Tuesday, August 25, 2009
This morning the market shot up like a rocket on news (and perhaps the expectation of good news), then fell back to earth equally impressively. It was worth almost 200 pts. on the Dow. Some traders made a lot, some made a little, some lost. "Big opportunity" was all compressed in a brief 50 minute window of time. What does it take to profit in these opportunities? A solid trading plan obviously. But plans are the easy part. I am asking about something else...the intangibles (Websters dictionary: "that cannot be easily defined, formulated, or grasped").
Here are some possibilities:
1) Focus. The ability to maintain constant focus and make micro decisions instantaneously. No such "I'm going to check my email", ....or "I need a snack", or ...."the market is dead, I'm bored", ....or "it was right in front of me but I didn't see it". If you can't focus you will make some trades, but no doubt miss many others. Is that good enough?
2) Instant amnesia. You just closed a stinker of a trade and are slapping yourself on the head "what the heck is wrong with me?. I'll think twice before I enter a trade again." ...Or you close a big winner, "I'm on fire and can do no wrong. The market gods have annointed me". ....Or you just missed a setup that fit your rules and it ran for 40 pts (YM) without you on-board. You're bummed and "need to go take a walk to clear my head". If you can't get back into the "now" moment you are risking self-poison.
3) Self-trust. You have a plan which you've beaten into your head. You know what to do and when to do it. It tests out to great results over time. You are a machine. ....At least that's what you TELL yourself. In real-time you just froze like a deer in the headlights as the
self-doubts ran through your mind. Three minutes later your "trade" is up 30 points YM. BELIEVE and ACHIEVE...doubt and die. I've said it before.
4) Indifference to what happens. I have a theory that many of the most successful traders simply don't care what happens. They have a winning plan of course, and they execute it well. But when the order is placed they are truly unemotional. Their stats show they will win in the end so they don't care about this trade, or the next one. They just execute the trade and wait to record the results. They are truly fearless because they just don't care how this trade ends.
Any others? What do you think? All of them? Mix and match? What does it take to maximize your potential to profit over time?