Tuesday, March 10, 2009

Reinventing Trading Success

I remember reading Paul Tudor Jones talk about the emphemeral nature of trading success in Market Wizards and how he was more scared of losing than ever before. Brett Steinbarger has mentioned the need for us as traders to occasionally reinvent ourselves and that the difference between a competant trader an expert trader was this ability to go to the edge as a trader and come back from a debilitating losing streak or fundamental change in the marketplace we trade.

Thinking back to when I was 16, I ran into this very dilemma. Not with trading, but with golf. I had started playing golf when I was 9. I wasn't Tiger Woods, but for my age I was pretty good. Moreover, I was passionate about playing golf. I analyzed my golf game even when I wasn't on the course. I was constantly looking for new ways to improve myself. And then I hit a growth spurt around 15 or so. And my game went from being good to pretty crummy almost overnight. I spent extra time on the practice range, went to several golf instructors, and overall became obsessed with "fixing" my golf swing. I was emotionally distraught over this process, going from the lows of not even being able to make contact with the ball, to the highs of occasionally seeing my old golf swing "coming back". Eventually, I discovered that I had been placing undue expectations on myself, not because I really felt compelled to play golf for myself, but rather because I thought that it would please my father. Upon this discovery, and the fact that this compulsion was nearly entirely fictious, I quit playing golf (well o.k. I still occassionally hack around).

Perhaps I surprised you there. Did you think I would go on to be the next Tiger Woods?

Trading on the other hand is something I've never done for someone else. The good news about trading is that it is so highly ostracized by normal social circles that there really is no reason to be doing this for anyone other than yourself. The bad news is that you can't rely on these normal social circles to fuel your low emotional energies when the rest of life (or even your trading) is beating you up. Fortunately, the market itself is a social circle that provides direct feedback. Listening and learning to the market's conversations is one of the elements that compels me to trade. Also, there are social networks such as this blog (and others) available on the internet. These are the elements that provided me with a successful motivation for trading in the first place.

Having gotten out of the "zone" from these elements in recent trading months has been due to me questioning my ability to understand other people's emotions (specifically certain important other people). When I am able to understand and integrate these emotional elements into the way that I read people (and the markets), I believe I will be well on my way to reinventing success.

My trading modus operandi will then be, "deriving understanding of myself, through the observation and interaction of other people and the markets, which are synonymous."

LT

1 comment:

Pilot Dude said...

Ed,
Beautiful piece that hit home several times. Thank you!