Friday, August 02, 2019

Staying Up When You Have Been Drawing Down

I've received a number of emails and comments in response to the most recent Forbes article describing the pain of losing in financial markets.  We don't usually talk about losing and how difficult that can be.  It's more fun to speak about success and profits and always getting better.  But that's not the real world.  As the article makes clear, not all who pursue trading can make a living from their craft.  If I'm a tennis player, I may not make the cut for pro tournaments, but I can enjoy my sport at a local club, playing against local competition.  If I'm just average as a trader, I consistently lose money.  That is not sustainable.

Many entrepreneurs build a number of start-ups before they hit upon a winning idea and execution.  Years of ups and downs, wins and losses, precede any appearance in the Olympics.  In most performance domains, losing is a necessary part of winning.

If you have been drawing down in your trading, what is most important is to step back and ask yourself a couple of key questions:

1)  Am I looking for opportunity in the right places?  So often, the difference between success and failure lies in what you are trading.  As I mentioned to a young trader recently, you can be the best well-driller in the world and, if you're looking for oil in the wrong places, you'll go broke.  The restaurant that works in the downtown location might fail in suburbia.  You can only know what works by studying traders who are actually successful and seeing first hand what they're trading and how.

2)  Is trading truly my area of opportunity?  As I describe in the book I'm writing (due out later this month), sometimes it's our strengths that derail us, not our weaknesses.  When I tried trading full-time, I found myself interacting with other traders and helping them--and losing trading opportunities in the process.  The reality was that I became a psychologist for a reason.  Being a meaningful part of people's lives is what really gets me up in the morning.  When trading took me away from who I actually am, my trading suffered.  

In the Forbes article, I link to a number of training resources and communities that can help us make the most of our trading.  That can help you determine if there are niches in markets that capture your strengths.  But before you worry about winning make sure you're playing the right game.  What are you really good at?  What gives you your happiest and most fulfilling experiences?  Your wins in life--inside and out of markets--can educate you about who your are and what you do best.  Your losses can be a wake up call, a nudge to become the best version of yourself that you can be.