Placing trades should be boring

I remember listening to traders speak on podcasts about trading having finally clicked to them, and being in a starting phase during my first six months, I was wondering what they meant. It was roughly a year later when I started to feel that my mindset had made a shift to think in probabilities and focus on the present moment of opportunity. I didn’t need to be right, I just had to hit it big when I was. This gave me confidence.

By now I have realized I don’t need to pick the next winning stock or predict what the market will do next. None of this matters. I need to work on my market edge and apply it as much as I can. Having the discipline to consistently make bets according to my trading plan is what matters most. Whenever I hear someone say that trading the stock market is not possible, it only tells me that the person wasn’t able to find edge or didn’t reach stress-free state of mind to risk money.

I need to have losses

Sounds strange, right? If a trader doesn’t have any losses it means either he or she is not taking enough risk to maximize the potential, or the trading system is about to blow up due to deep negative skew in trade distribution. A trader needs to have losses if risking money in the markets. The losses need to be small enough so winners can compensate them and more. This year has obviously been also for me a much weaker period than just “taking a few small losses”, but even years like this are expected in the market distribution if I want to be in this game longer than a single bull market. Trading is a craft of surviving, cause without surviving it doesn’t matter how much money was made in a roaring bull market by taking irresponsibly high risk.

Trading is a business

So at the end of the day, consistently following one’s plan is what matters. Whatever the outcome, the process is important. Only then can a trader make money in the markets, and even more importantly – keep it. It will start to feel a bit boring at one point. No adrenaline rush, no excitement, no greed or fear, just plain numbers. Feels like coming to a point where this is a professional business, not just another gamble. I do sometimes get excited about research or a new method I discover that keeps me passionate about the business, but it’s never about a single trade or a decision.

The best loser wins

I don’t cheer myself if I win, and I don’t beat myself up when I lose. It’s just part of the trade distribution. That’s why it’s funny to see people congratulate or comfort each other for the outcome of a single trade. For me as a trader, it’s all irrelevant.

We all trade to make money, but ironically the less we focus on it the better results we usually get. Being unattached to the monetary side leaves us humans make better decisions in financial markets. If you concentrate on winning, that is to be right, you’re probably going to lose. If you ignore winners and start cutting losses while they’re still small, you have mathematically a chance to become profitable. When I exit a position, winner or loser, all I think about is to take the next trade.