Where's Your Attitude?
The market is a vast land of opportunity and it is time that many of us start recognizing that and accepting the awesome challenge that it can literally change our lives.
As I was archiving my writing over the last couple weeks, it dawned on me that in my attempt at discussing the rules that have assisted me so well in trading, I had skipped over one of the most important areas that I believe has influenced my trading more than any other. This is not a quantitative rule whereby it can be measured or implemented with a degree of accuracy, rather it is one of the only qualitative aspects of the game that I believe most people take for granted and others simply don't get.
In my opinion it won't make a bit of difference to have mastered all the trading rules I have discussed if you attempt to trade with the wrong attitude.
One way in which I can tell a person's attitude very quickly when it comes to trading is by simply asking them what their goals are. Typically, the common response I receive, if I receive a response at all, is "I would like to consistently outperform the market." While that is definitely a start, I have often found that a relative goal rather than an absolute goal simply doesn't cut it.
For example, let's say you and I are toasting another year on the eve of December 31st and we casually start discussing our recent goals. Would you be happy if the market dropped 20% but you only lost 15% of your money? After exchanging pleasantries and learning that you aspire to be a full-time trader during your retirement years, would you state with pride that you returned 4% in a market that returned 3%? Relative performance goals are a start, but it is much like going on an exercise and diet plan and saying "my goal is to lose as much weight as my husband."
Sure, that would be fine if your hubby went on to drop a quick 20 i.e. the market ramped, but what if your soft sweetie sits on the couch all day eating chips and throwing back Budweisers? You may not be able to fit into your evening gown next New Year's, but you lost more weight than your husband. Does that make it a successful diet?
The market is a vast land of opportunity and it is time that many of us start recognizing that and accepting the awesome challenge that it can literally change our lives. If you are going to trade stocks, why not set out to make a million dollars? Silly, you say? To that I respond, no way!
Don't forget to read Prof. Tatro's Trader Talk: Understanding the Reality of Trading and Becoming a Better Trader series for further insight into the art of trading.
I have met plenty of people who have resolved to do just that and have done so many times over. Many have even lost it a time or two because they deviated from their rules and once again learned an expensive lesson, but bounced back and made it up quickly. I'll never forget the words I heard once from a full-time stock operator: "The first million is always the hardest to make. If you lose that, it is much easier to get it back because you already know what it feels like to be a millionaire."
Call me crazy but I am one of those people who firmly believe your attitude directly correlates with your success. Furthermore, I believe a person who truly understands the incredible opportunity the market presents can't help but get excited and at least momentarily possess the positive attitude it takes to push forward. The problem however, is that a positive attitude and four bucks will get you a double frappuccino caramel macchiato with a twist, but it won't take you to the level in which Mr. Market gives every single person the equal opportunity to achieve. It will take two other elements, one of which is a firm understanding of how to trade, garnered through the understanding, development and practice of a set of rules in addition to solid and achievable goals that can measure one's success as they mature and press forward.
Each and every day, I arise and tell myself that "This is going to be my best day in the market, ever." Does that actually happen most days? Of course not, but I set my mind in the right direction in order to strive for something that is positive. Furthermore, I monitor where I am on my monthly, quarterly and yearly goal sheet and I resolve to put past experience, rather than good or bad, behind me, and focus on the here and now, which is the only thing that I can alter or influence the future.
Here are some questions to consider as you embark upon your day.
1) Why do you trade stocks on your own? What do you seek to achieve by doing so and is this clearly written down and understood?
2) What are your goals for the last three months of this year? Where do you want your account to be by year's end?
3) What do you need to spend time working on or learning more of that will make you a better trader over the next three months?
4) What are your goals for next year?
5) Do you really understand the incredible opportunity you have as a trader?
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