Trading Attitude Goes a Long Way
Recently I spoke with a trader who was really struggling. Not only were his results not up to his standards, but more importantly, his attitude was pitiful.
One comment he made really stood out to me about how he was approaching his trading – and how he could alter it for better results. After taking a couple of small hits in failed trades, he remarked:
Accuracy is important to me. It means everything to how i look at the market the next day and how i look at myself in the mirror at night.
I think we all deal with that to a degree as traders, and especially us guys tend to equate recent trading results with how we think of ourselves. Not deep down inside – I don’t mean that, because many of us have values rooted elsewhere – but our day-to-day mood is often impacted by our trading results.
That’s common across many professions, but full-time traders probably have it even worse since we can keep score every second of the day and know where we are and where we want to be, and often times there’s that discrepancy which causes some frustration.
That’s where huge mistakes can creep in if we let them, as we increase size or trade frequency based on our desire for quick gains rather than when the charts necessitate it.
Two Solutions
I think zooming out on the timeframe of self-evaluation is key. Instead of responding to every tick with an “I’m a genius” or “I’m an idiot” mentality (which can be so exhausting), why not look at your results from a week to week or month to month basis? The daily swings, particularly in this market, can just be too much of a roller coaster sometimes – both in an account and emotionally.
Another way to keep your attitude in check is to accept that you’ll be wrong, sometimes often. That’s not to say that you need to expect failure at all. However, as a trader, your job is to manage risk effectively first and foremost, and that means when you find yourself on the wrong side of a trade, it’s often wise to return to the sidelines to reevaluate it. Getting back in is fast and inexpensive – if you deem it necessary. Taking a string of small losses might reduce your accuracy percentage, yes, but the goal of trading is to be profitable. Too many traders tend to quickly forget that.
Check It
The aforementioned trader has already come a very long way from when we first met, ridding himself of his former style of operating primarily on hunches. Moving toward a more methodical approach has already shown him a huge improvement in his results, and it’s been fun to watch. But as with most Type-A personalities, he’s in a hurry to reach lofty goals – and I can’t blame him. He’ll get there if he will stay on track.
What’s most important at this juncture for him is that he checks his attitude on a regular basis. Just as he defers to the charts when making decisions and periodically monitors his P&L, he’s got to get into the habit of objectively gauging his mentality. When he’s patient and prepared, he’ll be far less-likely to allow his short-term results to dictate his mood. But if he falls back into the mindset of living and dying by every trade he makes, the road will get a lot longer and much more difficult.
As with so many other things, in trading it’s your attitude which can make the biggest difference between success and failure. When your attitude is in the right place is when you’re going to see the most growth – both personally and in your account.
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
