We are all wired differently. We all bring different skills to trading. We all have distinct dispositions. We also have our own unique mental baggage that we deal with day in and day out.
This is good news.
Because you are unique, you can build a trading process that works for you. The ultimate goal is to accept who you are, know your skills and limitations and find a way to turn your internal trading machine into a statistical trading edge. Once you know your own “market edge,” you can then create a trading strategy that emphasizes your edge and ameliorates your mental baggage.
Some traders need control. Others love excitement. Some traders want a clear system to execute. Others feel imprisoned by mechanical systems. We all have trading weakness that can be triggered in certain market conditions with certain positions.
A system that is built on who you are, your trading needs and ameliorates your emotional triggers can turn a volatile P&L into more consistent profits. The first step is to determine what you really need. Not just what you say you need, but what is the underlying need. And don’t be shy here. It is ok to know that you need a trading adrenaline rush. There is no shame in this. It is fine to recognize a need to avoid being terrified.
Try this exercise to see if it reveals any deeper needs.
Make a list of what you need out of trading. This will probably include money, but be sure to look for other needs as well…perhaps recognition, proof of your intelligence or escape. Once you have written down all the benefits of trading, take the one that seems the most important.
For example, if you start with money as an important benefit, ask yourself, what benefit to I get out of money? The answer may be security. Then ask, what benefit do I get out of security? And keep drilling. The answers may surprise you.
The next step is to find out what your market edge is.
Market edge is anything that gives you a statistical advantage for a trade. It might be pattern recognition, fearlessness in the face of market panic, discipline to follow a system, or an algorithm.
Make sure this edge is in sync with your skills, temperament and emotional baggage. Once you have defined your market edge, you can then create a system. The more clearly defined it is, the more it can be followed, tested and improved.
Understand who you are, use the best of yourself to create a statistical edge and build a system based on this foundation. Trader and investor Mind Muscles are built on this process.
Please call if we can be of help.
A veteran broker and floor trader, Rich went from the "worst trainee trader ever", to building one of the most consistently profitable options trading firms on the Pacific Exchange by training his traders using neuroscience. Rich also holds a Masters Degree in Clinical Psychology, a B.A. in Philosophy, and is a graduate of the Gestalt Institute in San Francisco along with Master’s training in Neuro Linguistic Programming (NLP).
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