By Rob Colville on August 14, 2014 in
What trading hang-ups are you working to overcome in your quest to become a better trader, and, perhaps more importantly, do you feel like you’re going it alone?
Often, it’s easy to think that the pros have reached the “promised land” where profitable trading just comes naturally, and all they need to do is show up to win. But just like in any other endeavor, the best traders never stop learning, refining their strategy, and developing new methods and skills.
Sure, veteran traders aren’t about to “crash and burn” because of some rookie mistake, but rest assured that the pros battle their own trading hang-ups, too, and you may be surprised to hear what some of them are.
Leaving money on the table is a universal pet peeve among traders and is one of the most common trading hang-ups out there. Everyone, from first-year traders right down to the most seasoned professionals, are all looking for that “perfect” entry and exit, and while on one hand, it’s always good to tighten up key risk parameters, for newer traders, this can be a dangerous slippery slope.
You see, there’s no need to catch every pip in order to be a successful trader. There’s absolutely nothing wrong with getting in, capturing some of the desired move, booking hard-earned profits, then getting out and searching for another high-quality set-up. Long and prosperous trading careers are built on that very premise, afterall.
However, how often following a trade have you said to yourself, “I should have gotten in earlier,” or, “I should have let that one run a bit longer?”
If ever you have—and honestly, who hasn’t?—then rest easier, because these sorts of trading hang-ups plague even the best in the business, and they hate it just as much as you do!
You may never hit that stop just perfectly, and that’s OK. The critical point is this: don’t feel like your strategy is lacking or faulty just because you leave a little money on the table. Even professional traders struggle with that and are forever trying to improve entries and exits. Yes, it’s frustrating, but when you think about it, it’s really not so bad to share common trading hang-ups with the pros, now is it?
Although we all try to trade mechanically and free from fear and emotional attachment, we’re all human, too, and those thoughts along with a million others do creep in from time to time. There’s a lot riding on every trade, and obviously, not the least of it is money. For better or worse, though, there’s also our desire and/or need to be “right,” to continually prove the soundness of our strategy, and to validate our own abilities in the court of public opinion, which for most of us includes friends, colleagues, and loved ones.
All that makes it harder to trade with maximum conviction, and it doesn’t even begin to factor in the endless flow of news, information, and conflicting opinions that are always lurking out there.
And, when it comes to blocking outside “noise,” nobody has it worse than the high-profile and professional traders out there! They may have millions or more on the line with each trade, lofty benchmarks and reputations to maintain, and some even publish and/or present their trades directly before critics and mainstream financial media. Talk about trading hang-ups!
Sure, the pros have gotten very adept at blocking outside influence and handling the pressure, but that doesn’t mean it’s a non-factor. In fact, many have spoken candidly about times they, too, were overcome by fear, let biases creep in, or made costly unforced errors, some of which they’ll never forget or live down. Does any of that sound familiar?
The markets, though sometimes wildly unpredictable, promise one thing for certain: inevitable winning and losing streaks occurring throughout the course of every trader’s journey. This is the most emotional of all trading hang-ups, causing everything from elation and euphoria right down to anger, disappointment, and outright despair. And, no trader is immune to it, either.
Think about that sickening feeling you get whenever you lose three, four, or five trades in a row. Is it simply the market going against you, or is it something much more serious? And, how do you know whether it’s time to alter your trading strategy, or even worse, should you scrap it altogether?
Likewise, when you’ve rattled off four or five consecutive winners, you feel almost invincible, like you may never lose again! Is now the time to increase risk and/or position size, trade additional set-ups, and bend the rules in search of even greater profits?
Well, inevitably, it’s best to stay (relatively) calm and avoid knee-jerk reactions during these times, and the pros especially have a knack and the added experience to do just that. But it’s not to say they aren’t feeling it, too!
Clearly, maintaining objectivity in the midst of a hot or cold streak is one of those trading hang-ups that plague even the best in the business. That’s why we recently explored worthwhile, non-monetary trading goals, because fixating on other key facets like risk management and plan compliance—and not simply on profit and loss (P&L)—can keep any trader more grounded, calm, and objective, regardless of factors like market conditions and recent performance.
Because trading is so solitary, traders typically don’t have an accurate concept for what others out there are doing or the trading hang-ups they’re battling along the way. It’s a huge misconception, though, that some people are just “wired differently,” are “made for this,” or that trading the markets comes easily to them.
The truth is that virtually every trader, from beginners all the way up to the most seasoned veterans, will endure common struggles, some of which may never go away. And, as such, retail traders out there who are still learning, fighting inner demons, or experiencing some hard knocks, whether you know it or not, you very likely are in some prestigious and perhaps surprising company!