I couldn’t agree more! I read this sentence from the book, “The Life of Pi” by Yann Martel. For those who have not heard of this book, it is a fictional story of a teenager who survived 227 days on the ocean. I bought this book for years but finally decided it was time to read it last week since I wasn’t actively trading (due to my promise to myself to take a break while price actions was trading inside the dead zone).
The author gave a full treatment on the subject of “fear” in one short chapter (chapter 56). While the information provided in the chapter is “nothing new” since we all have at one point in our life experience fear in its naked form; it is still quite “revealing” to read the author’s recap of the essence of fear.
I’m sure everyone who are reading this post know and understand that fear is our worst enemy when it comes to trading. While fear can destroy us “slowly” in our normal day-to-day living if you don’t do something about it, it will “accelerate” your demise in the trading world by paralyzing your ability to trade with a plan and thereby destroy any chance you have to improve your game.
You must FACE fear. You must ACKNOWLEDGE fear. Only by facing and acknowledging your fear can you then embark on developing a PLAN to trade with DISCIPLINE in spite of your fear.
Yes, it means you have to WORK at it.
Nope, it doesn’t matter if you follow the most successful traders on this planet, you will still lose your shirt if you don’t INVEST your time to become a disciplined trader. Every successful trader trades with a style that is very much their OWN UNIQUE style. And the odd that you can be successful by taking the easy way out in following the trades of any successful trader is a big ZERO.
You know why?
Just because a trader is successful doesn’t mean he has no fear. It only means that he FINDS his own personal way to work around this fear and still be successful. And guess what, if you didn’t spend the time and investment to develop the discipline need to follow a trading plan that is unique to your own personality; your fear will destroy the trades you took by following Trader X.
Does the following sound familiar?
1) Trader X bought AAAA
You just took a loss from previous Trader X’s trade; now you FEAR to take another one.
2) Trader X sold BBBB as a loss
You hesitate to take the loss because you FEAR stock BBBB will take off without you. On top of that, you now decided Trader X is wrong to take loss so soon.
3) Trader X is holding CCCC thru the volatility while sitting on profit
You FEAR of losing the profit so you closed the trade to lock in profit even though Trader X is still holding it.
4) Trader X is still holding DDDD when the loss is now approaching 5%
You FEAR that the stock is going to zero; so you cut your losses (which by incident is the right thing to do but it’s just not part of Trader X’s trading plan).
Don’t forget, Trader X is NOT PERFECT and Trader X will have his usual % of trades that are wrong; however, by second-guessing Trader X and proving to yourself that you are “right” when Trader X is “wrong”, you are only encouraging your bad habit and allowing your FEAR to dictate your market decision instead of relying on a sound trading plan.
You see, there is no short-cut to become successful in trading. Either you work on your discipline as a mean to control your fear or you may as well be the benefactor to those who win consistently because they find their way to work around their fear.
Here is how the author Yann Martel closed his chapter on fear:
“…if your fear becomes a wordless darkness that you avoid, perhaps even manage to forget, your open yourself to further attacks of fear because you never truly fought the opponent who defeated you.”
Categories: Trading philosophies and thoughts