T2W Trading Community

What sort of trader are you? A Trigger Happy Terry or a Fatalistic Fred. In this article the author looks how most traders fall into certain trading 'types'.

“Know thyself” exhorted the ancient Greeks. Pursue intelligent, disciplined self enquiry and you will come to understand the treasures of the self. This timeless Delphic dictate could, I believe, serve well as a focus for effort for those who today would profit from trading the financial markets.  Know your own strengths and  weaknesses,  physically, mentally, emotionally and spiritually. Accept and understand them and learn how they relate to and feature in the market environment and you give yourself some valuable edges.

You gain clarity of purpose. You have the conviction to stand behind your actions and the equanimity to ride out the vicissitudes of the market. You are also better equipped to structure for yourself a methodology that reflects your personality and risk profile. Also, and crucially, you begin to lift the veil on the intentions and  actions of the other market participants. Their game plan becomes clearer the more you accept and reclaim the parts of yourself that have been split off, disowned or otherwise ignored. Self knowledge increases your predictive capacity.

The Roman poet Seneca, in a gesture of magnanimity was able to declare that “nothing human is alien to me”. If he was around today and he walked his talk then he’d probably make a great trader . Feeling comfortable with the far continuums of fear and greed allows for a measure of transparency into others actions. Expand your self awareness and the shenanigans of the market can be comfortably assimilated into your steadily increasing account balance. Know that anything can happen and accept this possibility at all times and no surprises can derail your journey to consistent profit.

The big players, the institutions, market makers, specialists and others who have many more noughts on their account balances than the rest of us ply their wares most successfully against those who lack the self knowledge to perceive “the tricks of the trade”. We’re not necessarily talking conspiracy here, just that there’s a bit more to it than having a grasp of fundamentals, technical analysis and level 2. I have heard market makers described as masters of emotional manipulation [in my own learning process I have been less flattering about them] but they are just doing their job and if you want to take part in their winner takes all game then you have to know the rules.

It is received trading wisdom to follow certain rules. Plan your trade and trade your plan. Run your winners, cut your losses. These time tested, battle hardened nuggets beckon us all, from the novice to the pro, to follow them to the promised land of profit. Presumably, many of the majority who end up on the wrong side of the win/lose equation are familiar with these rules too. Knowing what you should do is the easy bit. Knowing how to do it is where the challenge lies , where the real work of trading occurs and where most fail. How, for example, do you run a winner when, perhaps unused to profit and grateful for what is on the table ,you are greeted by an overwhelming inner chorus of “take it” ? How do you cut your losses when they may, as with other areas in your life away from trading where hope has often been rewarded, come good in the end?

Many would be trading hotshots, flush with the confident glow of achievement from other areas in their lives, bring what they believe to be tried and tested systematic approaches ,with inbuilt assumptions of success, to the market only to become aghast at the regular, protracted but ,of course, unforseen moves in the opposite directions of their positions. The market, we learn, is always right. It is no respecter of systems. It culls the naïve, the stubborn, the faint hearted and the complacent alike with ruthless precision. It takes no prisoners but can and does hold many hostage to fear and greed. Like Keynes said, the market can remain irrational longer than you can remain solvent.

For sure, those who opt for the implicit security of rationality and linear logic will find much to cause them upset and conflict in the market. They will be confounded by the painful realisation that qualities that serve them well elsewhere in their life cost them money in the market. They will face a stark choice-either to stay with their losing ways but retain an imagined integrity that comes from sticking to their principles or abandon their attachment to the ”system” they have been following , accept the pain and loss to self esteem this may incur and begin the task of finding a way that works.

Loss, financially, and in its gut wrenching, puke making physical manifestation is one of trading’s great probabilities. The stories of many successful traders are replete with colourful tales of early loss and subsequent recovery and thriving .Think of the initial losses sustained on the path to trading mastery as dues paid to illuminate the hidden, recessed aspects of self that otherwise remain as magnetic lurkers that threaten to sabotage your trading ambitions. As you become aware of these myriad expressions of shadow that have claimed safe harbour within your psyche so you can accept and embrace them and reconstitute them as tools in your trading armoury.

The fast, pacy action of the market gives the lie to the fact that trading is essentially a trip for those who are patient. Those who can endure will endure. Those who can’t will skulk off and console themselves with the war stories their diminished war chest has bought them. The patient can wait. They understand that the waiting is the work. Most lives are centred around waiting for something...health, relationships, money, fulfillment,  Godot…The rapid growth of online daytrading is an act of vengeance on waiting. It releases us from the tyranny of postponement. It allows us to “just do”. Masters of the mouse, we channel the energies of that we have not yet achieved through our index finger to a screen of flashing numbers. For some, the ability to express themselves in such an unfettered way, free from the constraints ordinarily imposed on them by work, family and society the inevitable financial loss is a price willingly paid.

The market is a melting pot where ambition and expectation jostle with the statistical certainty that most will lose ,a place where intensity of feeling is experienced[and sought]. The money on the line parameters of real time trading heighten the emotional charge in rough proportion to the time frames being traded. The active day trader roller coasts through more scenarios than a swing trader. Each to their own, be comfortable with your choice.