What is TRADING the markets to you?

This is what trading is to me after a few years experience, what is it to you?


I have been trading now for close to 4 years. I've learned through experience, trading the markets requires a high degree of self-discipline, self-control, and emotional detachment to your trading results. Trading is a psychological skill and not an intellectual one because no one knows where the market is heading and that is one of the first mental hurdles a trader has to cross. He has to realize that it is virtually impossible to predict the future of market direction and once he releases that belief from himself, then he is free to look at the market realistically in its natural form. That is why trading is so hard in the beginning because most people who trade the markets have never worked on their psychology, especially emotions like fear and greed, and of letting go of their own self-beliefs and not letting their own self image be tied to their profits and losses, and not letting their self-esteem get damaged or inflated according to how much one loses or makes in the market.

Most importantly trading the markets is about self-trust and building self-confidence in one’s trading plan through small profits, and accepting and understanding that trading is about probabilities, that with a well back tested trading plan you can only hope to win maybe six out of ten times and of those six winners you have to let those six run while you have to cut the four losers immediately. But ultimately one has to have a Trading Plan, which you have to follow meticulously. A well tested trading plan in the long run will give a trader profits and the trader has to think at the macro level and never in the micro level of his trading performance.

Emotions are key, and not being able to control your emotions and being driven by the voice in your head that is there to protect you from yourself outside of the trading environment will kill your trading account. A trader has to learn to regulate his emotions while trading otherwise he has to find a different occupation. Emotions, adrenaline, the voice in one’s head that says you are wrong or right during a trade is what kills most trading accounts, that is why a back-tested trading plan is they key to success in the markets, because a back tested trading plan removes emotions and instills self-trust in a trader.

Also, trading is not a get rich quick scheme, it is a long term commitment to grinding it out everyday, it is a job, and only when one puts in the time and effort of thousands of hours of screen time then one can build the self-trust in one’s ability to trade profitably.

And ultimately the trading has to come from yourself from within your disciplined, trained mind, that which can happen only with experience of trading for years and years, and it is a skill but a psychological one. Basically these are the skills I've learned in the last 3 to 4 years but I learn new things everyday but it is never about the market or if I think a stock will rise or fall nor is it analysis of a company or fundamental research that I’ve done,…its only about myself, trading teaches me more about myself than anything I’ve ever done because trading the markets is about accepting 100% self responsibility for your actions and thoughts, its about accepting total and complete self-responsibility for your life. You are judged immediately by your trading results and you cannot hide from that or try and forget it or avoid it. That is why trading the markets shows you how weak you really are in the beginning and how strong you can become as you learn self discipline, emotional self control and being able to think in probabilities and being able to see realistically when you let go of your own biases.

I see so many ads online for people saying follow me, follow my trading signals for $100 a month and you'll make $1000 a week, they are all charlatans, because trading takes place inside your own mind and it can only take place there and nowhere else. "Its not you against the market, its just you reflecting who you are in the market. The fact of the matter is that the market just transmits ticks. That’s essentially all it does. The game being played, and the meaning assigned to those ticks resides inside YOUR head. So therefore, you don’t see the market as it really is,…but as you really are, which is, the sum total of your own market knowledge and market experience at the current moment. What else could it be?" More screen time you get and more emotional detachment you have towards the market, the easier your journey towards being a consistently profitable trader. And ultimately the trading signals of buy and sell come from within your own mind, new traders will freeze in the headlights like a deer on the road, traders with enough experience will take the trade and know that its only a business of probabilities, a small loss will not bother them because they know winning trades are in their future and that it is a job, and not a vehicle to get rich by next year. The difference between gamblers and traders are that traders have a plan and do the work to succeed, gamblers are in it to make money quickly, but get stuck emotionally and their emotions like fear, greed and delusions about making lots of money in the market kill their trading accounts because after one trade they don't know what to do with the next one. Gamblers don't have a trading plan and they haven’t done the work to understand the market as it really operates.

I like to think that to become a successful trader or to become successful at anything, you have to practice the central tenants of eastern religions: if you have the self-discipline, the right attitude, integrity of character, the emotional detachment, and the ability to see things clearly for what they really are -- without distorting it with your own personal life experience and your biases, and your own personal beliefs -- then you will succeed at anything. But if you come to the market as you always have been and refuse to change your beliefs and are not ready to work very hard, practice strict self discipline, emotional self control and detachment to your trading results, then the markets will destroy you.

 

That is an excellent post. It should be printed out and read over and over again. Looking back on my own trading journey, you hit the nail on the head.
Thanks for a great post!

 

Impressive for a person who has only been trading for 4 years.

You said, "Its not you against the market, its just you reflecting who you are in the market."

You also said, "...markets will destroy you."

Contradiction?

So is it you vs. you or is it you vs. Mr. Market.

 

Steve,

from experience: your perception of what you see on the screen and your reaction to it, is what will make you or break you as a trader, now is that you or the market or the same is not important i don't think.

But, what about your trading, what is trading the markets to you?

thanks.

ktm

 

Trading is as intellectually challenging as it gets until it's not.

Once the backtests are there handing off to a broker is fine if you know what you're doing and actually have the background to understand the statistical analysis you've done. Also, doing this for other people becomes highly profitable when you can do it with scalability and for others besides yourself.

$100 per month for $1000 per week is just a come on, unless there's 3rd party autotrade service where the trader is investing his real money, then that is the proposition but not a profitable one for the trader that can do so with up to limits in futures or has POA in stocks to control size for his fund.

 

"Trading is as intellectually challenging as it gets until it's not." Once you have the mechanics and the psychology down, it should be on automation.

 

What is TRADING the markets to you? < Best question there is for a trader.

Several years ago I was asked a similar version of that question by a mentor/coach. At first, I thought, oh geeeez, what a waste of time. But over the years, the answer to that question has evolved as I continue to develop as a trader.

It was the best question anyone has EVER asked me about trading.

I think those who ridicule the question are either: 1) pure black box traders, 2) too new to really understand trading, 3) not new to trading but too stubborn to see how they contribute to their P&L more than their method contributes to their P&L.

syntrader AKA xxxskier from long ago.

 

Excellent...thank you very much.

 

Very well said. I think every new trader should read this or a post similar to this before trading. Ive been at this for just about 4 years as well and i have learned sooo much about myself. And still learning. Again, very good useful post, especially for the new guys.

 

Trading is all about finding a robust method or algo with positive expectation as a function of time and then applying proper risk management to minimize risk of ruin and maximize equity growth. All else, is a waste of time, I mean a total waste of time. If you are afraid of your emotions, just find someone who has no such problems to trade it and pay him. There are some pretty cold-blooded fellows, especially in England and Northen Europe that will do the job for a cut. By the time you manage to deal with your emotions, the game is lost, you are a burnout.