When you think of any aspect of your life, what separates the winners and losers is usually in their mind.
Think back to High School. I know for some it may be painful :). But think back to who were the smartest people in the class and who was at the top of the class.
It was not always the same person. In fact, sometimes some of the smartest people are near the bottom, while those of average intelligence are near the top, but they work very hard.
It all comes down to how they work, and how willing they are to work. Its a discipline thing, an emotional thing..but not an intelligence thing.
If you look at trading, the various methods and whatnot, there are a million ways to do it. Maybe more.
I have a friend who is a great scalper, very consistent. He makes a few trades a day (he's not a hyperactive scalper), and averages about a 50% return a month on his account. He is a great, but I could never make money how he trades. Id probably loose a lot because it doesn't fit me.
There are thousands of chart patterns out there you can use to trade with, but most people can not. Simple things like bull flags and bear flags. They have the best RR of any pattern out there, but I promise you most people are loosing money with it.
Or the Oops pattern. Over time it is the most accurate pattern I have found. It also gives a pretty good pay out. You know what, people are going broke trading it.
So this can lead you to one of two conclusions. A) Nothing works and I might as well stop trading now. Those who are successful at this just lucky, statistics will dictate that some people will make money even if just by luck. or B) There is more to trading than simple mechanical things and what separates the winners from the losers has less to do with set ups than the losers think, and its more "something else"
How many of you get a headache every now and again? or a Migraine? and when you do, how do you feel? How easy is it to get about your business etc.
What if you had no choose but to get about your business? How would you do it? Could you do it? How?
This is going to get me into something very personnel about my life, so bear with me a bit.
I wont be specifically talking about trading here, but it has EVERYTHING in the world to do with trading success. It relates to what a powerful weapon your mind is.
Several years ago I pretty sick with a viral infection. For about 3 1/2 weeks I had a steady temp of 101 to 105 and also during this entire time I had a pretty acute migraine. A 22 on a 1 to 10 pain scale.
Eventually the virus and the fever went away, but as a result of the high fever and the intense pain I was in the entire time my pain receptors managed to get "switched" on all the time.
So the result is that every minute of every day I have a mid level migraine headache. If I stop to think about it, and I go back to the 1 to 10 scale, then I have a pretty steady 6 going.
When this first started the only thing I could do for any relief at all was go to the doctor for a shot of Demerol or Morphine. I was doing this all the time too because it was the only time I was not miserable. For some time it got to the point were I was not getting out of bed at all, and I was suicidal because the only thing in my life was pain.
Vie been to all the specialists that deal with chronic pain and migraine. Here in Iowa, at the Mayo Clinic, in Michigan, In Chicago, In Baltimore, and they all come to the same conclusion which is basically, Geez it sucks to be you. They can do the tests and see that I'm in pain, and they have figured out what it is, just they don't really have anything to treat it.
This went on for a long time, during which I rarely got out of bed..and the only time I really left the house was to go to the doctor or the hospital. Lights out, moody as hell and just in general a really pleasant person to be around.
If you were to talk to me about anything, it would only be my pain. That had become the central focus of my life. How bad it is, how bad I feel, and God damn it how bad you should feel for me. During this time I am continuing traditional medical treatment, trying to find the magic combo of medicines or whatever. Nothing was coming of it.
So finally I ended up @ the Mayo Clinic's Pain Management Clinic. Its a one month pretty intense program for people who are basically at the end of their rope. Its certainly been established by that point that they are in a heck of a lot of pain, and its been established that there is nothing at all Medical Science has been able to do help them. Narcotics, Biofeedback, Multiple Surgery, Physical Therapy, Acupuncture. (Bullflags, Bearflags, Penents, Oops, Avalanche)
I went in hoping that they would have the magic bullet. Some pill I could take or something..but I found out that is not the case. When I got there, I expected to find the best Neurologists and Anesthesiologists the medical world had ever spit out. I was in for a hell of a shock when I found there was one doctors on staff, a psychiatrist and there were some psychologists..but not a single "real pain doctor".
When I got there I sat down with the Medical Director of the program, and the psychologist who had been assigned to me. We talked for a few hours about my headaches. What makes them better, what makes them worse. Do I notice any signals before they really flare up.Anything that can lead to a flare up? For me its certain smells, or not exercising enough, or exercising too much. Getting too much or not enough sleep (mostly too much), not eating enough and once I have them any sound or light is just horrible. So we went through that and I got into the program and met the group of people there.
A pleasant group of people, so they asked me: "How are you doing?". As per my routine I started to talk about how bad my headaches are and Jeez I hope they have the magic bullet here, but they did not let me get any further.
No they said, "HOW ARE YOU?"
So, I stumbled and thought for a bit, but I didn't have much so I went back to the tried and true, my headache. Again I was stopped, this time by a the nurse who ran the group meetings.
She said "Brandon, are you simply a walking headache? How are YOU?
And I really did not know what to say, because for a long time that had been my life. I was a walking headache.
I was in the program for 3 weeks, and really the entire point of the program was to let a person know that, everything has been done to try to ease your pain (every setup tried, every chatroom a member of, every seminar attended for the traders out there) Every medical treatment that everyone knows about, and every one that very few people know about too. Its all "been there, done that", and the end result had been the same. Nothing, I was exactly were I was when I started. That is, I was bedridden, in terrible pain, miserable and suicidal. But their program focused on taking the control of your mind back..you don't have control of the pain, but you do have control of you (you cant control the market, you can control you response to it)
During the time I was there, I fought the program almost the entire time. It was not at all what I wanted to hear. I was miserable, I had a god damn headache and they would not let me take my fleeping medicine. But, in the last week, and after I left, the program started to sink in and its had a major effect on my life.
The pain is still there, sometimes it does become overwhelming and I have to take morphine for it, but the important thing is, I get by. Nothing has changed at all with the headaches. But what has changed is more important anyway. What changed is how I associate myself and what goes on around me.
So how does this related to trading? Lets look at your average daytrader. He is up $1000 on his trading and you ask that trader, how are you doing? They will be doing excellent, I can almost promise. Now lets say that instead of being up $1000, they are down $1000 and you say, how are you today? They will probably think the world is ending and be miserable.
IMHO, this is the place most traders screw themselves over. How do they related to themselves and the market? When the money is positive, they are good, when the money is negative, they suck. So, they are relating themselves to the market almost entirely by the amount of money they are making. Good or bad is defined by, how much did I make/loose? If the trade made money, it was a good trade, if it did not it was a bad one. If you make money today, it was a good day, if not, its a bad day.
Good Trade = One I made money on
Bad Trade = One I was stopped out on.
Good Day = One that was profitable
Bad Day = One that was not profitable
But looking at it in this manner tends to lead to larger and more frequent losses. A better way to look at this is to say, did I have a valid plan and follow it? If yes, good, if no bad.
A bad trade is one that you did not follow your plan on, regardless of the outcome. A good trade is one you followed a valid plan on, regardless of outcome.
This isn't in my experience though how most people CHOOSE to look at things. "I blew my stop, but the trade came back and I made money. Wonderful, great trade"
Most traders try to read all the books out there about patterns and setups, but in the end, if they associate things in a screwed up way, they will get screwed up results. Nothing will ever matter if the association is wrong. Nothing will help you. Its not easy, its probably one of the hardest things you will do. It wont seem natural. It will seem like exactly what it is...very forced (like getting up and trading even though I have a headache and I want to die if I think about it too much)...but slowly, it will come around. Look at trades in the context of an overall plan and I think traders will have better results.
Sorry for the extra long post.
Brandon |
