The MercenaryTrader guys have quickly become one of my favorite trading blogs. Yesterday, they published a post entitled “Letting the Trade Make Itself” - this post happened to be along the lines of many ideas which I have been playing with and attempting to articulate recently. I am especially fond of the following concept:
“There should be no imposition of desires on the market, or emotional transference into the trade. “Bracing for failure” is a sign that something is wrong. (You prepare for the full range of outcomes, of course — but if the trade is right, then it is right, whether it produces a profit or not.)
When all the elements align, the trade should simply happen of its own accord. The hand opens “like the hand of a child” because the process of right thought, right action is so straightforward, establishing a position becomes like reaching for a glass of water when thirsty.” – MercenaryTrader
Mercenary’s ending attains a level of depth and elegance that few writers ever achieve:
“Do you have the ability to empty yourself of emotion, intention and internal conflicts? Have you practiced your form and technique to repletion, that you might call on muscle memory with total fluidity? Do you pursue the higher level idea of removing ego and fear from the equation, and letting the trade make itself?”
The key distinction that is being made here is the difference between holding the attitude of “I hold the key to all of my decisions in the market, I control my decisions but I have no control of the market” as opposed to the deeply flawed attitude of “it’s me vs. the market” and if the market is not doing what I want it to do then “the market is wrong”.
The latter attitude is a sure path to frustration, deep unhappiness, and financial losses. Trust me, I’ve been there and done that. Whereas, the former approach results in calm, calculated, controlled decision making and actions. Moreover, one achieves the ability to approach any trading environment with equanimity and objectivity. Ones confidence grows and trading results quickly follow.
The amazing aspect of reaching “trading mastery” is that it has little to do with the nuts and bolts of fundamental or technical market analysis, instead it has everything to do with psychology. Accurate, objective, and insightful market analysis/knowledge is a prerequisite, but it is the rewiring of ones psychology and approach to markets that enables one to make a quantum leap in trading results.
A basic outline for a rewiring of trading psychology:
- Ask yourself “Can I make the market do what I want it to do?” – unless you are Ben Bernanke then the answer should be “NO”
- Ask yourself “What do I have control of?”
- The first step is the full realization and acceptance that the market is an untamable beast and that the trader is very much like the archer “letting the arrow shoot itself”
- Prepare for the trade, allow the trade to set up, take the trade – execute with an unemotional & objective disposition with no preference as to the outcome of the trade
The trade will make itself, the trader’s role is simply to execute - there should be no resistance or struggling. If trading gives you high blood pressure or a losing trade makes you unhappy, then it is time to reread this post and MercenaryTrader’s “Letting the Trade Make Itself”. Take it all in and reassess what is causing your resistance and struggles, there is a good chance that the answer is you…..
