For Better or Worse, the Market Provides

“Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing” – Ed Seykota

What’s your real aim when you trade? Most people would say makingmoney, but most people don’t see the bigger picture. We trade for many reasons, some of which are usually imperceptible even to us.

Maybe what really drives my trading is the excitement – waiting for New York to open – scalping the 5-minute chart, scaling in to huge positions.  

Maybe I like boasting when I do well, and enjoy having friends pick me up when I lose – maybe I trade for emotional reasons, in other words.

Maybe I just like knowing what’s going on in the world, and trading helps me stay informed. Some traders actually care less about making money than proving their intelligence.

Everybody has these emotional foibles to some degree – we’re only human. Good traders are conscious of their biases and work around them. Under-developed traders often allow their biases to run rampant over their portfolio – this is where it becomes a problem.

If you want to be excited rather than profitable, then you will probably find yourself losing money but having the time of your life. If you want traders in your community to take pity on you, then your subconscious will no doubt arrange some big losses to facilitate this.

You can only truly win if you want to. Ed Seykota recalls a trader with the consistent ability to turn $10,000 into $250k, whose need for sympathy overtook his desire to be profitable, and so he would give it all back to the market time and time again.

Our most private thoughts and emotions have a stronger hold than we might like to imagine over our trading – it’s almost impossible to win big and keep your profits if there are unresolved issues gnawing away at the back of your mind.

The importance of self-reflection

“If people look deeply into their trading patterns, they find that, on balance, including all their goals, they are really getting what they want, even though they may not understand it or want to admit it”. – Ed Seykota

Your trading begins and ends with you: knowing yourself is just as important for us today as it was for Socratic philosophers in Ancient Greece. Maybe even more so.

As a former Army Officer with a Master’s Degree in leadership, I am conscious that I must lead myself before I can lead anybody else. If my own inner workings were a mystery, how could I expect to inspire a team? A community? A single other living human?

The same goes for trading. If I don’t know why I’m trading, then how can I expect to reach my goals? Any improvements you can make to your overall level of self-awareness will pay dividends in the future, as you find yourself becoming a better leader, trader, and person.

One of the biggest challenges…

It’s not always easy to tell good behaviour from bad – especially if a particular pattern or routine is particularly well entrenched. How can you be sure it was a mistake to pull the trigger, and you didn’t just get unlucky?

Truth be told, this will take intuition and the ability to hold yourself under the microscope as a trader. Identifying and isolating your weaknesses is just the first step: you also need to relinquish and replace them with good processes, which might be easier said than done in some cases.

This can be a frustrating exercise, as it is heavy on self-criticism and hindsight. The key is to be kind to yourself. Remember to clear your mind and breathe deeply. Stretch, take walks, and try to stay relaxed while going through this process. You’ll be glad you did.

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