We all grew up in an environment where we need to follow certain rules, do this, do that, do whatever. Follow them and they say you’ll be guaranteed a success. Do the opposite and you’ll end up facing unwanted sanctions or worse, end up incarcerated. The structure we have around us can be restraining to the soul.
For some, trading is the escape. It is one of the ways to get away from the “structuredness” of the society. It is a way to express your creativity by mixing and matching indicators or even drawing lines whenever, wherever, and however you like!
There’s no right or wrong way to do things in trading. But here’s the catch, the escape can also be the problem. It’s like your everyday coffee — giving you that high burst of energy momentarily, only to leave you crashing down to your feet, never getting back up unless you get a dose again.
At the start of your trading journey, the tendency is you study indicators, how high should the P/E of a company be, or how certain news can trigger the stock to go through the roof, straight to the moon. You just want as much information as possible to get that trade right!
Let me tell you something, trading has got to be one of the hardest if not the hardest skill to master. The reason is pretty simple, trading is about probabilities and it goes against our natural tendency to be right.
Gathering all evidence that prove or disprove your underlying bias about a particular stock is almost automatic. Neglecting those that don’t agree with you, only because you bought the stock and don’t want to accept that the trade can go against you, you were blind sighted.
I can’t blame you, we all grew up wanting to be right all the time. That’s human instinct. I mean, our ancestors won’t risk going through the river full of crocodiles, right? They want to be as sure as possible to cross the river with their limbs still sticking together.
Here’s something most traders know but never really incorporate in their trading:
“You don’t need to know what will happen next to make money.”
I hold this principle dearly. Why? It tells us that we don’t have to gather all the information about the stock like how the company has been doing, how many towers have been built, how many grocery stores have been opened, or how many indicators tell that it’s going to go up.
If, for example, another stock goes up without any logical reason, you can still make money! Consider this, if some random kid with a pile of cash, sitting at his mom’s basement, decided to buy a billion’s worth of the stock, he’ll push the price up! No matter how negative the indicators and your bias about the stock are, it’ll smash roofs and climb its way to the top!
What’s the solution? Find an edge and be strict with it. Edge is only a bunch of patterns/scenarios that stack the odds in your favor. Then, enter that trade without thinking too much about what it should do next. If you have the probabilities stacked in your favor, you wouldn’t mind taking the hits as you know your edge will play overtime.
So, enter that trade and don’t be afraid to push that button. Don’t think too much about what it’ll do in the next ticks or so. Just have an edge and follow your cut loss levels correctly. And always remember:
Be strict but a little reckless.
Contributor:
Full Name: Geyzson Kristoffer S. Homena
Investagrams username: @GeyzsonKristoffer
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About the Contributor:
An Applied Mathematics graduate and a full-time teacher, Geyzson Kristoffer is a part-time trader who has been an active user of Investagrams since 2017. He spends his mornings, afternoons, and evenings learning about trading and reading books: Alexander Elder’s Trading for a Living being his favorite. Cohering to his passion and profession, he set his heart on teaching and helping newbies, but only the dedicated ones.
