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Be Flexible

As traders in the markets, it's informative to study everyday examples of mass psychology. Although humans are highly intelligent, they can act like cattle blindly following the leader of the pack to the slaughterhouse. For example, have you ever observed how people drive in busy rush hour traffic? On a crowded freeway, it's common to see people refuse to acknowledge that the flow of traffic has slowed from 65 to 35 miles per hour. There's nothing they can do but patiently wait for the speed to pick up again. Rather than flexibly considering realistic alternatives, however, they waste time switching lanes in a fruitless attempt to make up the time they've lost. Similarly, on a congested downtown street, frustrated drivers are willing to turn into a busy intersection even though there is no way to complete the turn before the light changes. Soon they are stuck in the middle of the intersection, and they and everyone trying to cross the intersection are trapped.

There is safety in numbers. We follow the crowd out of fear. We try to control the world because we are afraid of chaos. But the quest for certainty usually leads to rigidity. And when you are closed off from the creative parts of your intuitive mind, it's hard to trade the markets innovatively and with the carefree mindset characteristic of traders at the top of their game.

How can you trade more freely and creatively? First, manage risk. Rigidity reflects fear, and if you trade with money that you can't afford to lose, you will know deep down that you really can't lose. If you risk relatively little on a trade, however, you'll feel more at ease.

Second, try to cultivate a carefree attitude. Don't make everything so personal. Trading doesn't have to be about your self-worth or abilities. Remember, no matter what happens, you have inner worth. Stay emotionally detached. The more you can remove your ego from trading, the more you can enjoy the process of trading. When you ease up, you'll feel as if a weight has been lifted. Suddenly, you'll see trading opportunities that were illusive before. When you take some of the pressure off of yourself, you allow your mind to expand. Your vision becomes clearer and you think creatively and intuitively.

Third, accept your limitations. Don't try to live up to unrealistic standards. Rigid traders believe they can force the markets to do what they want. It's just like a frustrated driver trying to travel at 55 miles an hour when a chemical spill on the freeway has created a traffic jam. It isn't going to happen. It's better to realize that you are human, and there are those times when there is nothing you can do to change matters. In the end, you must accept the fact that you can't control the whole world, and similarly, you can't turn yourself into something you are not. The irony is that you probably are quite intelligent and creative. But when you force yourself to be intelligent and creative, you stifle these qualities. By accepting life circumstances and personal limitations, you unleash talents that are suppressed.

So remember, you are human. You don't need to be right all the time, and you don't need to fully control things you can't control. Be human. Accept your limitations. When you do, you'll free up mental and emotional energy that you can use to trade creatively and profitably. 

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Saturday, 13 April 2024

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.