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Work harder. Be dogged after a failure – be persistent and push harder next time until success comes. Never give up. Never show a weakness. Everyone has heard these tried and true axioms of success. And these axioms have proved to be true in other endeavors outside of trading to the point that they have simply become the bedrock of "success" thinking. They seem so self-evident that few question whether they are also effective in the performance of trading. Why? It is natural to assume that attacking a problem by brute force and finally forcing your will upon outcome will work in trading as it has in other endeavors. This approach has great appeal for males with their testosterone-driven perception. Yet after the smoke clears for the umpteenth time, this kind of thinking produces persistent draw-downs in a trader’s account. What’s the disconnect? Stress – Facing the Challenges of Life. First, let’s define stress. For our purposes here, stress can be defined as your response to the challenges of life. Anytime you experience uncertainty, the body/mind is triggered to a stress response and the body and mind are placed on alert for the duration of the stress or challenge. In the not-so-distant past, stressors or challenges were fairly short in duration (but intense) and the body adapted to this. Finally, these short-term adaptations to challenges were so successful that they were burned into our DNA. So they became automatic, reactive biases built into our very nature. While the high alert status of the stress response allowed your ancestors to deal with a particular challenge (being threatened or approaching predators), eventually the body calmed down because the uncertainty - the threat of real predators - was gone. Life was good again. The body and mind then naturally fell back into homeostasis (calm state of mind) until the next challenge appeared in the environment. The take-away for the trader here is that the act of trading produces the very circumstance that triggers the stress response. And the brain/mind built for survival in a world of danger cannot distinguish the difference between the challenge to an uncertain future while being confronted by a saber-tooth tiger and the challenge of an uncertain future that confronts a trader every day. And until the trader can separate the two (biological threat and psychological discomfort), the body is always going to overwhelm the mind when it senses danger. Trading requires the smart management of stress (emotional intelligence) because it is unavoidable. What matters is the skills that the trader brings to the management of uncertainty and the challenges that are inherent in trading. Stress is Your Friend or Enemy – Depending on How You Use It. The relationship between stress and performance has been studied since the early 1900’s. Reduced to a graph, it looks like a bell-shaped curve. And essentially what was discovered is that stress is good up to a point. It keeps you focused, alert, on-task, and concerned about your current situation. It also produces a highly flexible state where the organism (the trader while trading) can respond thoughtfully to changes in the environment. This “good” stress is called eustress and it is the cornerstone of a peak performance mind. Then, after this period of eustress responding to the stressors of life, performance drops off dramatically. However, when stress is prolonged without effective coping skills for its management, the good stress of eustress becomes the bad stress of distress. Concentration levels go down and mistakes go up. The mind becomes confused and reactive. The distress will build (unless effective intervention is made) until burnout occurs and you are no longer capable of performing to the best of your abilities. As you have probably noticed, this scenario is common among traders. Particularly when they are trying to push themselves through the management of uncertainty with brute strength. So up until a point, working harder, being persistent in the face of failure, and never giving up did help. But without the addition of new, more effective, coping skills, this approach leads to distress. And distress leads to compromised thinking that shows up in your trading account as drawdowns. Fundamentally what is required is a new approach to understanding stress and its management. Failure as a Path to Improvement I'm not saying that you should stop being persistent. Instead I’m asking you to come to a new understanding of what persistency is. Persistency is not doing something over and over again until you force your will upon the markets. I know many traders who have tried this approach and have truly traumatized themselves as they keep running into the same brick wall over and over again expecting a different outcome. It doesn’t happen that way. Once you learn how to regulate emotional intensity by breath and relaxation training, you will get to the door of the mind. And it is the mind where you find the beliefs that you are projecting upon the markets. It is these projected beliefs that you produce the results that you see in your trading account. So failure can help you to isolate the belief about your capacity to manage uncertainty that has been holding back your success in trading – if you have the openness to learn from your mistakes. The trait of persistency helps you to find the self-limiting beliefs behind your lack of performance. These are not the beliefs that you talk about. These are the operational beliefs behind your performance in the face of uncertainty. These are two very different things. You can fool yourself and other people, but you cannot fool your trading account for long. After luck runs its course, you discover that the markets don’t care. If you insist on bringing ineffective beliefs to the management of uncertainty, the markets will allow you to burn capital. The more you project ineffective beliefs upon the markets about the management of uncertainty, the more you experience the stress of trading as distress, rather than eustress. It’s not about working harder, working more, trading more, or pushing yourself – it is about the beliefs you bring to the management of uncertainty. Once you realize and truly accept that you have to give up control of the outcome in trading (certainty), trading becomes the microscope to aid you in discovering the operational beliefs behind your performance in the challenges of trading. Mistakes show you the way. You are no longer using persistency as a bull-headed denial of reality. Instead you are using feedback from your failures to point out the beliefs behind performance. Personal performance is the one thing that you can control in the management of uncertainty found in trading. It is here that you find the real beliefs about your capacity to manage uncertainty. This is what you have been avoiding having to face. Yet no matter where you go, there they are. They are waiting for you to discover them and change them so that you can re-organize the mind that you can bring to the challenges of trading. It is here that the worry-based mind of distress in trading is transformed into the concern-based mind of eustress. It is your choice. The markets are not capable of caring. If you insist on bringing ineffective beliefs to the performance of trading and refuse to learn, then so be it. And the new reality is that the mind that you bring to the management of uncertainty is the only thing that you can control. When you begin seeing trading as your teacher, then you have opened the door to learning how to manage stress in trading. Rande Howell
I am hoping this thread will "morph" into one of the most popular tyhreads on the Internet. Why? Because this is a first. It is a place for people to do what they normally never would do. And that is: Show where they messed up in trading, How did they fail, what indicators did they use wrong, what bad habits do they feel they couldnt lick, and basically what got in the way of them succeeding. Now before you click to another thread with another new system or piece of advice, let me ask you all a question. If you wanted to learn to be a champion Professional boxer, who would you go to for coaching-Mike Tyson or Cus D'mato/Kevin Rooney/Teddy Atlas, Mikes trainers and advisors? Would you go to Muhammad Ali or Angelo Dundee to learn boxing. By the way, Angelo and Cus were both horrible boxers I dont think either one won a pro fight or even fought in one. So why did these two "LOSERS", Angelo and Cus, create 2 of the greatest boxers the world has ever seen? I can answer that, but I wont.....not right away. I spent 25 years researching where greatness comes from and whether it is made and molded, genetic or luck....or all 3. Or, none of the above! You see, losers have as much to teach us as winners. But losers don't sell books. Losers can't sell courses on trading.(Unless they just make stuff up). Losers opinions, arent usually highly regarded. And I will tell you,that is the biggest reason why most people never reach their full potential. So, if we all learned so much from reading about the most successful traders in the world "Market Wizards", why arent we all rich like them? Come on now...that books been out for what, 20 years or so now. There are no excuses. So, what could our failure to be a professional trader be caused by? I say, we let the people who went through the war, were the real casualties and tried everything and maybe more than the winners did ,let us hear from them! That means you if you are reading this and cannot make a living trading yet and have been trading or studying for 2 years or more. Talk to us. Right here, right now! . I don't think everyone gets how deep that can really go. You see, we always hear stories about a trader who "unveils" his story to us about how he succeeded. What I want is to hear the stories of guys who blew up 5 trading accounts, lost their house, lost their regular job cause they couldn't stay off the Internet(me!),lost their wife and even lost their perspective OF life. We don't hear from THOSE people....and those people are far, far in the majority. I think if we have a book called Market Wizards, we should have its opposite called Market failures. In fact, I should start a thread here to do just that. Trading is a merciless business. You can put in 40 years and still wind up like Edward Levebre from the "Stock Operator" book and die alone and broke in a hotel room after making millions trading. Those are far more common. We need to hear those stories...not just to pay homage to the "fallen soldiers" who may have been smarter than a Market Wizard" but just not luckier. Or destined to be in the wrong place at the wrong time. Myself: I have never emotionally gotten over buying 500 shares of APPL at 33, watched it go to 35 but set my stop at 33 and said I would get back in as soon as it picked up momentum.Then, I got so involved with day trading in a prop room, I forgot about AAPL it until 3 months later when it was way to high. I will wait for a pullback I said. It then went on to skyrocket past $700 and I wanted to have a position of at least 1000 shares when it went past 50. I can likely never get an opportunity like that again and would have been set for life. Hell, Warren Buffett probably never had that happen to him. So what I'm saying is, brains or not, persistence or not, it is soooo much easier to fail at trading than to succeed. And the real kick in the rump is we never really have control. We can only "hope" that what we do continues to hold its edge or else we might have to start all over again. How many suicides have taken place because of this addicting,exciting profession? Look at Gann, Elliot, Charles Dow and all the forefathers of stock trading. They all were/ became very physically sick. Was it from trading...or just coincidence? So I start this thread, hoping you guys out there who have thus far not made it yet, tell us your biggest mistakes youve made. But tell them in 2 or 3 paragraphs at most so the next guy can be heard. You are welcome to keep coming back once a day and write something fresh. So lets go. Right here. Right now! Who wants to be first to kick this off? And by the way, here is my disclaimer: DISCLAIMER-i HAVE THE RIGHT TO USE ANY MATERIAL PRESENTED HERE ON THIS THREAD IN ANY FORMAT I CHOOSE. I WILL NEVER BE FINANCIALLY RESPONSIBLE TO PAY ANYONE POSTING HERE ANY MONEY REGARDLESS OF WHAT HAPPENS FROM THIS THREAD. I hope helping another trader will be reward enough for you folks. So who wants to go first?