Life as a Trader
I’ve often been asked how I manage to work in this profession without losing my mind. The truth is, I think I have lost little bits of it over time. Just kidding! Seriously though, I don’t blame people for thinking that traders must be a bit crazy for doing what we do and, quite honestly, I think we must be able to handle the volatility from both the emotional/mental and financial perspectives.
I watched a very interesting video presented by a YouTube channel called “After Skool” that delved into emotion vs logic and how we live in a world that places far more emphasis and importance on the latter than the former. Among the many other insightful things that were stated by the narrator, probably the most important insight was that emotion is directly linked to your gut instinct far more than logic and that it’s nearly impossible to separate emotion from our thinking patterns and decision making.
Think of it this way, if I asked you how your day was you’d most likely say it was good or bad, i.e. an emotional response to give a general idea of your experience. However, if you had to use logic to provide the same answer by means of going through each decision-making process, weighing up the pros and cons etc. you’d likely take the entire day or perhaps even a week to answer the very same question.
The same applies in trading, we as traders simply don’t always have all the information to hand and often must make gut based decisions. Of course, that doesn’t mean that we always make the correct ones, but I can tell from experience that 95% of the time my gut has been correct. Intuition is the ability to see and process things without knowing how or why you’re doing it and it becomes better and better with time and experience just like anything else.
So why am I telling you this? Because it’s probably the most essential part of a trader’s daily activities, to manage your emotions when things look great or dismal. This is because both euphoria and fear can be highly addictive and damaging not only to your psyche but your account balance as well. If you don’t manage these feelings in the correct manner you will get burnt and left at the side of the road quicker than an Olympic sprinter in a 100m dash.
On top of that you need to do a lot of homework and I do mean a lot. It requires a certain kind of discipline and grit that will determine how far you get in this game. You need to delve into the numbers, yet not get caught up in “analysis paralysis” which will leave you baffled and wondering why you weren’t able to see the wood for the trees. Additionally, you also need to be able to admit when you’re wrong and believe in yourself when you pull the trigger. Sounds simple enough, doesn’t it? Well…it isn’t.
Trading literally is the only profession I know of where your financial and emotional livelihood can change dramatically for better or worse daily. Imagine building a house and laying some brickwork today, only to tear some of it down the next day (sometimes even on the very same day) and then laying it again the following and building on to that. Seems insane, doesn’t it? Well, that’s what it is like in this profession. It can be as punishing as it can be rewarding and it has created many winners and losers along the way.