Many years ago, when I first considered trading for a living, I read the famous book Market Wizards by Jack Schwager.
Jack Schwager interviewed top traders and others to disclose their various trading approaches and personal rules and secrets to their success.
As you read this book you realize several things about yourself. If you want to be successful, you will have to work at it and stay committed. Learn from your mistakes and learn that your biggest enemies are emotions and, in some cases, lack of knowledge. This book examines a side of trading rarely addressed: the human side.
In the book some of the world's greatest traders respond candidly to questions regarding their experiences growing up, how they became involved in trading, how they honed their skills and developed as traders, their trading experiences, philosophies and styles, and their emotions after bad streaks or winning streaks.
One of the things that stuck me about nearly all the interviews was a common theme and philosophy. That a level of acceptance, awareness, letting go, and being in flow was a necessary requirement to trade. Not only was it a requirement to trade, but to live, because as traders we mirror our beliefs and performance of our life, when we trade the market.
Traders and coaches like Ed Seykota and Van Tharp (two of the interviewees) have developed, borrowed and adopted methods from eastern philosophies to improve their lives and trading.
I have been a keen follower of Ed and have done a number of Vans courses, unfortunately for Australians both these men reside in the U.S. although they do occasionally travel.
Ed has his active Trading Tribe http://www.seykota.com/tt/default.html and has borrowed Buddhist teachings of “Right Livelihood”. Van has adopted the teachings of the oneness university in India, see his article here http://www.iitm.com/Weekly_update/Weekly_504_Dec_09_2010.htm
- Awareness & Acceptance
- Non Judgment and/or Labeling
- Knowledge & Wisdom
Look at that trilogy and relate it to trading.
To be at one with the markets and trade (or live) requires you to be Aware of things like:
Yourself, your experience and capabilities, either strong or weak, your debilitating emotions or your fortitude.
To Accept the above or whatever else may hinder or enhance your performance.
To not Judge or Label what is happening:
Do not harshly judge yourself, the markets or label a situation. It’s just “what is”. If the market does something you didn’t expect, the mistake is in you having an expectation, not in your decision.
When you enter the market you begin a relationship, with it and yourself. The more you can be Aware of your feelings and self talk about the market and your self, the easier you will be able to flow with it all.
Work on your Knowledge & Wisdom:
Success in trading is not a fluke; it comes from learning the process and wisely implementing that knowledge. By combining awareness and non judgment with knowledge and wisdom you often come back to the Big A.
So you go full circle in the trilogy of trading by
- accepting losses, be aware you can’t control profits and outcomes.
- Non judging the market and going with it, not labeling yourself as a good or bad trader and bringing your fragile ego into it.
- Using your knowledge and wisdom to put probability on your side,
- the implementation of the above mindset will help you achieve and recognise