Concentration Game

In my previous article I briefly mentioned concentration and spoke about how we become mesmerized on one indicator waiting in vain for a positive signal to generate whilst we ignore the others which could be pointing to a more negative outlook than what we would prefer.

Concentration is quite tricky to deal with. It requires you have the right balance between being passionate about something and being overtly obsessive around it. The way in which I like to compare it to is seeing concentration as a microscope, magnifying the smaller parts of an entire form of matter.

But quite often we get stuck with this. We've all experienced it once in our trading journey, for most of us it’s happened at the beginning when we were still gullible to the scrupulous dealings of sales people claiming that you, without any experience or knowledge of financial markets are able to master it within an hour of reading one guide.'

Our concentration is not focused on the amount on the skill but rather the monetary reward at the end of it. We sublimely assume this to be the truth and convince ourselves of the bags of money we going to packing away in a relatively short period of time. Rubbing our hands together, we couldn't think of an easier way of creating money.

However reality sinks in quickly when we start incurring losses we weren't expecting to accumulate.  How could something which is portrayed so effortless be so much more problematic? We start drawing negative inferences from these experiences and begin to perceive ourselves as inadequate and begin a long downward spiral of confidence deconstruction. Eventually the after effects spill over into our daily lives and all the good stripped away.

What we've done here is focused on one indicator, money. By using money as our indicator of success we have allowed ourselves to become susceptible to this draw down process of our own emotions. We will continue this process until we reach a point where we understand that money should come secondary in the journey to profitability and skill set should take the front seat.

Take a look around at all the successful people in the world. They will tell you the countless number of hours, days and years they spent committed to their skill only to reap the rewards much later. They didn't produce it with the intention of becoming the world’s richest person; they did it because they were passionate about the field they were in.

A great example is Steve Jobs, former CEO of Apple. From a young age Steve wanted to change the world by using technologies to make life easier.  Starting from humble beginnings in his parent’s garage building the Apple 1 right to the last product he saw through, he dedicated his life to changing the world.

His meticulous attention to detail in his products makes Apple brand the most sort after products around in the world. He would breakdown every component of his products and designed it individually and made it fit perfectly until every component made the complete package.

Steve knew he was going to change the world but he didn't quite expect how big of an impact he had on the face of technology in the 21^st century.

Trading works on the same concepts, we have to breakdown every aspect we wish to master and conquer them individually. Instead of concentrating on the monetary gains, try focusing on building the skill of understanding what makes a market tick. Which indicators work in different market conditions, how well do they work, when do they work, the advantages and disadvantages and how to apply them. These are just a few things you should try to concentrate on.

When we concentrate on making money the emotions of fear and greed take hold and steer our trading results in the direction of which ever emotion is prominent. When we are emotionally distressed we tend to react more on impulse rather than rationality making us prone to making mistakes.

   

I've witnessed personally in my trading when I use to think about the money side of things how I acted more on emotions rather than using my skills I’d built on.  But I decided that it was time to concentrate on the important things, my ability to trade better. No matter how long it takes me, I have a goal in place and that’s to become consistently profitable, but in order to obtain this I need to attain a strong skill set to reach it and until such time I would regard my goal as incomplete and in progress.

When last did you focus on a particular aspect in your trading process? Instead of heaping it into a pile and procrastinating about the day you going to deal with them, take it one step at a time, committing enough time and practice to master them individually.

If you would like to contact me you can through my email at cadetrader@gmail.com or if you wish to follow me on twitter and get the latest updates of news, interesting commentary and general trends in the market, my twitter handle is @CadeTradeR if you follow this link it’ll take you directly to my twitter timeline: https://twitter.com/CadeTradeR

 I've been receiving great feedback over the last few weeks and have enjoyed sharing stories with fellow traders. Don’t hesitate to comment I really appreciate it. 

Fishing Out the Right Opportunities

Trading often brings out the best and worst sides of our personality, that’s why most new traders who embark on the journey end up being fed up with constant conflict of the two and call it quits before they are able to realize their full potential. Being confronted with bad habits you have often battled with throughout your life can be daunting, at most times purely annoying.

Being a young person in my twenties, I can share my feelings of desperation to make an impact in my life which will define the next 40 years of my working life.  These early stages of life are critical to my ability to create income potential and ultimately ensure my financial security later in life.  

I believe the best word to define this feeling is impatience, wanting something to be completed with so you may carry on. It’s also certain to say that I share this sentiment with millions of young people around the world, but I digress.

I would describe myself as an optimist, seeing a learning opportunity in every flaw. This topic made me set out thinking of ways to embrace the feeling of patience in my trading. But how would I know how to act that way if I didn’t have some reference to look upon as a goal to work towards. Then it dawned on me about a time in my life when I was younger and found the rewards of patience which I would like to share with you.

Fishing is a patient game that I can tell you from my first fishing trip. I was 9 years old at the time and my uncle had asked if I would like to see how to people fish. I always had a sense of curiosity since I’ve been young so I decide to tag along. 

We found the right spot at the water’s edge and began setting up only to realize we were one fishing rod short. My uncle’s friend decided to improvise and went into his fishing box and found a spare fishing line which I could use to fish with. I can say now that I was more excited about catching fish than I was about the equipment I had to use so it didn’t really bother me.

My cousin, who is the same age as me, came along and you can imagine what two 9 year old boys concentration span is when you have to wait around for the fish to bite. But I was determined to catch a fish whatever it took, so I listened in to my uncle’s friend who was explaining to my cousin and I that patience is the skill with fishing. So we waited and waited.

After about 2 hours my cousin was fed about with it and left his rod to go find something more interesting to do, but not me, I was determined that I was going to catch a fish. Time started to drag and the sun was beaming down from its highest height. 

Another 2 hours and no luck, this is when I really started thinking maybe it was best to just pack up and leave. As I was ready to go kick the can and make my way back I noticed a tug on my line. The excitement, here was the moment I had been waiting for, now to reel it in. It took 3 minutes to reel that fish in, but the satisfaction of knowing that that my patience had been rewarded felt better than any other feeling I had ever felt.

The same thing goes with trading, there will be times when you see a potential setup coming but the confirmation hasn’t validated yet. You wait in front of the screens for days on end until you eventually submit to the powers of boredom and frustration.

We become so engulfed in anticipation of the price action that we blur out the smaller more important details.  We concentrate on one aspect on the chart, hoping that if we think hard enough about it that maybe the chart will hear us and change its course and do what we actually expect too.

Instead of simply admitting that the time for entry is not yet we side with our more emotional side of things and begin to personify the security we wish to trade and assume that somehow and somewhere in between this it is conspiring against us so we aren't able to take the trade.

This is the crucial part where most of the good work goes down the drain; the one thing humans do when something is working against them is to turn away from it, just as my cousin had done with his fishing rod.  We take our eye off the mark and then a few days later we learn that what we had predicted had indeed come true and we missed out because of pure impatience.

We feel a sense of deep regret by our actions and hope that it won’t happen again putting it down to being an amateur. But is it really? Trading has to be the most equitable field I’ve ever come across. You can have a trader with 10 years’ experience and another with 6 months experience, both take the same trade at the same time, yet one comes out losing and the other gaining. What would you say if I told you that the trader with the least amount of experience had gained from this trade? Impossible you say? Not at all.

 The trader who is most aware of his emotions and understands how to deal with them is the one who will succeed.  At the end of the day that is what makes the difference between a consistent trader and one who simply quits. I would like to leave you with a quote I found.

“The angler forgets most of the fish he catches, but he does not forget the streams and lakes in which they are caught.” –Charles K. Fox 

If you would like to contact me you can through my email at cadetrader@gmail.com or if you wish to follow me on twitter and get the latest updates of news, interesting commentary and general trends in the market, my twitter handle is @CadeTradeR if you follow this link it’ll take you directly to my twitter timeline: https://twitter.com/CadeTradeR