Trade The Journey

Trade The Journey

Trader Destruction: Hope and Indecision!

Greetings to all the new and returning readers.

I’m always hopeful that with each forthcoming weekend, I could begin the post with the abundance of positivity in the world. However, that’s not the case and probably won’t be for a while.

I won’t spend time rehashing the current events of the week. I’m quite sure you may be familiar with them. Nothing surprising has happened thus far, except the new normal of chaos. I suspect this will continue until the election. A part of me is saddened that in this election, we face the repeating of a cycle.

Instead of taking a step forward, we seem to be wedged between going back and to the side. Regardless of the outcome of the election, we do have domestic and international challenges exacerbated by the current administration. We also have problems that were bound to occur with the rise of foreign powers.

I like to trade, but I also enjoy economics. I’m fascinated by supply and demand. At the root of each market are supply and demand. This is most definitely true of Trading.

 

The beauty of life is in simplicity.

A lot of thought goes into making and keeping things simple. I always think of the story of the Apple Ipad usability test conducted in the middle of the rainforest. No, it was not planned. A girl from the village picked up the iPad and began using it without instructions or a seminar detailing features that needed notes to use. Of course, this is isn’t the whole story but I’m sure you get the message.

Simplicity and ease of use require forethought and clear thinking. There’s a combination of possible interactions the user could have with a product.

Thinking out loud, I’d design a product where the product performed a set of functions with a total of twenty variabilities included. That’s why I am not a product designer.

You can find many similarities between the process of Trading and almost anything you do in life. The only difference between Trading and almost anything else is the tuition you pay immediately for faulty forecasting or reasoning.

Currently, I’m reading “The PlayBook: An Inside Look at How to Think Like a Professional Trader.” 

Its great book detailing setups and the explanations behind their positioning methods. This book is tough to find, and on Amazon, it’s listed for nine-hundred dollars. One statement in the book particularly caught my attention.

“A trader is mostly a master of risk management.”

It clicked. I read about the importance of living to fight another day in the trading arena. Cutting your losses short and letting your profits run is the objective of each trader’s success. At least it should be, but how do you accomplish this difficult feat?

For me, the critical component of cutting your losses short is eliminating indecision. Indecision and hope are the enemies of maintaining your status as a profitable trader. There’s nothing more discouraging than waiting for a trade to break-even.

I’ve been in losing trades like everyone and sad to say, I’ve been a victim of hope and decision. I’ve watched in horror as the position turned against me. Clawing my way out of a losing position felt similar to climbing out of an open grave.

Volatility is a trader’s best friend or worst enemy.

It’s in a trader’s best interest to practice cutting your losses quickly, which means eliminating indecision. A parallel comparison would be procrastination in life.

Trading largely imitates life.

Here are some thought processes to help end procrastination and indecision in Trading:

Just do it. “Just Do it” happens to be a Nike slogan and an excellent model for living. When you just do it, all of your questions on how to get started are answered. You learn as you go.

Next Play. This is another anecdote I got from The Playbook. If it’s a losing trade, recount the missteps in placing and exiting the trade and move onto the next play. All of the great players are experts in short-term memory. Ask Tom Brady if the interception from the previous play hinders his confidence for the upcoming play. Next Play.

Planned Exits. There’s an art to placing stops, so they are filled and leave room for profitability in a trade. I’m still learning this art.

Everything we do is interconnected if we choose to view things that way.

Becoming a decision-maker in Trading requires strength in character. You have to believe that the next opportunity is in the next trade. You also have to think that over a series of trades, you will be a profitable trader.

All of this leads to the fact that Trading is a demanding profession. There are many things to consider when trading.


This past week:

The current economic limbo has hit many people hard and will continue to so for the foreseeable future. As uncertainty and cautiousness start to permeate the attitude of people, the economy will continue to stall and begin its descent.

To keep the country afloat will require more and more debt. I’ve heard people doubt that the Coronavirus exists, and the numbers are inflated. I’m often asked, do I know anyone that has the Coronavirus personally?

I don’t, but that doesn’t mean we shouldn’t take this threat seriously. The consequences of ignoring the warnings are dire. It’s akin to playing Russian roulette with the effects of the Coronavirus lasting for a lifetime.

I’m beginning to see the effects on the economy of this prolonged battle with an “invisible enemy”. I’ve felt the effects, and luckily, I have a few dollars saved to weather the storm.

This past week, I’d like to give myself a “B” for continued perseverance.

Cut your losses quickly. Indecision kills opportunity.

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