Tuesday, July 07, 2009

The importance of sticking to a plan

Note: This blog has transformed from a purely entertainment-oriented blog into a place for me to share aspects of my life that others may find boring, stupid or otherwise TMI for your taste. Part of my life that I'm trying to chronicle and share with others as an exercise in getting things off my chest and airing them to the world, possibly in a call for help or even just encouragement, is my newly found passion and career change: trading. So here's your first 100% trading post...hope you enjoy...if you're still reading...

So, I trade futures. I must spend 12-14 hours a day either trading or working on my setups, back-testing, coding strategies for the software I trade with and so forth. The point of all this time spent working on strategies and such? You create battle plans while not on the battlefield, then execute them when you go back out. Sounds simple, right? Wrong.

There's this disconnect from what you planned outside of the market and the execution of that plan while in the market and it is truly the most difficult aspect of trading. If not done properly, you can lose a lot of money really fast.

See, as a trader you look at yourself as a casino. You have an edge and over a large enough # of outcomes your edge will payoff, how much depends on how great you edge is. Well, the difficulty comes when you're trading a plan and you only trade 25% of the potential trades...and that's where I'm stuck: if you don't trade EVERY setup you're not going to properly execute the plan and realize the profits your edge should be yielding. Through fear, confusion and an assumption that you know what's going to happen, the execution of your plan is sabotaged by the very person who created it. I'm 100% convinced that the ONLY thing standing in the way of my becoming a successful trader is Bryan Mills.

How do you get around it? Well, you just sort of have to close your eyes and jump off the cliff, knowing that the parachute you packed is going to work. You eliminate yourself from the equation as much as humanly possible and basically become an emotionless, non-judgemental robot that reacts with no hesitation and complete faith in a system. The most difficult thing about that is knowing that you will fail some of the time and that failure is a requirement for success. How crazy is that? In order to succeed, you need to fail...and the human mind is quite incapable of easily grasping that concept, without some serious re-programming, or at least to the extent that I push it. I mean, there are certain days where I may only be 55% successful, yet turn a nice profit. Imagine if you coded software and 55% of the time the programs you coded worked...or making necklaces only 55% of the time that didn't fall apart...you get the idea.

Right now I feel like an addict going through rehab. I'm having to abandon the desire/need to be right and to be successful 100% of the time, and it's tough, but I can't achieve the level of success I want without letting go of the desire to be right.

So, that's where I am. Am I happy about it? Hell no! Is it something that gets better with each trade? You bet! It just takes practice and consistency and those are things that are a daily goal, no matter how difficult it may be...

1 comment:

Paula said...

Sounds like some important life skills... keep at it!