Bad Assed Trader: Confession time again. This is getting to be a bit of a habit, but I like to think it is part of the process of cleansing my trading soul as I strive for trading purity.
This is not to say that trading is anything like religion but probably reflects a conversation my coach Emmanuel and I had about religion, faith and belief systems when we traded together last Wednesday morning. You may wonder why on earth we spend time talking about such concepts rather than staring at and analysing charts and price action. Well the reason is that Emmanuel and I share an interest in psychology and both believe that the key to conquering trading is about understanding - and therefore controlling - yourself better.
So back to that confession.
I've become too hung up on my performance and my need to drive it up, especially in relation to being Up On The Week.
Yesterday (Friday) morning I was too keen to try to turn around my earlier performance of the week (standing at -0.5%) and put pressure on myself to take a trade when MY SET UP HAD NOT OCCURRED. This is the original sin of trading - playing fast and loose.
Emmanuel tells me that we must stay "in the Now" when trading. He recommended "The Power of Now" by Eckhart Tolle, a book which provides a better understanding of what that means and how to achieve it. I've been working on this but I can see that with my current approach - developed over a lifetime of some years - it's going to take a little time.
The reason this is so important is that traders do bring their own baggage from the past into their trades - usually in the form of pain or fear of losing because they lost the last trade. This then influences them to act differently, rather than acting in exactly the same way, which is what trading requires for consistent success (as opposed to sporadic wins).
Traders also often bring the future into their trades. This is what I do too much. I know it's one of my biggest issues because as a Faceless Bureaucrat I've had my management style professionally analysed to determine whether I make decisions with reference to the past (experience), present (current evidence and benchmarking against peers) or the future (strategic goals) and I was found to be very future-driven.
Whilst being future-driven has its benefits in management and everyday life - being motivated to plan for the future, anticipating problems and taking action to avoid them etc it simply doesn't cut the mustard with trading.
The effect it has is just what happened to me on Friday. I was trying to improve my performance for the week - planning an outcome. I tried too hard to find a trade because I was influenced so heavily by this future aspiration.
So - confession: I broke my rules, I took a pivot short on cable (GBP USD) when price was still above the 50 moving average on the daily chart. Why oh why. When I look back today at what happened after I took that trade - price turned around and went up 160 pips. How much more wrong could I have been?? There goes another tenner.
Only moments before I had been looking for an opportunity to go long on cable and then, because some news somewhere (probably) caused the price to dip, crashing through the 50 moving averages on the four hourly and hourly charts I thought I was justified to jump in and join the crowd who by then were moving on. What a fool. I have to share it with you as part of my cleansing process - acknowledging the problem with living in the future rather than the now and sticking to one's rules.
If I had stuck to my rules and continued to watch I would have found my set up occurred two hours later when price broke up through the 50 moving averages again. I would have set my target at the next point of resistance, about 85 pips higher than my entry and that trade would have come home four hours after entry providing 4%. This is the difference between failure and success in following one's rules.
Still, I can't be too hard on myself as I'm still learning, it's still early days in trading terms. But I was kicking myself all morning - oh the error of my ways.
The important thing here is to recognise the mindset I created when I traded whilst being in the future rather than in the now. Next time that happens - and every time it happens - I must force myself to stop and not to trade. This is where the discipline comes in.
I've acknowledged my mistake. I've written it down and shared it. Now it's time to put it into my past and instead recreate that mindset of the Now, where it doesn't matter whether I take a trade on any given day or not - the only thing that matters is that a set up fully meets my rules and if it does then I take it.
Fresh start next week then.
And I'll be blogging tomorrow on a more optimistic note following an interesting discovery I have made.
This is not to say that trading is anything like religion but probably reflects a conversation my coach Emmanuel and I had about religion, faith and belief systems when we traded together last Wednesday morning. You may wonder why on earth we spend time talking about such concepts rather than staring at and analysing charts and price action. Well the reason is that Emmanuel and I share an interest in psychology and both believe that the key to conquering trading is about understanding - and therefore controlling - yourself better.
So back to that confession.
I've become too hung up on my performance and my need to drive it up, especially in relation to being Up On The Week.
Yesterday (Friday) morning I was too keen to try to turn around my earlier performance of the week (standing at -0.5%) and put pressure on myself to take a trade when MY SET UP HAD NOT OCCURRED. This is the original sin of trading - playing fast and loose.
Emmanuel tells me that we must stay "in the Now" when trading. He recommended "The Power of Now" by Eckhart Tolle, a book which provides a better understanding of what that means and how to achieve it. I've been working on this but I can see that with my current approach - developed over a lifetime of some years - it's going to take a little time.
The reason this is so important is that traders do bring their own baggage from the past into their trades - usually in the form of pain or fear of losing because they lost the last trade. This then influences them to act differently, rather than acting in exactly the same way, which is what trading requires for consistent success (as opposed to sporadic wins).
Traders also often bring the future into their trades. This is what I do too much. I know it's one of my biggest issues because as a Faceless Bureaucrat I've had my management style professionally analysed to determine whether I make decisions with reference to the past (experience), present (current evidence and benchmarking against peers) or the future (strategic goals) and I was found to be very future-driven.
Whilst being future-driven has its benefits in management and everyday life - being motivated to plan for the future, anticipating problems and taking action to avoid them etc it simply doesn't cut the mustard with trading.
The effect it has is just what happened to me on Friday. I was trying to improve my performance for the week - planning an outcome. I tried too hard to find a trade because I was influenced so heavily by this future aspiration.
So - confession: I broke my rules, I took a pivot short on cable (GBP USD) when price was still above the 50 moving average on the daily chart. Why oh why. When I look back today at what happened after I took that trade - price turned around and went up 160 pips. How much more wrong could I have been?? There goes another tenner.
Only moments before I had been looking for an opportunity to go long on cable and then, because some news somewhere (probably) caused the price to dip, crashing through the 50 moving averages on the four hourly and hourly charts I thought I was justified to jump in and join the crowd who by then were moving on. What a fool. I have to share it with you as part of my cleansing process - acknowledging the problem with living in the future rather than the now and sticking to one's rules.
If I had stuck to my rules and continued to watch I would have found my set up occurred two hours later when price broke up through the 50 moving averages again. I would have set my target at the next point of resistance, about 85 pips higher than my entry and that trade would have come home four hours after entry providing 4%. This is the difference between failure and success in following one's rules.
Still, I can't be too hard on myself as I'm still learning, it's still early days in trading terms. But I was kicking myself all morning - oh the error of my ways.
The important thing here is to recognise the mindset I created when I traded whilst being in the future rather than in the now. Next time that happens - and every time it happens - I must force myself to stop and not to trade. This is where the discipline comes in.
I've acknowledged my mistake. I've written it down and shared it. Now it's time to put it into my past and instead recreate that mindset of the Now, where it doesn't matter whether I take a trade on any given day or not - the only thing that matters is that a set up fully meets my rules and if it does then I take it.
Fresh start next week then.
And I'll be blogging tomorrow on a more optimistic note following an interesting discovery I have made.
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