Short Posts

How to Follow your Trading Plan in 2018 with Laser Focus

How to Follow your Plan in 2018 with Laser Focus

Wow! 2017 has been one hell of a year. My results for trading vary a lot from year to year. Some years I’m profitable, some years I’m not. This year has been phenomenal for me, especially on the day trading side.

[Let me stop you there – No, I don’t trade some Holy Grail trading systems! These past couples of years we’ve been in a raging bull market so it’s been easy money. A monkey picking stocks at random would have had a high probability of success.]

It’s been a very forgiving market, and the market gods have been throwing bones at the disciplined and the undisciplined alike. So if you haven’t made any money this year, it’s too bad because opportunities were not lacking.

But take comfort in the fact that the market is not going anywhere, and whatever it does in the future, there’ll always be opportunities for the prepared mind.

Now, whether you made money or not this year, it’s important to remain humble and renew your commitment to adhere to your plan in 2018. Unconditionally! Which means even in the face of a forgiving market as we’re seeing.

Because, if you don’t, you’ll develop bad habits and those proliferate like weeds. And eventually, the market will catch you off guard and you’ll pay the consequences.

So in 2018, how can you follow your plan with greater ease? How can you do what’s best for you when you are reluctant to do so? How can you stop giving in to short-term emotional gratification?

Two steps…

The first one is recognizing that you have a certain desire to achieve certain results in trading and, sometimes, in the heat of the moment, you naturally feel like overriding your plan because you think you know better what’s the optimal way to move forward.

But at any point, if you end up overriding your plan, I think it’s fair to say that you’re stripped of any objectivity and you’re functioning on irrational thoughts and strong emotions.

So again, the first step is recognizing that you’re prone to doing that. Everyone is, to some degree or another.

The second step is acknowledging that your emotional states do not need to match the rules set forth in your plan.

This is very important! You don’t have to always feel good about following your plan. It’s not meant to be a “feel good” thing. And there a reason why it doesn’t feel good: Following your plan gives structure to your behavior, and your mind doesn’t like that.

I mean, who likes rules? Rules are hard to abide by and, even more so, one’s own rules. These are the hardest, one could argue – if you’ve ever tried a diet or going to the gym, you must know that.

And so, it takes a special kind of courage to feel unpleasant states and still choose to go ahead with your plan. But in this case, you need to feel worse before you can feel better – you need to go through the pain of following your plan in the present so that you can enjoy consistent profitability in the future.

Mindfulness is said to not solve your problems, but rather dis-solve them.

This is not an easy, comfortable process, but your deep-seated emotions need to be fully embraced. This is the only way to make it in this field long-term.

From an early age, you learned to stay away from pain and discomfort. The ego attempts to constrain the body, dictating what it should and shouldn’t do; what it should and shouldn’t feel. The thing is, pain and discomfort aren’t always bad and you can learn to overcome the toxic conditioning of thinking-that-they-are by willingly opening up to these feelings.

In that act, mindfulness helps a lot. It is simply being aware of what is happening right now without wishing it were different; enjoying the pleasant without holding on when it changes (which it will); being with the unpleasant without fearing it will always be this way (which it won’t).

Mindfulness is said to not solve your problems, but rather dis-solve them.

To cultivate a skillful perspective on so-called negative emotions, through a mindfulness practice one can learn to reframe and reinterpret them as just information, knowing that the whole spectrum of inputs arriving via our five senses is just that: information – inherently nondual and unlabelled.

Armed with this new perspective, you can then learn to act in the market with a greater degree of objectivity, and the unpleasant emotions that arise in relation to following your plan will no longer hold such power over you.

Last few words…

Before I end this short post, I want to leave you with two things:

First, a quote from famous German philosopher, Nietzsche:

If you are unwilling to endure your own suffering even for an hour, and continually forestall all possible misfortune, if you regard as deserving of annihilation any suffering, and pain generally as evil, as detestable, and as blots on existence, well, you have then, besides your religion of compassion, yet another religion in your heart (and this is perhaps the mother of the former) –the religion of smug ease. Ah, how little you know of the happiness of man, you comfortable and good-natured ones! For happiness and misfortune are brother and sister, and twins, who grow tall together, or, as with you, remain small together!

All he’s saying is that you need to keep pushing your own boundaries even if it means that you have to suffer in the short-term. That’s the only way to grow. Striving for comfort is one of the worst things you can ever do.

Second, an action step:

When placing and/or managing your trades, make sure you have a clear idea of the kind of emotion you’re experiencing. Then set an implementation intention by repeating the following: “I will not blindly react to [emotion]. Instead, I will use the [emotion] as a cue to redirect my attention to my plan.”

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Yvan

I’ve been trading for a living since 2006.

By merging mindfulness (an in-depth study of the mind and its tendencies in the present moment), a good trading process, and an efficient business practice, I went from being a losing trader to a consistently profitable one.
Through my work here at Trading Composure, I aim at helping you do the same.

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