Sunday, July 30, 2017

Renewing Our Trading And Regaining Our Passion

One of the most striking differences among traders I have encountered is their grounding in a problem-based mindset versus an opportunity-based mindset. The problem-focused trader is chronically frustrated, battling one challenge after another.  The opportunity-focused trader is inspired, finding meaning and direction in setbacks.  It's easy to become problem-focused when losing money and it's easy to perceive opportunity when things are going well.  The successful traders I've known look for problems when things are going well, because they are always looking for opportunities to improve.  They are also looking for what is going well during periods of drawdown, because that is where opportunities may be showing up.

In a recent article, I outline why I believe we could be on the cusp of important market opportunities. Yes, it's been a challenging period for traders in terms of low-volatility market behavior and erratic trends.  But, as I outline in the article, there *are* strategies and approaches that are working; I *do* see people succeeding.  There is opportunity in current difficulty.

What has kept me alive in markets since the late 1970s, besides risk management, has been research.  Every week I update my database, explore ideas, and test out strategies.  Easily 80% of what I look at is either worthless or duplicates what I already have.  Another 10% is promising but ultimately has limited value.  It's that final 10% that opens new doors and yields fresh opportunity.  I could become discouraged about the 90% of research that never finds its way into my trading, or I could be energized by the 10% that moves me forward.  

If I were not innovating, what would keep me interested, driven, optimistic, and energized during periods of drawdown?  Too often, we are mired in problem-based mindsets because our focus is solely on P/L.  So our focus and passion rises and falls with our equity curves.  When we approach markets with intellectual curiosity and a love of sharing ideas with like-minded colleagues, we create whole new sources of motivation.

Trading was fun when it was new.  The challenge is keeping ourselves re-newed.

Further Reading:  Why Trading Has A Future