Intuition and Trading Discipline

jehung

The Market Is Always Right

In my personal life, I am a highly sensitive person. I have a strong sense of intuition, and over time, I started to develop some confidence in my intuition. I have a saying: I am always right. I am just early.

My science education plays into this confidence in my own intuition too.

This old attitude of mine is exactly what does not help in trading. It turns out that the market, not me, is always right. It is always right because it is a manifestation of the collective opinions of all traders around the world.

The hallmarks of an unsuccessful trader culminate in a “lack of discipline”. At the end of the day, I want to be a trader that makes money and not a trader that can boast about “I am right”.

Discipline

Two years ago, when pressed with this question, I would have given you the stock answer: following your trading plan, be sure to journal, don’t overtrade, and preserve your capital. I have always known these as good behavioural trades to have, but why do I still not them after two years?

It was because these are requirements that were external to me — I haven’t stepped into a process that allow me to absorb and learn what I really needed to learn. I kept on trading instead. I thought that if you got good with your strategy, you would naturally come to a point where these behaviours would simply “stick”.

But that never happened.

I am no longer defining discipline in the old ways. Instead, my updated definition of DISCIPLINE IS:

  1. Have good study habits: be a steady and continuous learner, so that I can acquire skills required in the trading environment (since the first hallmark of an unsuccessful trader is lack of skills).
  2. Have good self-awareness of my self-limiting beliefs and step into the process of redefining my psychological process to remove them.
  3. Understand that I am learning to cross the street in a busy trading world as a child: I need to institute some rules and limitations to guide my behaviour until I do learn how to act in this trading world. To be concrete, one example was that I should stop trading while I learn, because I should take the time to re-calibrate my relationships with the charts, and I will heed this advice now.
  4. Have good mental hygiene habits and nourish my EQ with : daily inner reflection so that I have an opportunity to know my mental states.

Sorting out Self-Limiting Beliefs

Many traders have some form of self-limiting beliefs. For me, this manifest in my association of trading with a form of gambling. When pressed about it, I had to admit that I like to gamble, and I believe that a gambler will eventually meet his ruin. Being a gambler, in the past, meant that I LACKED something in my life as well as in my character. It indicates that a person is lazy and likes to take the shortcut to get the reward. It shows that you are weak so that you take the softer, easier way out. It means that people should not trust you.

Objectively, I understood now that I felt this way because I only saw the similarities between trading and gambling. But I also see how they are dissimilar to gambling in that in trading, you can easily lose more than what you are staking in some situations (such as when you break your rule or when you have a margin call). Being a successful trader indeed demands a higher skill level than that of a gambler.

Trader as the Most Important Variable

Strategies don’t make money — people do. Working on the person, not just a trader’s strategy, is the most significant of puzzle piece in the game of trading.

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