How do you view the markets? I mean, if you were asked to describe trading metaphorically – what would you say?
I asked this question back in 2011 here. It still remains a fascinating topic to me. It’d be interesting to know how others view it, and at what stage they are in their trading journey…
Mind Over Matter
Is it really so important? I mean, if you have an edge(s) to consistently beat the market – why would your mental outlook matter so much.
Obviously, you need an edge. But if there’s one thing I have learnt about myself over the years it’s; most of my trading problems were created by myself.
In fact, knowing your personal traits and mind is 50% if not more of the entire edge. How often was an ‘edge’ the reason you got out too early, or late, did something impulsive, closed a profit before the move developed or second-guessed a trade?
This is why the whole metaphorical view interests me. Those that instinctively describe trading as a fight or battle are having just that. Probably not what you wanted to hear if that’s you…
On the Bright Side
You can change your outlook, when trading the markets it’s best to approach them with a sense of calmness. Many a bad decision was made in the heat of the moment. Intuition and experience count for a lot, but it’s important to embrace the uncertainty and simple fact that; there is risk. You just need to manage it effectively, while applying all that you know. Thinking like this (longer term) allows you to focus on the here and now, in the moment, quite calmly, resulting in doing the right thing.
Consistent application and preparation will lead to better things. Intuition comes with experience, don’t rush!
When I originally asked the metaphor question on the link at the beginning of this post there were some interesting responses. Those that I know to be very profitable replied with metaphors such as:
Not a comparison to some blood-curdling battle from day-to-day. The emotional torment is self inflicted.
Aside from exhibiting a healthy mindset, it’s important to know what your edge(s) are. You’d be surprised to hear how many have the ability to make money, but don’t know exactly why. Knowing the characteristics of any particular edge huge. It’ll lead to finding more, and the ability to adapt when situations change.
This may not apply to all, but for me it’s a certainty. Trading has taught me much about myself, in the sense that monitoring my behaviour whilst trading has shown me my own character traits. You just cant ignore them if you’re to get far in the markets. Maybe not to others, but it helped me realise just how frustrated and impulsive I could be (early on). Having adapted and moulded my attitude to he needs of the market was a massive bonus outside of trading.
I’m not going to say it’s made me perfect, far from it. But it’s certainly made me more aware of my behaviour in any given situation, for me, a positive thing.
Being aware of myself also leaves a sense of confidence in decisions made, which funny enough, often leads to better decision making too!
Recent: £400 Bank Challenge (3 Days)
p.s. If you have a different metaphor for how you see trading and the markets, drop it in the comments below!