Welcome to the Coaches Corner! I’m Mike Curtis and today I’d like to discuss a common myth among aspiring traders—the belief that the market is out to “GET THEM!” Who among us hasn’t felt that early on in our career? Eventually we come to realize the market doesn’t know who we are…or for that matter care about taking our money. But starting out, there’s no doubt it can feel like we’re sporting a big bull’s eye each time we enter a trade, as it seems every trade entered goes in the opposite direction hoped for.
Times like that it’s hard not to get frustrated and feel as if you’ve developed some sort of eternal bad luck. I’ve actually had more than one coaching client tell me, “Oh, you want the stock to go up… well, I’ll short it in my account and there’s no doubt the stock will move higher!”
Having worked with many new traders who’ve experienced the “market is out to get em” anxiety, I’ve identified what I think are the two key causes underlying these feelings of insecurity:
1) Lack of a comprehensive trading plan that
incorporates proven high-probability strategies
that have been properly tested and vetted.
2) Hesitation due to unchecked emotions and/or fear.
Let’s start by looking at this first problem. Executing high
probability strategies can ensure that you don’t NEED
the market to move in a certain direction to succeed.
No one can predict exactly where the market is going
and when it’ll do so—so avoiding trades that require
a specific directional movement to be profitable will
improve your results.
Learning strategies that have a higher probability of success can help you BEAT the market. Sometimes “bad luck” is merely the result of trying to apply a trading strategy that is inappropriate and unlikely to succeed. Remember, there are thousands of strategies out there and you need only find one or more best suited to your situation that’s capable of shifting probabilities in your favor.
What’s more, bad luck doesn’t really exist in the market. With every trade there is someone making money and another losing money…or at least one party is foregoing opportunity. Fact is you just need to align yourself with the side that is making money. If you’re trading strategies with proven success that are capable of providing even the slightest probability in your favor, you can beat the bad-luck myth. The key is adopting a system that enables you to identify market direction and provides a heads up as to when the market cycle will probably change—allowing you to trade with the market instead of chasing it.
When it comes to hesitation resulting from fear and emotions, the underlying cause is generally the same— the lack of a solid trading plan.
Traders that shoot from the hip often lack a good strategy and rarely get totally comfortable when it comes to taking on risk and pulling the trigger. When they do finally get comfortable enough to execute a trade they’re generally late to the party and the real money has already been made.
Having a set plan of action in place eliminates the negative effects that fear and emotion have on the success of your trading efforts. The combination of a good plan, sufficient trading education and practical experience trading live markets will provide you with the comfort level necessary to trade with confidence in any market condition. Trading confidence is important because it enables you to apply your strategy CORRECTLY and to react accordingly when things change.
The axiom “Plan your trade and trade your plan” should be a guiding principle for any trader. Making decisions in the heat of the moment will almost always result in faulty judgments and bad outcomes.
Overall, you should always remain apprized of what the broad markets are doing and be aware of the current market cycle. Tools help us identify where the ‘big money’ is flowing. Beyond that, a good plan of action should strike a balance between position sizing, risk management and operating intellectually (rather than emotionally), allowing for tactics that are proactive rather than reactive.
Bottom line, if you’re afraid of “bad luck” or feel the markets are “out to get you,” step back and analyze your approach. You’ll find that a good plan and disciplined approach go a long way toward eliminating bad trading habits, keeping emotions in check and alleviating fear.
Mike Curtis has been an active trader in the derivatives markets for 8 years. He has mastered the world of equity and index options along with spread trades, futures and foreign currency. He loves teaching and has personally coached over 500 individual investors needing help learning to apply a consistent trading method. Through his mentoring, he has helped hundreds of people change their financial situation through trading in the financial markets. He is a husband and father of 4 young children and currently lives in Salt Lake City, Utah.
You can contact Mike at 801-717-3993 to learn more about the Traders Edge Coaching Program.