First, you need to be responsible for your own actions as a trader or investor. No one is to blame for your mistakes nor is the market responsible for fooling you. All the data is right in front of you in plain sight for you to decide how to interpret.
Be careful when listening to outside sources of information that often come under the guise of proven methods or black box systems that help to provide you a full sense of confidence when trading or investing.
Beware of educators that just tell you what you want to hear, things like “Trading has always been easy for me, just follow these simple steps.” It is said that trading is the hardest way to make an easy living. Trading and investing require discipline. Discipline means that you follow your trading plan if you have one; a trading plan that is objective and analytical and not subjective and emotional.
There is no replacement for trading experience. That means objectively watching the market through all of its iterations to learn how the market reacts and digests various new pieces of information.
This is what it means to be weathered by the markets, as over time by just surviving the markets, you will learn from them. You will find your own way, simply by surviving and experiencing the markets. This is why it is so important for you to have good risk management, as risk management is the key to surviving long enough to become market experienced.
Being subjective is like looking through the world with rose colored glasses on, which can lead to “hopium”. Successful traders ultimately get their confidence from within. That confidence comes from being able to read what the market is actually saying objectively, measured against your own personal objective experience as to how the market has reacted to similar situations in the past.
Remember, the past is never 100 percent indicative of the future, as one new piece of data can make “this time to be different”. However, it does give us some guidance, as everyone else is also looking at the past for guidance. In many cases, the markets are filled with self-fulfilling prophecies. What does that mean? The more people who look and analyze the market in the same way will make this type of analysis more successful and more accurate.
Let’s end this with a word to the wise: when trading, leave your emotions, the guru’s and the fabled “Black Box Systems” at the door and stay objective and disciplined in your approach.
Written by Michael DiGioia, Director of Education
Mike is available for One-on-One Coaching. Learn More
