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You Need Control

The need for control is the biggest psychological impediment to profitable trading. Traders strive to control the markets, but in the end, they find that they must accept their fate and settle for controlling their emotions. When your money is on the line, it's difficult to remain calm, rational, and in complete control. You want to win, and there is a strong need to want the market action to fall in line, but trading outcomes are rarely sure things. It's natural to want to have complete control over your destiny, but it can't happen. Instead, as a trader, you must put up with where the markets want you to go, and you must try to control your impulses and emotions rather than "acting out" impulsively against the markets out of anger and frustration.

Many traders have a strong independent streak. They are used to having things go their way. This strong sense of independence allows them to work in an unconventional profession, like trading the markets, but it also usually means that they have trouble maintaining discipline. They may often want to control rather than be controlled. They may become frustrated by the numerous ways events can go against them, such as interest rate hikes, weak economic news, or media hype. There are a host of factors that traders cannot control. You cannot merely dominate the markets and make the markets go where you want them to do. Instead, you have to learn to go where the markets go, and rather than act out of frustration, you must maintain discipline.

How can you maintain discipline and self-control? First, you must accept events as they come. The markets are chaotic and unpredictable, and so, it does not make sense to believe you can control events. If you try to control events, you will become angry and frustrated. And when you are angry, you are bound to act on impulse and make decisions that you'll regret later. Second, develop trading plans that are easy to follow. If you trade with a detailed trading plan, for example, you will impose structure onto an unstructured reality, and this structure will give you a sense of realistic control. You can reduce some of the feelings of uncertainty, and feel in control, by clearly defining a target profit objective, and entrance and exit strategies. The more structure you impose and follow, the more powerful you'll feel. You will know what to do and when to do it, and you will gain some of the control you desire.

Seeking out complete control when your money is on the line is understandable, but there's only so much you can do. The winning trader tries to gain as much control as possible by managing risk and trading a valid trading plan, but at the same time, he or she knows that nothing in the markets is certain and that all you can do is change the things you can, and accept the things you cannot.

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Thursday, 13 June 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.