I recall my first experience with this situation and the emotional turmoil it created in my mind. The first signs were that I was no longer seeing opportunities I had previously seen. Immediately this triggered my fear of becoming complacent. There are thousands of trading adage's out there, and one in particular is "Bulls get fat, Bears get fat but Hogs get slaughtered". The meaning of what is being said is, when you think you've mastered the market and you're trading with elated spirits, chances are you've become complacent and it might mistakenly lead you into a trap of profit drop.
However there's a difference between becoming complacent and being bored.
Complacency in the context of trading, is when your confidence has taken a steep hike and your level of fear has drop so that you no longer feel apprehensive taking a trade, in fact you proudly enter trades with swift reason. These bouts of overconfidence usually occur after a string of good wins, thus allowing you to drop your guard, you now become susceptible to errors in your trading plan.
Boredom on the other hand happens when you begin to lose focus, in markets specifically when your attention has been drawn attentively to daily movements only to be suddenly switched off. Your mind has gotten use to the excitement and buoyancy of the euphoria, that when it is switched off your mind enters a state of frustration. These emotions have the ability for you to start force trading into positions which can't be efficient in the long run.
The most striking difference I would say is the fact that one completely ignores what's happening and erroneously believes the condition will continue indefinitely while the other is being fully aware what is going on. Both have the ability to draw down your account severely so its imperative to spend time thinking how you are going to deal with these outcomes in the future.
Due to the lack of trading experience, I would say I misinterpreted my feelings at that particular time and in doing so mistakenly held off on trading to "cool off" so as to say. But although I did call it wrong, I'll be the first to admit it, I did discovered one of the most important principles of trading. Although the markets might not travel at the same speed or even move in the same direction, the need for you to be fully aware of your emotions and what's happening in the markets is of key importance.
By understanding these emotions you have a greater propensity to accept the prevailing conditions and in the process be better prepared when it does comes around. I want to focus specifically on boredom as it's one of the underestimated emotions dealt with on the markets. A really great exhibition of boredom in process presently is the S&P 500. The movements oscillate painstakingly at slow speeds with any whiff of volatility creating an immediate awareness from traders. However it doesn't always create the desired move that is expected.
I've found that when the market starts to slow down my attention draws to smaller time frames and that signals that things are beginning to quieten down. I start assessing my positions either to close them up or maintain awareness of the technical placements and any possibilities. Any new positions which I add are done so with strategies designed for the market condition and not the previous one. The time drag is one aspect that does affect the most, however I try use the available time picking up on new concepts or brushing up on my trading knowledge.
I also try engage with different activities beside trading. I know from experience when the market is going nowhere, staring at the screen can be excruciating. Changing your environment gives you a chance to step outside your trading zone into a more relaxed environment thus allowing you to refresh your thinking.
Finally I've learnt to accept that no matter what I think or do, the market will go where it wants to go, no individual can change the course of the market. Yes, it can be frustrating when you're in these type of market conditions but there's really nothing you can do about, you not in control, the market is and when it happens it's best to let the market lead.
If you would like to contact me you can through my email atcadetrader@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
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