Thursday, April 2, 2009

Trade or Die

What if I put a loaded gun to your head right now and said, “Trade well or die.” Could you do it? What if I threatened your family? Could you execute your trading plan, avoid blowing out your account and make money at the end of the month/year etc.? How about make 10% ROI monthly? How about 500% annually? How would you trade if your life was literally at stake?

For those of you who have never traded before or are relatively new, my guess is that you would roll over and die. But how about those traders who have been doing this awhile but are unsatisfied and/or inconsistent with their trading?

This may seem like a silly or extreme psychological stretch for most of you. But picture this. If you were a CIA agent, or a Navy Seal, or a Green Beret your life (and perhaps those whom you hold dear) would be on the line every day. In the book “Unbeatable” by Jack Schropp, the author states that many individuals fail to achieve their aspirations because they lack focus. As a former Navy Seal, he knows from personal experience that the ability to remain focused while waiting for hours in near freezing wastewater, in enemy territory, with no backup, leeches crawling on your skin, etc. is what separates the wanna-be recruits from the elite. He also states that you don’t get to this level of focus by being in your comfort zone. During Navy Seal training recruits are pushed to extreme physical levels and taunted by their trainers to test their ability to manage their emotions (see reality) even when things are seemingly at their worst. Sounds like a boot camp for lazy traders to me!

The problem for many struggling/breakeven traders (including myself at times) is that they have nebulous goals devoid of passion. They get started on the right foot but become complacent with where they are. Usually this complacency sets in at the top of their equity curve. How many times have you traded 90% of the day well, and then given back a great deal of profits at the end of the day/week/month? Being a “sunshine patriot” regarding your trading is easy. But how do you fare at the 11th hour, when the chips are down, you are feeling tired, and you just wanna quit? Are you gonna ring the bell recruit?

Here are some of the passionate affirmations I visualize to myself during my darkest trading times:

“Trading means freedom – I never want to be a slave to the illusory bonds of money”

“Trading means excellence (arête) – I will never know what I am capable of until I ask more of myself than I ever thought possible”

“Trading means understanding – By understanding the market I deepen understanding of myself”

“Trading means helping others – Only when I can adequately provide for myself and my family can I help others, whether this is financially, intellectually, emotionally, or spiritually”

What mental tools would you use to stay focused in your trading if your life and those you cared for was literally at stake?



Jules said...

I like the cat!! :-)

Very interesting post, LT. Makes a lot of sense.

But if someone were to point a gun at me, I'll be focusing on getting him to point it away, or on PRAYING LOL!

Lord Tedders said...


Right I forgot that you've actually had that happen to you.

My point really had to do with level of focus. I see many traders fail to achieve their full potential because they mysteriously "blow up" after trading well for a period of time.

What if their lives were at stake?


Jules said...

Ouch! Ouch! OUCH!!! Still talking about me, LT! LOL!

On a serious note, agreed that focus is the all important element. Without it, you can't even lose well. A book I'm reading now talks about how trading is actually a loser's game, and the consistently profitable trader is the one that's best at losing. Wise :-)

Lord Tedders said...


Don't know about that personally. I've never made any money losing :P
There is something to be said about having good entries.

In all seriousness though, there is a fine balance. I am finding that I like managing my position size based on my conviction for the trade instead of using a very tight all in/all out approach. This gives me some flexibility on the idea, but once my idea is proven to be totally invalid I'm not getting hurt too bad.

At least that's the theory ;)


James Stollenwerck said...

I like this post. If you're into backtested probability, the real challenge is to take the next trade whether you feel good about it or not, much less playing with position size to maximize return. Geez...we're only human, know what I mean?