The Dark Side of Suppressing Emotions While Trading

well i definitely respect your approach. people talk about how being at peace with yourself and your life positively impacts your trading. i wish man, i really do wish that were the case for me.

Redneck if you wouldn't mind sharing briefly, share a summary of how you entered trading, and where you were at that time, and how long it took you to feel comfortable with your new trading life

 

I was an EE Manager

My wonderful financial planner lost the majority of my retirement – and pissed me off (yes at one time I too drank from the spigot of financial ignorance)

I decided I could do at least as good as him....

It took me 18 months of pure D hell to – to basically get over myself…


But I was also hampered by not being able to find anyone who would give me a straight answer about trading… Literally more than once I got laughed at for the questions I would ask.. ahh but they knew the secret and would certainly share it - for a price


In spite of myself - I got through it…

Within a year I discovered I could make more in a month trading, than what I could in a year as a manager

Time passes and here we are – warts and all

RN

 

There does seem to be an inverse correlation doesn't there (referencing post counts...)? Occasionally though you find a very rough gem in these here woods. Mostly it is just entertaining though, sort of like people watching at a casino.

I'm quite familiar with some of the surrounding area but haven't tried Brussel's. Thanks for the tip. I'll give it a whirl.

I know it sounds ridiculous but don't get too hung up on the money and picking a checkout point. We both know we can go drop 10M TODAY here in Newport on a house (that wouldn't be anything relatively super special) and we would simply be one in a thousand here locally. The pond is pretty damn big and there are a lot of big fish, it is easy to get caught up in the lifestyle adjustments and your checkout number becomes meaningless.

If you love trading and you are profitable then just do it to win, because ironically there is never enough money to satisfy the winner, and so beyond a certain financial independence standpoint you are just keeping score.

 

Trust me. There are people who have all of that and are still miserable. The thing is, everyone is looking for happiness in all the wrong places. But let them be.

 

And none of it does a bit of good – unless you can enjoy living

In way less than a hundred years – we’ll all be dead, gone, and forgoten

RN

 

What about you T80, what is your mini story, how did you become a cold analytical killer!

How did the market break you? For how long did you feel its wrath? When did you make the turn around?

 

My story isn't really all that unique or interesting. I started like many in the dot com heyday.

I had no idea what I was doing. My style was the polar opposite of what it is today. I was very short term, I was very discretionary, no good money management, no appreciation for risk, no appreciation for statistical inference, etc. etc. etc. I was a walking disaster who luckily didn't have a lot of money.

I was fortunate enough though, to realize that the whole dot com thing was hot air, and I avoided leverage and I avoided the general crappy dot com issues.

I wasn't fortunate enough to understand what happens during a liquidity crunch and that just about all boats sink when the "general conditions" change for the negative. A lack of appreciation for how correlations change when SHTF is probably my most damaging lesson. A lesson thankfully learned before 2007/2008 once I actually had real money to lose.

One thing is for sure, I was losing for YEARS. 6 or more I gather. Maybe I'm just a slow learner.

It is hard to describe a moment where everything clicked at once. It was more gradual. The first thing though, is to get the emotions in check. Nothing good can happen long term without that.

Most people do the opposite, they build a strategy an then they have problems executing because of emotions. It is better to learn in a bear market in my opinion, this will solve this problem quickly.

Ideally:

One day you wake up, and you have your emotions in check.

Another day you wake up, and you have a way of determining what the general market conditions are (very important for trading equities IMHO). Don't be long when general conditions are bearish, don't be short when general conditions are bullish. I'm sure some 60/40 fund managers will disagree but if you are a privateer you are more flexible and can move quickly; it is a different game.

Another day you wake up and you have a good winning strategy

Another day you wake up and you realize you need multiple winning strategies that don't typically correlate to each other, and start looking at other asset classes and strategies

Then one day you get your money management and risk metrics set to deal with the 7-10 year storm and black swan sort of events

Finally one day you wake up and realize you need capital, a lot of capital, to really make a serious go of it. Typically this is either where people seriously go looking for OPM or they get their cost of living such that their income from other endeavors gets them a grub stake.

Then at the end of this long road, you realize (at least for us CA residents) the government is going to jack you for 45%+ for your short term equity gains and you start to realize that an un-leveraged return of 40-50% a year ain't looking so good if you are a U.S. Citizen and playing by the rules. You put your CAGR into a calculator with and without taking into account taxation on a 10 year or greater basis and you cry yourself to sleep at night, meanwhile everyone around you thinks you're a greedy un-American prick. This is when you will have made it.

 

I should add that one thing that was interesting was that my original (local at the time) inspiration for starting to trade back then ended up being a mini-madoff and going to the big house.

http://www.enquirer.com/editions/2003/02/09/biz_kisor09.html

So imagine you are a few years in and losing money, and one of the guys you hold up as someone who is proof that you can make it, ends up being a fraud. Major gut check and soul searching time for sure...

 

For my money – today was a good conservation - I'm finding them all too infrequently these days…..

Thank Y’all


Now come tomorrow – none of it matters, except price


I sincerely wish each of you inner peace

RN

 

Thank you, let's all make money this week