it is, you’ll be disappointed and no one wants that to happen. When handling your emotions, losing is actually a good thing to learn from, especially if you minimize the loss.
There are two sides to the financial coin and the emotional coin. The feeling that you get from the possibility of doubling your money is “heads,” while “tails” is reserved for when you get wiped out. Never let your “coin” land on tails; cut your losses short and let your winners run. Never be afraid to admit you are wrong; it builds character and over time self-confidence. Give it a try, my own experience validates exactly what I preach. It takes time but we all know that good things come to those who wait, that is as long as they work like hell while they are waiting.
Handling taking losses can be challenging, but there are several ways to effectively cope with it:
Acknowledge Your Feelings: It’s normal to feel disappointed, sad or even frustrated when you lose. Allow yourself to feel these emotions; process them.
Learn From Experience: Reflect on what has happened then try to identify what you could have done differently; what you learned from the experience. This can help you to improve and prevent similar mistakes in the future.
Maintain Perspective: Remember that losing is a part of life, and it happens to everyone. Try not to let it define you or your self-worth.
Stay Positive: Focus on the things you did well and simultaneously maintain a positive attitude.
Move On: Don’t dwell on the loss. Instead, focus on what’s next and what you can do to move forward.
Seek Support: Talk to friends, your family, or even a therapist if you continue to need help processing your emotions and moving on.
It’s important to remember that losing is not the end of the world, it can actually be an opportunity to learn, grow, and develop. It’s not how many times you fall but how many times you rise after falling. Remember, it’s all happening “between your ears”. Controlling your emotions, especially when it comes to handling losers is key.
Make It Real
Imitating another successful trader’s “personality” is a good place to start but doesn’t bring you any closer to achieving success. Generic descriptions such as day trader, scalper, swing trader and position trader exist; immediately classifying yourself into one of these categories doesn’t help either. Practicing all of what you know to be true then doing it consistently remains the longer term objective. It does not matter how you trade; rather understanding what you are personally as a trader first makes all the difference in this trading world. Take the time to figure that one out first; you’ll be happy that you did.
Building trust in trading strategies is based on a solid foundation of truth that often leads to success. With a better market awareness you’ll “see” the truth more clearly. Repetitive observations enable you to have more confidence in all facets of trading but remember, it takes time. Again, determine who you are first; the rest will then fall into place.
The phrase “making it real” describes the process of taking “something from an idea or concept to a tangible reality”. This can refer to many things, like inventing a new product, building a structure, implementing a plan, or bringing a vision to one’s life. The phrase can also be used in a more figurative way, such as “making a dream real” or “making a goal a reality.” It’s up to you; you can do it.
Know Yourself
Personality causes us to act in ways that are reflected in our trading methods. Once you understand your own personality, identifying detrimental trading behaviors and improving your trading plans becomes a regular daily goal. Reviewing your trades is essential; take good notes and don’t be afraid of change. The world around you is in a state of flux more often than it is stable. Understanding how to effectively deal with change enhances self confidence and that’s the goal. Often there is nothing holding you back . . . except yourself. Once you understand how to deal with that dilemma you’re well on your way to being a successful trader.
Understand your own natural skill set then develop a trading approach that matches. Cautious investors and traders might prefer looking for longer-term trends; someone who is more spontaneous might prefer day-trading. Behaviors can be modified, but the core of who you are is difficult to change. Don’t ever force yourself to be someone that you’re not. It’s better to develop a plan that leverages your strengths and obviates your weaknesses. You are unique; your path to success must be your own as well.
The phrase “know who you are” is often used as a way of encouraging someone to have a strong sense of self-awareness and understanding of their own identity. It can mean different things to different people. However, some common interpretations include:
● Understand one’s own values, beliefs, and principles, be true to them.
● Recognize and accept one’s own strengths and weaknesses.
● Have a clear sense of one’s own goals and aspirations.
● Be aware of how one is perceived by others and how one presents oneself.
● Have a strong sense of self-confidence and self-assurance.
● Be comfortable in your own skin, not anyone else’s.
Knowing who you are is a phrase that can be used as a reminder to take some time to reflect on one’s self, and understand oneself better. It’s a critical step in becoming the best damn investor or trader you can be.
There’s no easy pathway to making money, not here in learning how to invest or trade or anywhere else in life. Respect how difficult it is to invest or trade in these markets, put the time in and you'll do just fine; it’s a marathon, not a sprint and practicing every day is a pathway to becoming the best damn investor or trader you can be.
Hope you enjoyed this post. I’m just a young 68 years old; my Dad became a broker when I was 13. It’s time for me to ‘give back’ to all of you what’s in my head. It’s not always pretty but it’s based on history . . . and history, unchecked, repeats itself.
Everyone learns at their own pace. If you pick everything up the first time through, great but if not email me at david@thetickeredu.com so we can further help. Thanks again go out to Danny www.mrtopstep.com . . . check him out; he’s worth your “click” and thanks to all of you who have adopted what is being created and presented; we’re humbled by the response and referrals. Again, let me know what you want to learn, I’m all ears.
Rogers and Hammerstein’s “The King & I” gave us a song that fits well with today’s segment. It’s called “Getting To Know You” . . . get to know yourself ; what’s “between your ears” . . . that’s the best way to start.