Personally, I define trading as a process of learning how to make wise decisions. One must hone his decision-making skills in order for him to be successful in the markets. While this is true in trading, it is true as well in our day to day lives. Our decisions today will greatly affect the outcome of our tomorrow.
We have different perspectives in decision-making, one may say that he made a good decision while another may argue that it is a bad decision. So who is saying the right answer? I believe this is where ‘Experience’ comes in the picture. Either first hand experience(personal experience) or second hand experience(experience of others) it helps us validate and strengthen our decision making.
Saying all these, I believe that I had made a lot of bad decisions in my trading(based on experience), to become profitable was a challenge. Learning the technicals are but mere tools to improve trading but it is in the execution where it really matters, weigh in pressure and emotions, and surely you’ll understand how challenging it is.
With all these losses I’ve incurred here are 5 lessons I’ve learned from trading that relates to life.
Never Make The Same Mistakes
There is no perfect trading system out there, all has its flaws and losing is normal but I believe every trade has a story to tell. Did the loss occurred because of your trading system or did the loss occurred because of your decision making? I like what Einstein said about insanity
If you dont’t do something about your losing trade and try to learn from it then don’t expect that your chances of winning on your next trade would be high, more likely it will still be a losing trade.
Same thing in life, We all do mistakes and if we don’t do something about it and try to learn from it then let us not expect a different result in life.
If you are overspending and you see that your savings is getting lesser don’t expect that you will still have savings in the future unless you do something about your overspending.
If you are eating fatty food and you noticed that you’re stamina gets weaker don’t expect that you will still have the same stamina in the future unless you do something about your eating.
Either firsthand mistake or secondhand mistake, let us learn from those mistakes and never make the same mistakes in the future.
Never Dwell on the Past
I experienced losses in trading and one of them was around -40% losses. When that happened to me, I was disturbed all week because I can’t stop thinking about it. It made me question my capability and got a hard time to accept it. As I came back to my senses, I realized that i have to fully move on with that trade and continue to thrive in learning.
Same thing in life, we had bad experiences that made us question ourselves, we’re afraid that when someone finds out those bad things in our past they might judge us. It makes us paralyzed. It makes us lose focus and delay us in achieving our goals in life.
Experiencing that trade made me learn the next lesson in this post, it is to
Have a quality ‘ME’ time every now and then
When I incurred that -40% loss, I was pushing myself of finding what I called a revenge trade, it is a trade to atleast cope up with my losses. I got some stocks for the revenge trade and was lucky enough to pull it off but didn’t manage to breakeven. Later on I just realized that it was only because of emotions. I was wrong of thinking a revenge trade because I am emotional that time. It will only affect my bias and decisions. When I realized that, I know that I have to do something about it.
I decided to stay away from the market for some time just for me to get out of all the noise and thoughts about it. I needed some quality ‘ME’ time to get back to my senses and start anew.
In life we also get emotional and being emotional makes us do things without thinking twice only for us to realize that it is the most stupid(sorry for the term) thing we’ve ever done.
Having a quality ‘ME’ time every now and then pacifies us. Whether it be a jog in the park, a jam with your friends, playing games and etc. it helps us release the stress and emotions so that we can get back to our senses and continue to keep moving forward
Embrace the Process
Before, I thought that trading is all about winning and losing, it is all about ‘buying low and selling high’ with the use of technicals. I was wrong, trading is not always about winning and losing and what sets great traders and new traders apart? I guess it’s because great traders know that trading is a continuing process of mastering their system, success is about mastering the process of their trading style to be sustainable and profitable rather than determining success by keeping a scorecard of winning trades and losing trades where if you win more than you lose, you are successful.
We have victories and defeats at some points in our lives, and there will be cases that we may define our success based on those things. For example a person who has a great career, fame, a fully paid house, a nice car, and a beautiful wife may be the definition of success. But I learned that it’s not about those thing(those are just bonuses), I believe that success is a continuing process of life that whatever it throws upon us may it be good or bad, we are ready to accept.
So yeah, embrace the process.
Come with a Plan
“Never enter a trade without a plan”, that’s what most people say.
No one can be always correct in predicting the price of a stock, that is why we should have a plan because in trading, the charts has no specific results but only possibilities. These possibilities may or may not align with your plan. The only 2 outcomes are it’s either you are correct or you are wrong. If you are correct then congrats but if your wrong, having a trading plan will reduce the risks of losing more money in your trades and lets you test your system.
Every trade should be accompanied with a trading plan because the outcome is not always right.
What amazes me in life is that God’s plan is always right for us, so in coming up with a plan
I’ll just leave this here.
Commit to the Lord whatever you do,
and he will establish your plans.Proverbs 16:3