Owning the Process of Trading

Trading is about sound decision making in the midst of changing market conditions.  Sound decisions making is only possible when you develop the discipline to follow a well-tested methodology.  This seems pretty straightforward until one begins trading.

As Dr Van Tharp always says, “we do not trade the markets, we trade our beliefs we have about the market”. It is therefore important that the methodology you use is in line with your belief system, personality, temperament, etc.  This is to ensure that there is no internal conflict between you, the trader and your trading system.  Compatibility with the trading system means harmony which places you in a good stead to exploit your strengths.

Market is full of paradoxes and contradictions.  At the fundamental level,  we not only buy and sell financial product in the market. We buy and sell feeling as well – hope, desire, fear, relief, expectation and so on.  Every trade that begins and ends bring some feelings and leaves others. It is never an exchange of the same product even if the product bears the same stock code.

Every decision come with it a thought and a feeling.  in trading there is a constant  exchange of feeling.  You need to experience it in order to appreciate the nuance of trading. It cannot be fully articulated.  You know it through actually owning the whole process of trading from selecting the stocks, identifying the setup, executing the trade, managing it until the eventual exit (whether for profit or loss).  We learn from the process and hone it over time through constant review and fine-tuning.  It is ultimately the affective quality of our direct experience that we build our skill on.

By experiencing the process, you can better understand the emotions that come with it and learn to be detached from them. This helps you to eventually achieve a sense of calm and confidence in trading.  It is in this resourceful state that decisions can be made in the best interest of the trades.

This is akin to a person learning to ride a bicycle or for that matter, an electric unicycle.  Unless he develops the sense of balance, he will never be able to ride the bicycle or unicycle.  The sense of balance cannot be fully articulated and can only be learned through direct experience.  The initial help from a coach is useful but the rider would have to own the process in order to develop the confidence to be an independent rider.

There will be no change if there is no ownership. As the late motivational speaker and author, Jim Rohn once said, “You can’t hire someone else to do your pushups for you!”