Sunday, September 4, 2011

A Weekend Note - Clearing Cobwebs of Indecision

I received the following letter recently from a reader and though I usually answer letters privately I felt that this question merited a public answer, as I know it's a struggle that troubles many traders and I was no exception.

Message*: Been reading your posts via Kirk Report. Your last several have been quite thought provoking. Stopped trading a month ago and have been doing some introspection regarding my trading abilities and lack of ability. Yesterday's post had a remark beginning with "growing cobwebs of indecision --- inevitable further loss." Your words nail the part of my trading self that really scares me as I do not see how to get past it. Really trying to figure out if in truth I can be any different when facing the screen than I have been recently. Thank you for putting into words what I am struggling with. Have you dealt with this? If so, how did you get past this. To note, I have a trading plan, rules etc. They turn to mush in movement of the day. J

Dear J,
First I wish to thank you for such honest introspection and thoughtful question as well as for your courage write about your struggle. Trading will bring us face to face with ourselves at the most inconvenient of times and what you are going through is exactly as you have recognized, a fear. Cobwebs of indecision set in when we have a fear of loss.

Most of us for one reason or another have trouble accepting loss. We are taught from an early age that losing anyone or anything is negative and it is usually associated with something we've done "wrong". Therefore our emotions are tied to loss on a very personal level. We all go through pangs of pain when a loss occurs, but the how long it takes to get over a loss depends on how much value we have put on the object or relationship we have lost. So, first I'd like to encourage you to list the losses you have suffered, or would hate to lose and put them in order of importance viewed from your feelings and not from what society may dictate.

Once your list is finished, you may recognize that your fears are stronger about losses you feel you don't have a chance to recover. We usually put money irrationally high on the list if not directly, indirectly by putting the most valuable items of our possessions there. But there is another reason; money is also closely tied to how we feel about ourselves. It's no wonder that money is so high on the list of what people want out of life.

Nothing brings this fear closer to scrutiny than trading. Trading allows for no mistakes and we learn that lesson very fast, therefore as we are suffering a loss by watching the price go opposite our position in a trade, the cobwebs of indecision set in, we lose muscle movement; the signals from the brain are so confusing that we cannot act or react. Also often, if we do get a jolt back to life we may act irrationally which makes the next experience even worse.

The ability to break out of this pattern is in all of us, yet it is not emphasized enough so it is not recognized easily when we are so entrenched in the fear of loss. What I am speaking of is that loss creates opportunity and we actually know it instinctively but in a frozen state of mind it's hard to act on. We know that loss is not a bad thing because it makes room for something new. This is reinforced everywhere in nature. Look around in nature without flowers dying we'd have no new blooms, without winter, no spring. Without loss of home, car, job or wallet; no lessons. Loss, when accepted, sets us into motion to do something that we may have not done before and we learn from each experience.

Trading through this struggle we find the solution to be in the action, not reaction or non-action. Remember that a body in motion tends to stay in motion, so if you practice what you have planned with each trade, the motion becomes fluid and natural and cannot freeze. Put your plan on automatic, in other words, set the stop loss order and profit order once you are in on a trade. The action forces discipline and reinforces trust. The more you experience that your planned strategy and rules work, the more trust you will place in them and consequently the more confidence you will gain in your ability to trade well.

Happy Trading, Living and Dancing

The Daily Pick - $DJIA SPX $DJT

©DayTrading with Anni 2011 All Rights Reserved


Day Trading Strategy said...

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AnniDayTrades said...

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