Bad Assed Trader: Tomorrow I’ll be spending all morning trading with my coach, Emmanuel. His first question will be: “How are you getting on?”
In the first six months of my trading journey whenever he asked that question I felt an overwhelming urge to grab him by the shoulders, shake him vigorously and plead “You’ve got to help me! I’m not making any money here!”
After six months I calmed down and realised that it was normal not to make money in the first year and that he would show me the way, or rather help me to find the way, no problem. There have been occasional moments since where I’ve felt a little lost and at sea because my trading account has not been increasing consistently but generally I’ve accepted that this is a long game and I’m learning all the time, about the technicalities but also about myself.
In the last month I seem to have accepted this point at a new and deeper level because with redundancy by October looking ever more likely I’ve been casting around for other possible income streams to supplement my redundancy package.
The plan was that I take redundancy and then dedicate a year or so to trading exclusively, living off the redundancy package until hopefully trading generates sufficient consistent income. But I have come to understand that I trade better without pressure and an alternative source of funds will help keep the pressure down, as long as it doesn’t distract me from trading.
I hit upon the answer to the question of an alternative income recently and will blog more about that in my Faceless Bureaucrat mode shortly. It’s all very exciting and will help, rather than hinder my trading.
Coming back to my answer to Emmanuel’s question I do feel that tomorrow is the first time I will be able to say that I believe I really am on the way to turning that corner.
I know I’m the everlasting optimist. And a good thing too or I’d have given up ages ago, which I understand is what most people do when they start learning to trade. But I will share with you how I will explain it to Emmanuel.
The story starts about a quarter of a century ago when my oldest daughter was a baby. When she was old enough to sit up and pick things up to play with I bought her a “shape sorting” toy. It was a brightly coloured plastic box with different shapes cut out of the lid and it came with different coloured hard shapes that fitted into the holes. There was a star, a triangle, a square and a circle.
We spent many a happy hour learning which shape fitted into which hole and trying them all for fun. And a couple of decades later here I am basically doing the same thing with trading.
At first I couldn’t tell what shape the hole was, let alone select the right shape to go into it. Translated into trading terms I basically struggled to see when the right pattern occurred on the charts to offer an opportunity to trade.
Sometimes I would spot the opportunity – see the shape – but I’d pick the wrong shape to slot into the hole. In trading terms I would take the trade, it would start to go my way but I wouldn’t benefit because I would set the stop loss or profit target in the wrong place and get stopped out for a loss or at breakeven.
Then Emmanuel instructed me to stick to particular rules and just trade one strategy. This was like saying “Take the square peg and wait until the square hole and only the square hole appears. Ignore the star and all the others, just go for the square.”
What this revealed to me, about me, was that I’m not a very patient person and I do get a bit frustrated with waiting and sticking to rules so diligently. I know this because I did often find myself trying to bang my square shape into a circular hole telling myself it was a squarish sort of circle and would go in if I pushed and bashed hard enough. This tactic lost me a bit of money.
If I’m honest I can see that my years as a Faceless Bureaucrat had encouraged me to look at the operational context and then seek to influence it, a process of negotiation when planning and decision making. Often I was able to impact on that context and so if I had the equivalent of a square shape (the resources I had available whether that was money, staff, skills, time) I could mould the environment to accept it. But the Forex market just doesn’t work like that – it is much more like the shape sorting toy and accepts only what it accepts, not what you want to inflict on it.
The last time I saw Emmanuel he moved us onto a different track. He told me to spot where things were moving and find a way in. Now the shape sorting box is different and I’ve responded better to that I believe (though only time will tell).
Now when I look at the charts I sometimes see fuzziness and no shape, so I don’t trade there. Other times I see the shape and I look down at my box of shapes to see what will fit. I have a variety of shapes and they are no longer hard plastic but more bendy and flexible. I can’t change them much but enough to make them work with the opportunity in front of me. So if there’s a circle I can take my oval and bend it into a circle (this relates purely to the shape sorting image – there aren’t any circles on trading charts…).
Emmanuel has given me permission to use the rules I have learnt to exploit the opportunities I see in a more flexible way. This appeals to the Faceless Bureaucrat in me because I was very happy scanning and interpreting the environment in which I worked and then shaping a tool (writing and implementing a plan, for example) that delivered what was needed.
Looking back I realise that this was the style I adopted when I first started trading although not consciously and because I hadn’t fully learnt the rules or about my own weaknesses I wasn’t doing it well.
I know now that one of my biggest trading weaknesses is my optimism and confidence. I tend to expect price to move further than it often does. Now I’ve learnt this is my weakness I check myself and act pessimistically. Recently this has turned what would have been losing trades into winners. Strange but true.
As I say, only time will tell whether I really am discovering my true trading personality and how to use my strengths to trade successfully with this new approach. The good thing about having a morning with Emmanuel is that I can show him the trades I’ve been taking recently and he’ll tell me honestly whether it’s luck or improved skill that has led to my better results.
Fingers crossed...
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