Notes from a Newbie: Failure Sucks but Instructs
May 20, 2018
Welcome back traders for round 5 of Notes from a Newbie. I hope you all have been finding great success in your trading adventures. In the event that you haven’t or are struggling to find your way, rest assured that you are not alone. It appears my portfolio is mirroring the market and struggling to find a direction, although signs are starting to turn bullish on both accounts. So as I sat here again trying to figure out what exactly I wanted to talk to you about, I decided to take a bit of a philosophical approach to the blog this week. See what I am learning as a new trader is so much bigger than wins and losses. Learning to be a trader can teach you so much about yourself, it can help reinforce your good habits and also quickly expose your bad ones. It requires a special set of attributes to conquer a profession of this difficulty. By now most of these attributes have been acquired or taught to you through various life experiences. Some will align great with this profession while others will be the cause of many headaches. But hey, this is all part of the learning curve, right? So what are some of these attributes? I thought you would never ask!
So I will lead off with a quote I came across today that I thought fit perfectly with trading and aligned with what I wanted to talk about today. Particularly for those including myself that have experienced some volatile times early on in their trading careers. See whatever happens after you pull the trigger on a trade is your new reality, it’s permanent and cannot be undone. If you manage it poorly, if you break the rules whether that results in less than ideal profit or a huge loss, the results ARE the results. The question is what do you do now?
“Resilience is accepting your new reality, even if it’s less good than the one you had before. You can fight it, you can do nothing but scream about what you’ve lost, or you can accept that and try to put together something that’s good”
– Elizabeth Edwards
Pretty good huh! I thought so too! I think one of the most important attributes you have to have to be a successful trader is RESILIENCE! I would venture to bet that there isn’t one successful (and I will let you determine what success means to you) person that hasn’t experienced some sort of hardship or loss during their journey. There are countless stories of multi-millionaires who at one point lost it all, hell Micheal Jordan was once quoted saying “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.” The most successful people in the world have shown the ability to bounce back from adversity, and that is no different in trading. When you make a bad trade or a trade goes against you, what you do next is far more important than what you did first!
The hardest part for me has been acceptance. Particularly acceptance of a loss. See losing is not easy for me to accept, even when the lesson of the loss is far more important than the loss itself. I have always known that I didn’t like losing but it wasn’t until I was a trader that I realized how costly that could be. I would like to be able to tell you that I have conquered this problem, but it is an on-going battle that I will eventually learn one way or another. The faster you can accept defeat and move on, the better trader you will be. The longer you wait to accept the outcome the worse the outcome usually becomes which makes the accepting part even that much harder, catch my drift!
The next attributes or qualities I want to talk about are drive, determination, motivation and work ethic. These qualities are often fueled by your “why.” I will save you the explanation of my reasons “why,” but we all have them in this business. If you are reading this than odds are your “why” brought you here. Everyone has unique reason as to why they have chosen this path to the financial markets, some are more determined and motivated than others. For me, that fire for success burns like crazy. I am determined to achieve financial freedom, to get out of the rat race and to build a legacy. However, what I have also found is that same drive and determination can also cloud my judgment when improperly applied to trading strategies. My burning desire to succeed can lead to poor decision making when I let emotions get involved. Vengeance trading is a dangerous game, and one not often won. There is a fine line between wanting to succeed and succeeding. I can want a stock to go up or down all day, but what I have found is the stock really doesn’t care about my feelings. My point is, not only must you possess these qualities but you also have to channel them or contain them. I am learning that having the qualities to be a successful trader and knowing how to apply them are two far different things.
My take away this is this:
1. Everyone has the ability to learn and possess the qualities to become successful in this business, but it can come at a cost. Take advantage of the lessons that are learned along the way, they will shape your trading identity and define who you are as a trader. I have found that documenting my mistakes makes it much easier to learn from them and much harder to repeat them.
2. A resilient trader will be a successful trader. This profession will test your ability to fight through adversity, you will have days, weeks or months that you get knocked down. How fast you get up is all that matters, be a fighter!
3. It’s ok to lose the battle as long as you don’t lose the war. Your strategy entering the battlefield determines your victory or defeat long before the first round is fired. If the market out strategizes you, accept defeat and regroup because another battle is coming. (Sorry went all Patton on you there)
4. Work every day to be a better trader, lean on your “why” for motivation. It is the reason you are here anyways. Ask yourself every day “What have I done today to become a better trader?” If you don’t have an answer, get one.
5. And the last thing above all is what I have to remind myself of daily, HAVE FUN!
Ok, I think I am off my soapbox now. Hopefully, this was a little enjoyable to read, next week we will dive back into some charts and I will talk about what trades I am working on this month. See you then!
“When everything feels like an uphill struggle, just think of the view from the top”
See you all next time,
One Reply to “Notes from a Newbie: Failure Sucks but Instructs”
Very nice piece. Thanks for the introspection sir.
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