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This is a phenomenon I have noticed over the years, and it
has helped me improve as a trader by seeking out similar behaviour in myself.
It is worthwhile taking a look at your own approach and identifying if it is
present.
Through Decisive Trading, I get a lot of emails from
traders. Quite a few of them are struggling traders, and all they are messaging
for is some advice and maybe a bit of encouragement.
I’m focusing on the emails here from people who are struggling
and asking for advice. The emails all differ, but they have a common theme.
They say things like:
‘I have lost a lot of money trading, my trading plan is ‘X’,
can you offer some advice?’
‘I am trading on ‘X’ market and have been for two years. I
have lost lots of money and I just can’t figure out what is going wrong. Can
your course help me?’
‘I am using a system where I wait for a moving average
cross. I learned it from an old trading guru I met in a bar who only ever
shares his secret once every thirty years. It isn’t working. What should I do?’
All of these threads are different, but they are basically
asking the same thing.
I am doing ‘X’. It isn’t working. Can you offer some advice?
When it comes to specific trading plans, I don’t offer exact
ideas, because for me to understand the plan, I would need to study it,
thoroughly back-test it, and then trade it. Unfortunately, I simply don’t have the
time to do that for every email I receive. What I can and do often point out,
is the obvious steps they should take in relation to what they have told me.
So, for each of the above, it may be something like:
-
‘Reduce your position size. Stop trying to make
the money back and first learn how to protect your account and build your
trading abilities.’
-
‘If you take the course, my advice would be to
switch markets. Treat it as a fresh approach so you don’t carry bad habits over
with you. After you become consistent, then you can trade whatever market you
like.’
-
Consider that the system doesn’t work or isn’t suited
to your trading personality.’
And here is where this phenomenon come in, the one that I am
simply calling stubbornness. I would say 90% to 95% of the replies to this type
of email question and then response is the same. It is so common that it is
what I expect when I see the name pop back up in my emails.
They say – ‘Thank you. But I think I’ll keep doing what I’m
doing. I’m sure I can make it work.’
So they are emailing me because they are failing, and are in
a place of desperation, they pretty much highlight the issue in the email, and
I simply point it out to them. But when I do that, they pull back, as though I
was some sort of pariah that was trying to harm them and their child.
It’s stubbornness. The equivalent of banging your head
against a brick wall, asking someone how to stop making it hurt, and then when
they tell you to step away from the damn wall, you instead say nah, I think I’ll
keep doing this, I’ve been doing it for too long to quit now.
At first it used to boggle my mind and I would invariably
reply, trying to point out that they themselves had already highlighted the
issue in their initial email. But I found that by that time, the heels were
already dug in (stubbornness) and anything I said would fall on deaf ears. Now,
I just wish them well and hope that they figure it out, or at least don’t lose
too much more money.
The refusal to change your opinion or come around to a new
way of thinking has something to do with ‘self-affirmation’ and ‘cultural
cognition.’ I don’t want to get too much into the meanings, because they can
pretty much be summed up by the word I’ve already been using – STUBBORNESS.
Once I started to realise what was happening, I wondered if
I was acting in a similar way? I must admit, it took me a while to link the
common responses to myself, but once I realised that such a high portion of the
replies were similar, it made sense that maybe, just maybe, I was also stubborn
and didn’t even realise it!
It’s worthwhile looking at your trading and digging into
what it is you do in order to find weaknesses and then ways to improve. You
should be doing this all the time, and not only in relation to stubbornness. It
is easy to grow bad habits, and unfortunately, if you don’t identify them
quickly, the market will do it for you by taking your money. This is all part
of trading and you should be aware of it.
So, I had a look at what I was doing. It took me a while to
identify the specific areas where I was being stubborn, but sure enough, they
were there:
-
My main one was that I went into certain trading
days with a bias in terms of the trend. And throughout the day, even if the
market was telling me that I was wrong, I clung to that bias and looked for
trades that fit with it. What it resulted in was unnecessary losses and a lot
of frustration on my part when these days showed up. It told me that I needed
to work on my acceptance of being incorrect and my willingness to change my
mind quickly.
-
The second thing, which was closely linked to
the first, was that I had a hard time accepting strong trends. I always
expected them to end, and was looking to sell into the bullish rallies or buy
into the bearish ones. Again, this resulted in frustration and unnecessary losses.
The simple act of thinking about these things helped me
greatly. I knew I was doing them on a subconscious level, but I was being
stubborn, and because of that, I had never really addressed the issues. It’s
almost like someone standing you in front of the answer written in six-foot
letter on the way in front of you, but you instead chose to close your eyes. By
specifically looking for that stubbornness, it was like opening my eyes and
giving myself the permission to read what was right in front of me.
It helped me a lot and I am sure if you search out the stubbornness
in your own approach, it will help you also. Don’t be afraid to be wrong as a
trader, but be terrified of not addressing and correcting those mistakes.
I hope you’ve all had a great trading week!
James Orr
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