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Dealing With Market Uncertainty – A Short Guide

Dealing With Market Uncertainty – A Short Guide

We all want certainty in our lives. It is a wonderful thing to have order to our lives, to know what to expect, and to feel safe, but as traders, it is not always easy to get those things.

The market likes to throw chaos our way. Uncertainty is in its nature.

Even with routines and systems and processes that are supposed to make things a little more peaceful, organized, and predictable (over the long-term), sometimes, the market will do unexpected things — gapping well below a stop, reversing course just when it’s about to hit our target price, handing you a string of losses, just to name a few.

That’s when things get hectic and complicated. But how sane we remain in the middle of all this uncertainty determines how good we do in this field.

So how does one get good at handling uncertainty?

The answer is very simple — and it won’t surprise you. It’s practice.

And that practice in question involves letting go and re-centering in the middle of uncertainty.

Let’s see that practice in more detail.

First, you need to understand that when the market throws uncertainty your way, it’s not necessarily a bad thing. The situation is not inherently stressful; it’s not inherently anxiety-inducing.  It’s just your mind making up stories about how and why it is. In other words, it’s all perception.

So the problem isn’t outer circumstances. The problem is our internal stories and expectations we’re holding on too tightly. Our minds don’t usually like chaos and uncertainty. We naturally crave order and certainty. And that’s what we unconsciously expect out of life and out of the market. So we come up with stories to explain why we want things to be a certain way instead of accepting them as they are.

Which causes inflexibility…

Therefore, we are causing our own difficulties in trading by being so rigidly attached.

The good news is that, if we ourselves created the ideals in our minds by thinking too much about the past or by projecting too much into the future, we ourselves have the power to change it.

Again, the simple solution is letting go. What if you let go of all the stories about how you want things to be, and instead created a new story: the situation in front of you will unfold the way it will. And you’ll be okay!

Letting go is acceptance.

Accepting outcomes as they unfold, without any prior knowledge of how they’ll unfold, is true power. If you want to go Zen monk style in your approach to trading, this is the way to go!

Acceptance means seeing the beauty of each moment, no matter how it unfolds, no matter how uncomfortable or painful it seems.

Acceptance is knowing intimately that uncertainty can’t hurt you; that everything is just made-up stories and that you have the power to change that.

Acceptance doesn’t mean that you have to just sit there passively and wait for your fate. No! Acceptance is knowing that you have a reliable trading system (hopefully you do) and it’s there to protect you against uncertainty as much as it possibly can. And it’s choosing to follow that system with complete disregard to what happens in the short-term.

If you want to have a long and prosperous career in trading, it’s the only way that works. It’s releasing the struggle and being okay with the outcome, trusting that it will all work to your advantage in the long run.

Again, any situation is inherently neutral. What is painful or uncomfortable is the stories you tell yourself. And again, the whole practice is to just let go and accept what is.

So when uncertainty strikes, the method is as follows:

  • Notice that you are getting frustrated, or anxious.
  • Notice that your stories and expectations you hold are causing the difficulty. Not the situation itself.
  • Understand that the stories are not always true, or relevant.
  • Let go of the stories, which is causing you to struggle.
  • Breathe, and re-center yourself in the present, so that you can become calm. This is simply returning to the present moment, a point in space and time that is neutral, with no expectations, no stories, just seeing the situation afresh and with unfiltered eyes and an open heart and mind.
  • See the beauty and perfection in the moment in front of you.
  • With kindness, redirect your attention to your trading process and system.

Easier said than done.

I get it, and it’s true. But the difficulty comes from two things.

First, you don’t like to let go of the stories and the expectations you hold. You want things to be the way you want them to be. You want control over things. It’s normal. It’s human nature.

Second, you have difficulty in truly being present and seeing the perfection in every moment of life — even the ones wrapped in uncertainty. Things often don’t live up to your expectations, so seeing the beauty in them is foreign. Uncommon. This is also normal.

But again, the answer to these problems comes with practice.

The practice of opening up.

Whenever you have difficulty with uncertainty, with accepting things as they unfold… this itself is an opportunity for practice. And what a wonderful opportunity it is.

How can this situation be your teacher? How can you open up instead of recoiling?

Feel the internal struggle. Feel the sharp edge in your chest when things start to fall apart and get messy. Feel the frustration in your torso and belly. Let yourself feel all of that, fully!

Notice what’s going on in your mind. See how you can let go of the stories and expectations.

Then see how wonderful an opportunity this is to practice letting go and acceptance.

When time and time again you’ve practiced this act of opening up; when you’ve refined it and have mastered it fully, the world (and the market) will finally become your oyster.

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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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