Here’s something that’s been on my mind for a while.
Partly this relates to me but also relates to a lot of people I know who’ve either traded, are trading or have stopped for whatever reason… Maybe I’ll fall into one of these categories in the future. Who knows? We shall see… anyway, now I’m just procrastinating on getting this out there… here goes…
I don’t think most people get into trading because they like trading.
My belief is that the majority of people open a trading account because they are focussed on the end goal (which is sold as a Midas-like ability to pluck unlimited cash from thin air) rather than any stage in between.
For whatever reason they have an issue (usually around lack of money, what a surprise) that they think trading can fix. Trading is seen and sold as a short-cut to an amazing lifestyle of ‘working’ 30 minutes per day, sitting on a beach and not having to answer to a boss. Here’s some bullet points cut from some spam I received this morning: –
Set your hours to suit you. To succeed as a trader requires as little as an hour a day.
It’s easy to start. All you need is a computer, trading account, charting software – and the right training, of course!
You can trade from anywhere. As long as you can plug into the Internet, you can trade.
No tax on earnings. Spreadbetting in the UK is not taxed, so you keep everything you make.
Yep, you’ll notice it promises you’ll be able to trade. Great. No promises about being able to make money though – haha 😉
Statistical probability shows that if you have enough people doing the same thing then x% of them will be completely awesome at it. They may be naturally talented. However, at this initial stage it will actually be a small number of people winning if you’re getting them all to perform a complex task.
Now, if you enter this arena when focussed on the end goal but don’t immediately (or quickly) begin moving towards this goal then you will get frustrated, upset and angry. Then you will quit. That was the end of your trading journey. How much you lost in the process depends on your emotional make-up… This is what most people do I guess.
Of the 40+ people I met who all started their trading journey in about Oct 2010 I know of 2 who are still trading… Everyone else has stopped or isn’t replying to email… probably also indicating that they stopped 😉
The reason I’m writing this post is to remind myself to forget about the end goal when trading and to focus on enjoy the process of trading and getting this bit right.
I’ll readily admit that I too was sold the ‘shiny thing, make it all better’ idea of trading which was enough to get me hooked on the whole idea.
However, I’ve noticed that when I’m enjoying the process of analysis I am able to approach trading decisions calmly without lizard brain dreaming up shite about fast cars and a life of luxury. Focussing on the process also means you don’t succumb to fear/dread/indecision around placing a particular trade which means you’re less likely to miss seeing/noticing something important.
What just gets in the way of making good trades is too much thinking/dreaming about the results you’re trying to achieve. The job is to trade well. If you can trade well then the money will sort itself out.
Ask yourself whether you can be flexible, disciplined and open enough to learn to trade. You’re learning a multi-disciplined skill so that’s the thing to focus on. If you are worried about your ability to achieve the end goal of endless luxury, fast cars (as sold) then that’s very self defeating and de-motivating.
Your lizard brain will be doing it’s level best to ensure you screw it up to ‘keep you out of danger‘ Lizard brain absolutely hates taking risks.
Your reward for going to the gym = fitness. Your reward for turning up at work = salary and career progression. Your reward for making a good trade = money (potentially – you can make a good trade and still lose)
The main point though is you have to love the activity to benefit from it. Dreaming about the results is ok now and again but forget about them when you’re doing the work to get yourself there. At this point dreams become a distraction and source of frustration.
Do the work.