Trading, be it successfully or not, is a very stressful career. When one is dealing with making and losing money based on your perceptions the stresses can be enormous. You must do everything in your power to eliminate the stresses.
I have never met or heard of a successful, highly stressed trader. In fact it’s quite the opposite. Most of the successful traders I have talked to seem very relaxed and confident. I suppose this is what has made them such success in the first place.
Reading Market Wizards (Jack Swager) one common factor picked up on all the best traders was their ability to disassociate them-selves with the market action. It was almost as if they were unconcerned with their positions. Considering some of these guys (and girls) traded with hundreds of millions of dollars at a time this is a remarkable feat. Most of the traders I know get excited when they have a couple of hundred dollars at stake.
I know my own trading results went through the roof when I actually spent less time “trying to control the market.” By this I mean staring at the quote machine and end of day graphs all the time. I took up tennis lessons, jogging, reading, writing, and even other business ventures just so I could take my total focus away from the markets. Not only did my results improve dramatically but so did my quality of life.
How can the top traders keep it so cool when the risks are so high? Go through this book again:
1) They decided a long time ago to take responsibility and find out what works
2) They have a system that fits them with a built-in support system.
3) They plan every trade down to the finest detail (wouldn’t you if you had $50 million at stake? more importantly they know when push comes to shove they will follow the rules.
4) They have put the ground work into this system and continue to do so.
5) They have complete confidence in both the system they follow and in their own skill to flawlessly execute it.
6) They definitely view trading as a game in points and stopped counting the money a long time ago. Most of the top traders are very wealthy so if they aren’t trading for enjoyment (and winning) they’d simply retire.
7) Finally they learned a long time ago that they alone cannot control the markets. Watching a quote machine and hanging on to “guru” advice all day is a losing system. Most of the top traders have a life out-side of trading. Realizing the importance of keeping it all in balance.
Trading is no different from any other aspect of life. If your total focus is on one point then every little dip and peak becomes exaggerated. This kind of peak and valley emotional trading will not only ruin your trading results but it could destroy you as a person as well.
Even if you was to make millions from the markets is it worth it at all costs? Surely it’s the journey that is important and not the arriving at the destination.
In order to trade successfully you need to take time off. Re-charge the batteries and gain some perspective. I remember my first few years as a stock market player. I would spend all day, night, weekends reading, studying, staring at the charts, trying different systems, etc…. Frankly I wouldn’t wish it on any-one. Yes, I learned so much, without the intensity of study I wouldn’t have become so successful, so quickly (5 years) but if I had to do it again, or if I was giving advice to a new trader, I would have kept my life much more balanced. “Work hard, play hard.” “Not work and work some more.”
The stresses are big enough without making it the only focus in your life. Take a ten year view on your performance. Realize that if you can gain just a 30% return in the stock market year after year you are doing better than most.
Treat trading like any other business. Work hard from 9-5 and then be disciplined to switch off and live your life.
Futures trading is a weird way to make a lot of money. We are brought up to believe that to earn an honest day’s pay you must do an honest day’s work. But if you buy 20 contracts for $1,000 ($50 each) and the S&P goes up 4 points, you have made $2,000 profit. Amazingly it may have only taken 30 minutes to do this as long as you checked the prices for 1 minute daily and followed your rules. What else is there to do? Yet, most people will have a problem making this kind of money from the work put in. I am sure when the S&P gains ONE point most traders will snatch at the profits in order to take the sure profit and then lose those profits chasing other trades. Yet it will be the balanced trader who spends his time wisely and follows his rules who will always make the big money.
So keep it in perspective. Realize you have no way of controlling the prices. If you find yourself “itching” for more action then take up some interest AWAY from the markets. NEVER try to make your trading more interesting or exciting. If you do this you are forcing the markets into something that simply does not exist.
Remember to trade what the market is SHOWING you. Ask yourself whether you are trying to see something that doesn’t exist.
Successful, profitable trading is:
- Stress free