Friday, May 12, 2017

(Re)Making It As A Trader

If there's any more challenging than making yourself a successful trader and starting from scratch, it's remaking yourself into a successful trader once you've been on top and your edge has eroded.  Not many people can learn markets; even fewer can relearn them.

Per the above quote, the reason remaking ourselves is so difficult is that it brings suffering.  We have to kill off old impulses and ideas to open ourselves to new ones.  We have to pass up the old trades to open ourselves to new ones.  Remaking ourselves is all about letting go, and that feels like loss.

Most of all, when we go back to square one and relearn trading, we let go of ego.  We go from being successful to being a beginner.  We go from trading size to trading one lots.  Not everyone can move from a level of success to a level of humility.

I recently spoke with a very successful trader whose edge in the market went away.  After taking time away from trading, he is now returning, learning entirely new strategies.  As I was speaking with him, I began to feel optimistic about his comeback.  There were several reasons why:

1)  He is keeping detailed statistics on his trading:  what's working, what's not, how he traded, what he could improve, etc.  He truly accepts that he's a beginner and is willing to work the learning curve just like the newbies.

2)  He is looking at markets in new ways:  exploring different markets and different ways of trading those markets.  He's networked with some smart people and is finding edges very different from what he used to do.  He's willing to try new things.

3)  He's looking to leverage his strengths:  knowing the skills that made him successful in the past, he's looking for ways of employing those skills in his new trading.  He's not trying to be a different person.  He's trying to find niches for the person he knows himself to be.

The traders remaking themselves aren't merely looking for markets to "turn around" and give them their old edges back.  They take responsibility for adapting to the markets as they are.  They aren't sitting around blaming algos or choppiness or bad luck for their challenges.  They embrace new learning curves.  They observe what others are doing successfully and find a way to incorporate those things into what they know and do.  A great example is a trader I know who used to trade the ES futures directionally, but now--in a lower volatility environment where there is considerable sector rotation--he is trading the relative strength of one sector versus another and finding solid short term moves and trends.  

Still another trader looks for stocks showing strength or weakness near a pronounced support or resistance area.  When the move goes into that area and volume comes into the stock (playing for the breakout), he is harvesting profits.  He is making money from the failure of breakouts to sustain themselves in low volatility conditions.  That is very different from his past "momo" trading!

All the elements that help make new traders successful--mentoring, coaching, observing skilled traders--equally apply to traders remaking themselves.  If you can embrace the challenges and successes of the new learning curve, the remaking process may bring more than suffering!

Further Reading: