IN QUEST OF THE HOLY GRAIL
It is not hyperbole when I say many beginners dedicate their lives to searching for the Holy Grail – a perfect indicator or trading system with a 100% success rate for setups!
There are also some who have been trading for years, tried and tested a number of successful systems but they forget, drop what they are doing and head off for the latest fad , especially when ads offering incredible systems catch their eye.
Perfectionists have the need to avoid unpleasant emotional experiences. Hence, traders who seek the perfect system are likely to be motivated by the need to avoid unpleasant experiences.
The only pain that we will suffer is the emotional reaction to a loss ,worse than being jabbed with a pin, or even the post op pain that our mentor Ray is now undergoing while taking his first step out of bed after THR. If we focus on avoiding losses rather than on maximizing overall gain, we are unlikely to succeed at trading.
A group of traders may all incur the same loss but suffer different emotional responses. This depends on their past experiences — not only while trading but in the broader arena of life.
For example, the more competitive they are, the more uncomfortable they are likely to be about incurring losses. From an early age, many of us are programmed to compete: to win; to accomplish; to be top of the class; to be right; and to succeed at whatever we set out to do. Losses are thus equated with losing — to be avoided at all costs. This group is the A- type Personality.
Not all perfectionists are A-type personalities. Many procrastinate, or avoid competing altogether, to avoid failure.
Newcomers to trading often start off with a string of positive experiences. Without the basics of Money Management, they are often over-confident and bet large amounts of their capital in the expectation of further gains.
Past trauma affects how we view related experiences. I recall what Denise Shull said about “Echoes of Perception” . A child who almost drowns may be prone to developing (hydro) aqua-phobia. I was a case in point, fearing water because I have a tendency to get cramps in the legs, even now. I did not overcome this echo of perception of water until after my first child was born when I took swimming lessons in order to join my ‘water babies’ – this vision was so powerful that it erased my fears completely. Faith can move mountains, and this helps.
Similarly, when hit with the shock and awe of a major loss, many traders never recover. They quit trading completely or spend their entire career trying to avoid a repeat of that negative emotional experience.
How can we overcome this phobia or echo of perception?
We must see losses and profits as part and parcel of trading. In fact, complete elimination of losses should be seen as a failure rather than to equate failure with losses.
We must learn how to distinguish between small normal losses and large abnormal losses in our trading system.
We hear that top successful traders aim and enjoy success rates of 30-50% p.a , and it would be naïve for us not so super traders to aim for more. They are able to maintain this rate with sound Money Management, to restrict the size of each loss while realizing substantial gains on successful trades , that is, by running their profits high with trailing stops or the Rule of 3 as taught by Mentor Ray.
Hence, we should focus on the collective effect , maximizing gains , not on the impact of individual transactions.
Denise Shull has this to say,too: Do what it takes to be trading only when you have got close to optimal levels of physical, mental and mostly, emotional energy – your Psychological Capital.
How do we do that? Denise said:
1. Learn to judge your mind, body and emotional static FIRST.
2. If the body is tired or the mind is wired on other elements in life or there is lots of emotional static in the form of aggravation, fear, or even “yippeekyaaaa, kyaaa” (I am a great trader), then execute on dealing with these energy levels first and foremost.
The net effect will be to avoid a debit to our cash capital and our psychological capital when the markets, our strategy and we all line up. Putting our psyche first can only mean higher odds of total profitability in our trading.
NOW witness the wisdom of Samuel Clemens:
“We should be careful to get out of an experience only the wisdom that is in it – and stop there;
Lest we be like the cat that sits down on a hot stove-lid.
She will never sit down on a hot stove-lid again, and that is well;
But also she will never sit down on a cold one anymore”
++++++++++++
This brings me to recall the movie:
CAT ON A HOT TIN ROOF
Starring Elizabeth Taylor who also had a hip replacement, if I recall right.
Our mentor Ray is in good company, seeing how well she is moving still among the Stars.
TAKE HEART, RAY, YOU WILL DO MORE, SHOOTING TO THE STARS!
