T2W Trading Community

It seems that my ego is at its most insistent and niggling whenever I am sitting on a winner . It craves satisfaction via the premature snatching of profit . Ways I have found of dealing with it centre around bringing it into perspective and simultaneously seeking objectivity. I have two chairs in my office.  One is permanently sited away from my desk so that should I feel the need I can go and sit in it and, if you like, tell the temporarily stuck trader what he must do from an objective place . Of course, this ability to be detached becomes internalised after a while and there is less need for the musical chairs routine but it is crucial to know that you have a voice of clear, sensible objectivity inside that you can trust to take the hard, but right, decisions. A friend of mine plays a tape that he himself has recorded that merely repeats either I, Doug, run my winners or I, Doug, cut my losses. Others I know try to reframe their actions so as to con the poor old ego as in for example pretending they are trading properly and responsibly with someone elses dosh or pretending they are holding a loser instead of a winner and then following the ego’s preferred strategy of holding that loser.

It is also probably the dastardly big E that makes us deny what we see on our screens in favour of what we think or expect. So much about trading involves self discipline and as you become more familiar with the inner urges that require that discipline so your trading improves.

Keeping a daily trading journal allows you to play “Big Brother” with your ego. You can spot the areas of self sabotage as they jump off the page at you day by day.

Another useful procedure is to draw a chart of your own equity curve on a daily basis in your preferred visual format. This can illustrate the steadiness or otherwise of your hopefully upward momentum and alert you of potential trouble. If , for example, you like to trade a bit of spiky action then you must be on your guard in case you replicate this on your own equity chart. If you live by the spike then make sure you don’t die by it. Know when you are due for some consolidation or sideways movement! 

In conclusion, you’ve got to know what you’re up against and realise and accept that much of this is inside your own head/heart/mind. Understand yourself and gradually align your perspective with that of the market’s and the veils begin to fall away from your eyes.

What is vital to understand is that the market, by nature, is a self cleansing mechanism where few survive and prosper. Those that do need to be clear of the psychological baggage that requires resolution elsewhere in their lives. Bring your “issues” to the market at your peril. It will cost you dearly. A key ingredient in the recipe of  regular returns is knowing when not to trade, being able to identify in yourself when you are at less than optimum and at these times sit on the bench and enjoy the spectacle free. Standing aside is a valid position. Save your strength and fire for when you need it. We need as many edges as possible to achieve consistent success- rigorous discipline, technical understanding ,adequate finance, time and space but it is probably through the development of self knowledge that the independent trader finds his best shot.