All the wrong reasons

Saturday morning thought...

I remember reading somewhere or hearing that if you come to trading for the wrong reasons that you will not be a successful trader. I believe the one of the wrong reasons is money.

Let's face it. 99% of traders that are traders are here for the money. They may love trading or come to love it or they may hate it. Before they became traders they did not know what their emotional attachment to this occupation would be. i.e. one of love, hate or indifference.

To be perfectly honest I think that people that tell you that you must be a trader for the right reasons are probably those people that have been selling you trading courses and because you can't make money with their course then you are here for the wrong reason and that is why you are failing and not because of their trading course.

So is there a wrong reason for becoming a trader? Well, I guess if you are in dire straights and you see the markets as a less risky place to "take a bet" and make it big and quickly fix your financial woes then that might be the wrong reason. But that would be the same wrong reason why you went to the casino to try and get out of that financial hole that you are in. In this case you aren't trading you're gambling, it's just that your gambling in the market place instead of the casino but you are essentially still gambling and not trading.

All and any vocations are a journey. If you are a trader then you will go through many stages and with each stage will come losses and profits. You will look back and say "the markets were great in those days" when you look back at your profitable streaks. Those were really the days when your strategies and indicators matched the markets. If you stick it out then those days will be back but you need to survive the stretches in between. A farmer cannot reap hay year round, he must store feed for the winter when production is zero.

Compare the careers of the trader, developer (computer programmer), and doctor.

The doctor learns more with experience but the object of his skills do not change. The equipment that he uses and knowledge about the human body will improve over time but the essential underlying object of study does not change.

A developer, like the doctor acquires skills over time. The language and operating systems that the developer works on change like lightening under her. In just 1 year her highly prized skills and knowledge become obsolete. The developer must adapt to a dynamic, flexible changing market while developing core skills that will carry from one discipline to another.

The trader is the same as any vocation. As you develop basic market skills the tools that you use to analyze and assess those markets will improve over time. The markets will change through their innate dynamic nature, because of government regulations and because of changes to the securities traded brought on by institutions and exchanges.

One of the right reasons is your ability to face change and adapt and develop with the markets, technology and times.

Although this journey often starts with the selfish motives you mention, the process of self discovery is immediately forced upon the unsuspecting participant by the overwhelming and uncontrollable forces of the market. If we stay on the path long enough, we eventually learn the well defined boundary between the few things we can control and the much larger environment and forces over which we have no control.

In a very pure sense, the market rewards good decisions and behavior, and at the same time punishes bad decisions and behavior. The desire to make money in an external and objective sense is neither good nor bad. Actually the market could care a less about you or what motivates you to think and act the way you do.

Therefore, if the desire to make money leads you to make bad decisions and act in harmful ways as a trader, then it is bad for you as an individual. If this same desire leads me to make good decisions and act in valid and rewarding ways as a trader, then it is good for me, and this consistent monetary reward is a powerful positive motivation for me personally.

So from this perspective, trading success is actually dependent on consistently making good and rewarding decisions. And it is this (our behavior) that we actually have control over, and very little else.

If we consistently do the right things, the market will reward us.

Well put pt_emini. I often compare my trading to my golf. If I make a mess of a hole on the course then it angers me and that usually perpetuates itself in such a manner that I mess up the next and following few holes out of frustration. For example, I will try and hit the ball too hard on the next tee shot (analogous to overtrading) instead of hitting a controlled steady shot down the fairway.