If At First You Don't Succeed, Lower Your Standards
November 29th, 2018 | 6 minute read (Repost from We The Market)
Before I get beat up based on the title alone, please read to the end. For those that don’t know me I am an older day trader. I have lived a lifetime collecting awards, trophies and success in most areas of my life. This is not about my greatness. No, this is about how I did not have natural talents but maybe one. Hard worker, if that is a talent at all. In the past, I have put my sights on a goal and worked hard to accomplish the task at hand.
Welcome to day trading. What a humbling experience. As Rande Howell has explained in his writings, you can be successful in your business life but not in trading. You can get away with a lot in everyday life but not in trading. Rande has great insight and I highly recommend learning from his writings and other material. From other research I have found, We are hard wired to lose money (1:39 into video). If you are a new trader or experienced, we know you still have to put in the hard work and time. Most likely the high failure rate in trading is due to a lack of grit. That is, people lose money in the beginning to the point of either losing their account or simply saying this is insane and call it quits.
The inordinate amount of time and effort and no glory in the beginning is hard. I want to be that super star trader like Ross, Andrew, Joseph, Cam and many more. I will make it but the journey is one where I keep changing my ways until I find the right recipe that works. The last couple of months I have been focusing on psychology. I like both psychologist Brett and Rande’s writings.
And now to the point of this article. In the late 80’s and 90’s the office environment had motivational posters on the walls. Later there was sarcasm anti motivational posters.
I came across Joseph James video on YouTube and at first I laughed out loud when he was talking about our expectations were too high. That is what made me think about the sarcasm poster. On YouTube, 2 Indicators to Help Our Emotions, starting at time around 1:08 he explains to align our expectations with the market. We can’t expect to make what the superstars like Andrew makes with both our bank account and lack of experience. Yet, this is exactly what I started out to accomplish when I started trading. The results was a drawdown of my account. Joseph further explains that losing takes a toll on us.
To further my point, a Ted Talk on YouTube, How to practice emotional first aid by Guy Winch, he first explains how devastating loneliness is and how it can kill you. Then, Guy says FAILURE is equally devastating. We as day traders condition our minds to accept loss. To the new trader, loss is failure. It is just business in the trading world. Until we are conditioned to understanding that losing money is not failure we will be subjected to emotional hijacking as Rande Howell writes. Once emotional hijacking occurs, your day is done unless you like dumping buckets of money down the toilet.
In the month of November, 2018 after taking a few more big draw downs on my account, I decided to lower my standards so to speak. Align my goals with the market. I had a rule that as soon as I generate a few dollars I would quit. The intent was to end my day green NO MATTER THE AMOUNT OF MONEY. That is an attitude shift. Of course everyone wants to end their day positive but the difference was not trying to achieve hundreds to thousands of dollars on the day. I simply accepted what the market would give.
This new strategy has accomplished several goals. 1. I am not suffering from losing days. Yes, I still have losing trades but not losing days. I also can accept a losing day as long as it is smaller than a winning day. 2. Building a pattern of consistency. I have more winning days than losing. Please be aware that new traders can have more winning days than losing and still lose their account. This is because new traders hold on to loser longer than they hold on to winners. Another psychological problem to address.
The very short take away is first establish a base of winning consistently. Second start increasing your profits. Increasing your profits might be from slowly increasing share size. Another way is to find better setups with risk reward ratios higher. Prove out your ideas and then change them until you find the right combination to success. In the end, we simply may not be Chuck Norris.