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As I stand before market open at peace in my gleaming ivory trading tower with my meditation over I find Shakespeare’s advice floating into my thoughts.
Knowing yourself and your weakness is an important part of trading.
In fact, many argue that it is the most important part, more than predicting market direction or money management.
The stress is on Following your plan – note my stress on the word your and being true to yourself.
And being true to core selves is the base of it all. Quoting Shakespeare:
To thine own self be true
Polonius:
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.
Farewell, my blessing season this in thee!
Hamlet Act 1, scene 3, 78–82
"To thine own self be true" is Polonius's last piece of advice to his son Laertes, who is in a hurry to get on the next boat to Paris, where he'll be safe from his father's long-winded speeches.
As a trader and of course as a person we can relate to the above lines:
First, there is our outer authenticity – how well what we say and do matches what is really going on inside us.
Second, there is our inner authenticity – how well we actually know ourselves and are aware of our inner states.
Sometimes we need to act a (temporary) role just to get by. But sometimes, more often than not, we spend more time living non-authentically - trapped in relationships and jobs where we rarely get the chance to truly be ourselves. These traps have solutions – e.g. we can change the situation by taking steps.
However the fact is that most of the time we don’t know ourselves - our inner authenticity gets compromised and even lost.
From my vantage point currently I can contemplate my whole life.
How I grew up in modest surroundings ever protected by parents from the surrounding filthy culture (till we moved out of there) and how they were proud that I was ‘different’ than the populace. Moral and ethical values were high up on the expectations list.
What has all this got to do with trading?
As children we have no consistent identity of ‘self’. We are like water which fits into the jugs around us succumbing to peer pressure, expectations and learn to adhere.
We need to find our self - we become a self even when we are not aware of the philosophy.
A blogger says “People always say how you should be yourself, like your ‘self’ is this definite thing, like a toaster or something. Like you can know what it is, even.”
The question is – will we be able to find this elusive ‘self’?
But my counter question comes naturally – can we really be a single self ever?
And do we need to?
As a trader I would most definitely say YES!
Truly, ever since I began trading I have become more cohesive – trading has been a gestalt therapy.
But being ME?
I can KNOW me – I can discover things like my beliefs and then know what actions I am more likely to take based on those beliefs (e.g. ‘trends continue’ so I ’buy low and sell high’). This goes beyond mathematically proving the fact that ‘Trends continue’. If somewhere my self is in conflict with this belief though I agree with the mathematics but still close out early then there is a part of me hidden which has some control and which needs to be brought out into light. Here comes the difficult part.
But my ME changes almost every day. When I was doing my Diploma in Engineering I used to study so hard – grades were the most important to me. I used to be the topper which was just a side effect really. What was important was finding perfection in action and improving upon it every moment.
That was me.
But when I went to get my Bachelor’s I discovered many other things – I started playing the guitar for example, and then I wanted to do many extracurricular activities and finally could have been labeled as a slacker.
So where did ME go? Was I being true to myself?
The problem was everywhere I went I was the ‘star student’. The topper. But that was not me at all. I was good at seeking perfection and trying to put in as much hard work as possible to achieve that perfection and being a topper was not on my list of self at all.
Really society is all about not changing – people expect you do certain things and behave in certain ways like a stereotype. For example, watching Wall Street always made me feel like behaving like Michael Douglas even though I felt that this personality did not really resonate with being a trader.
Coming back to trading…
In trading you need to be constantly aware of the flux that currently is ‘you’. Multiple people reside inside you whether you like it or not.
However being yourself is truly the most important thing in trading. And there is a place called You though it is changing every moment. While this sounds New Age it commonsense really.
The truth is you need to be prepared to handle any curve ball that gets thrown at you – the twist is that a part of you is pitching and another part is on the other side and as you become better and better you start detaching yourself from all your identities and see things as they truly are not as you want them to be or as they appear to be.
It is a lonely place to be at, for very few people are around in this state. But the profits come and you are at a strange liberty with the market.
True prayer is not petitioning (e.g.god PLEASE let this trade work out, I swear not to stay so long in a losing trade again), it is listening.
Letting go of thoughts we enter a deeper inner stillness, become completely receptive.
Experiences that seemed uncomfortable, such as staying with a trade that the mind had wrapped with anxiety (what is it hits my stop loss? etc..), suddenly lose their power to make us react or run (premature exits!).
Suddenly we are wide awake to the mystery of each moment, unknown till it arrives. As things come forward (e.g. a failed double top) we are ready to receive and respond.
Our mind no longer keeps on doing these things:
1. resenting the past mistakes and reminding us of them
2. worrying about future negative oceans of outcomes
3. escaping into a fantasy world (trade will go to target even though double top failed!)
Today during my hours I suddenly was drawn into the very recesses of my mind, probably the spring of conscious thought that is hidden away otherwise.
I have suddenly come face to face with the startling revelation that I actively seek out pain - the pain of loss, the pain of failure, etc.
I will not narrate more here due to many aspects being of a personal nature but it has been a revelation that has the potential to turn around my trading for good.
In pain I find my comfort zone, and this sabotages my trading. I am now counselling myself to replace this comfortable place with another better one that will help me succeed more often.
I've read your posts with interest these past few days.
On 26 May you wrote:
Why am I aiming not to make money primarily but trying to be right and being ok with losing money and being right rather than getting out with that small loss as I 'had planned'?
Did you arrive at an answer? This is a tremendous struggle we all face as traders. Accepting a loss is a recurring theme in your message. What do you tell yourself in order to do this gracefully and without ego?
I did arrive at an "answer" but it is not something any trader would like to hear!
To gracefully accept a loss I must NOT be thinking from an ego state - I find best results when I approach this as a "skilled blue collar worker" job where I have to grind out profit OR loss widgets and the factory supervisor in my mind simply tells me that I have to grind out bigger profit widgets and smaller loss widgets.
The catch is that I will not know when starting with a raw material chunk held to my lathe whether the result will be a profit widget or a loss widget.
I need to apply my skill to shape it into a profit widget (that's why 'skilled worker') and I conserve my resources and throw it away after it hasn't shaped into a profit widget after some set minutes (rule 1) AND when it is apparent that it may not become a profit widget anymore (it MAY but I will no longer waste factory resources on it).
The most important message is however: I do not need to know or even worry about whether I will churn more profit widgets than loss widgets. My lathe's diamond tipped cutting tool is shaped in such a way that favors the odds that I will produce a lot of profit widgets - this is where I as a man surrender to my tool.
The moment I have 'faith' in my setups and I wrap my ego around my market decisions it is where things start
to go all wrong.
This is NOT an intellectual game - your actions (includes inaction) define your success not thoughts.
It is intensely challenging and uncannily simple at the same time.
You should have faith enough in yourself to convince yourself that you finally are wrong.
Also the moment I start thinking I have the 'answer' and start to relax I'd better B E W A R E. That is EGO speaking. Learning to listen to yourself is critical.
I thought this is important enough to deserve a separate post.
And while I tell myself all the above whenever I trade, the mindfulness state persists.
The moment I slip out of conscious mindfulness suddenly there are no guarantees. It is something I have to be very alert for (my emWave2 biofeedback device (not completely necessary as long as you take slow deep breaths) keeps warning me when I am in 'the zone' and when I am not.).
It is not just a process to become a profitable trader, it is a process to stay a profitable trader. You keep what you have truly earned.
You have to trade what's in front of you, without hesitation. And if you're prepared to get out immediately if things don't go as expected, there is virtually zero risk. Knowing this, and I mean *knowing* it, enables the trader to take these trades and even make immediate exit-and-reversals because he knows that he can't be screwed.
This applies to all timeframes.
Note that the 'fastness' is an illusion and is relative to the timeframe.
Trading weekly charts and getting out after three days is still 'fast'. 'Not fast enough' there can be four days, and it probably makes the difference between a mediocre and successful year for a longer term trader.
