Avoiding the Pain in Trading

Trading is a process where it's almost impossible to avoid feeling 'pain'.  This article examines how the painful aspects of trading can be better managed on an ongoing basis so that long-term trading goals can still be met.

As human beings we are inclined to do things for the sake of avoiding pain than for the sake of seeking pleasure. Even though we hate to admit it, it can be hard to master the art of trading at first instance because more often than not, we come to trading seeking pleasure i.e. pleasure in the form of an additional income, a new hobby or even in the form of a new day job. However, in reality most people find learning to trade a difficult and painful process. Losing trades diminish hard-earned capital, and one’s pride can be dented when one has read the market wrong. For many, it is a stark difference between the success (i.e. pleasure) they were expecting and after a few unsuccessful trades, it’s easier to stop trading than continue. So how then can you avoid the pain in trading without quitting altogether?

Firstly, it is important you adjust your expectations. Trading is a skill, a craft that takes time to master. The trading strategies that we share with you are NOT magic bullets that guarantee successful trades each time you use them. Rather, it helps to think of trading as a probabilistic game. The questions you should be asking for each trade are “What are the chances of succeeding if these technical elements are present / absent?” and “How much am I prepared to lose if I am wrong?” Knowing upfront that losses are part of learning to trade and preparing yourself for them is an important first step that needs to happen if you are to avoid the pain in trading. Most beginners do not consider these questions and instead deny their fallibility, isolate themselves from other traders and get angry that it’s not working out. These behaviors do not help them at all, and a change of mindset is desperately needed if they are to continue learning to trade!

Another behavior that causes a lot of grief is the act of trying to bargain with the market. Yes, the market is a living and breathing thing, but straying from your trading strategy and moving your stop loss orders will not help you succeed in the long run. I know it is hard to have faith when you first learn and apply the strategies because you do not “own” them. You didn’t create them, you are unsure if you are applying them correctly, and in the back of your mind you question if (and When!) the strategies will deliver the wins you expect. If you are constantly wondering if your next trade is going to be a winner or if you’re wondering what else can you do to improve your chances of winning, then you are still bargaining with the market. Also, you should only be trading with money you can afford to lose. Worrying about losing your trading capital can be a self-fulfilling prophecy! Try to get yourself to a point where you can focus on flawlessly applying your trading strategy, then leave the rest to the natural course the market will take.

The best traders I have met almost always have a certain zen-like calmness around them. They accept the dichotomy of trading – that there will be wins as well as losses regardless of whatever market or trading strategy they choose. Avoiding the pain in trading requires a philosophical change to a point where you are divorced from the emotional highs and lows associated with winning/losing a trade or gaining/losing money. It is for the love of trading that you trade, and a matter of probabilities and price action that will help you get the ultimate pleasure and success that you seek. Happy trading!

Regards,

The TWP Team