“In the end, psychology more than anything else divides the winners from the losers, and the losers from their money” – Marty Schwartz
After quite some time in front of the screens, I have to say that -as mostly anyone in this business- I have became an expert in what doesn’t works in trading 🙂 It took me a while and painful losses to understand that those who succeed in this game are the one who focus on risk management. At least this is my own personal understanding and review of my performance and how learn to grow -and keep learning.
Regardless, during the last year I have switched my focus towards the psychology aspects involved in trading, which personally I think they account for a larger share of trading performance that most of the people think.
Working in the psychological aspects on my trading has had some important implications beyond this field, permeating into my “regular life”.
I once read a post by Eli Radke from traderhabits.com, What having a girlfriend taught me about trading where Eli Radke -the blog’s creator- drew some paralelisms between trading and relationships.
If there’s something that I truly love is skiing. I have spent an important portion of my life focusing on skiing -and teaching it. This is an important reference for me when it comes drawing analogies when trading. I’m drafting a post on this which is currently in the works, however here are some of the ideas that I feel are important to have in mind in both fields:
– techincal skills
– perception of oneself
– pushing the limits WITH Risk Control
– More risk control
I will get back to tho a complete post on this, however, I just wanted to “throw it” out there so if there are any inputs from readers.
Particulary, I was reading at Investor’s Business Daily on how to deal with losses. I have experienced them and came into terms that will have them as long as my trading exists -in a controlled manner. Nothing worst than letting perfectionism come into your trading.
You can find the complete article here, but there are some aspects I would like to highlight in this post:
- People who blame someone else or anything external always repeat their mistakes and avoid personal responsibility – Be accountable for your own actions (this goes beyond trading, IMHO)
- There’s no need to find fault with the circumstances of our lives…., but there are times when we need to close one or more chapters in life that are causing us to lose. We need to close that chapter and get on with the rest of the book. – Let it go and move on. It is easier said than done, but I have found no alternative than this one. Again, this goes beyond trading.
- As far as trading success is concerned, perfectionism is an extremely harmful mindset. Every trading system will have periods of losses – I tend to have “perfectionist” aspects in my personality which have hurted my trading. My dad once told me “Lo perfecto es enemigo de lo bueno”, that would translate to english into something akin to “Trying to achieve perfection may jeopardize the good” or “The best is the enemy of the good”
- Just like in sports, however, falling down in practice is a must if you are going to skate faster – Practice makes the master.
- Just as a pair of inexperienced skaters needs time and patience to find their balance on the ice, you need time to adjust to the trading principles that work. Eventually, though, you’ll reach success. – Persistence
- trade what I see, not what I think. – Rinse & repeat, ad infinitum.
- With good risk management applied, you’re protected if your position is filled and moves negative. If the position moves in your favor, then raise your stop. – MANAGE YOUR RISK PROPERLY!!!!!!
Hope it works.