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Pulling the Trigger

Dear Joe, Sometimes I absolutely dread sitting down to trade. I have had so many bad experiences that I’m not sure I can pull the trigger. Is there anything I can do about it?

What happens to us as we trade colors the way we see things in the market and influences the way we approach them. We take a big hit in a particular market, and we decide never to trade there again. Or, when we have a great trade in a market, it produces pleasure, so we try to trade there again as soon as we can.

How do you envision the markets overall? More importantly, how do you conceive of your role in the market? Do you see the markets as potentially hazardous arenas in which you must be very, very careful? Do you see them as though everyone in them is out to take your money? Or do you view them as a place in which there is dynamic profit opportunity?

Each time you sit down to your trader workspace, do you feel uncomfortable and wish you were somewhere else? Or are you really eager to jump into your work, look over your charts, and get down to trading? Does plowing through new material feel like a lot of hard work, or does it excite you to learn new information that will add to your ability as a trader?

The way you envision the markets will have a powerful influence on your actions! So it's absolutely necessary for you to be very much aware of just what your perception is and what past experiences colored your perception. You need to honestly assess your vision of - and feelings towards - the markets and your role in them. It will surely be time well spent.

Here's something to think about: the longer you sit in front of your screen, the more bad experiences you are going to have. The thing that defeats most day traders is that of overtrading. As you continue to sit in front of your trading screen, your focus and your sensibilities become increasingly numb. The longer you sit there, the more the probabilities increase in favor of your making bad decisions and wrong trades.

Let me ask you a question that may put the entire situation into perspective for you. Have you ever seen old people in a nursing home sitting hour upon hour staring at the TV screen? If you haven't, can you picture what it would be like? Almost everyone has seen people who either by choice or circumstance, sit all day watching TV. They sit and watch the "boob tube" hour after hour. What do you suppose this is doing for their minds? Do you think they are becoming increasingly sharp? Is sitting there all day helping them to grow? What would you say is happening to their minds? Are they not going to suffer from an increasing amount of atrophy as they fail to think - as they fail to use their minds?

When I see a trader sitting in front of his trading screen all day long, it generates the same kind of picture for me as when I see someone watching TV all day. They are destroying their minds. At least with TV you might learn something. But what are you learning watching a cursor tick up and down hour after hour?

Trading is a terrible occupation if all you do is trade. Taking signals from a mechanical trading system is one of the most mind numbing, emotionally crippling things anyone can do. The shorter the time frame being watched, the worse it is. Is it any wonder that 90% or more of wannabe day traders last only 3-6 months in the market?

A successful trader has two major things going for him/her: 1. Plenty of money to have an excellent life-style. 2. Plenty of time to do some good in this world. But if you sit and trade all day, what do you have to show for it in the end? What have you produced that is of benefit to anyone but yourself?

I'll let you answer that. But my suggestion to you is that you strive to trade less, not more. Learn what the good trades look like, and then trade them only when they occur. And when they do occur, focus your money - trade as many contracts on the good trades as you can. Don't trade more of the time on lots of trades, trade lots of contracts less of the time on the good trades.

Use your time and money to help those less fortunate than you. After all is said and done, it is more blessed to give than to receive. Do you know what the word "bless" means? It is a verb meaning to "make happy." Paraphrased, that old saying translates to "you will be a happier person if you 'give,' than if all you do is strive to 'get.'" But if you are busy spending all your time on a 1-minute chart trying all day long to get, you're not going to be able to get much of the happiness that is available from giving.



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Monday, 27 May 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.