How much is enough? How much researching, chart-watching and just general thinking about your trading is harmful? How does doing too much trading related activity hurt your chances of trading success? In today’s lesson, we are going to discuss these topics and delve deeper into why you may indeed be self-sabotaging your trading simply by doing too much of everything.
You can call it “micro-management” or you can call it “over-thinking” or “over-analysis”, but no matter the label given, the intent is the same: Total Control.
Perhaps at the very root of this problem of micro-managing one’s trading, is fear. When a person is afraid of losing their money, they will do anything they can to try and take control. However, in trading, trying to control the market is futile, it’s actually impossible. The only thing within your control as a trader, is yourself and your thoughts and actions in the market, that’s it.
Here are 2 of the best pieces of insight I can share with you to help you let go of the need to control the market:
Many traders try to control everything, and this thinking leads them to being unable to mentally handle a trade that is quickly moving against them or a trade that just barely misses their profit target and then reverses. These are just two of many examples of the consequences of being afraid and thus trying to control everything in one’s trading.
First off, stop trying to know everything. You can never know every single piece of data that is underlying a swing up or down in a market. In other words, you can never really know why a market is moving in the direction it’s moving, all you can know for sure is what has happened before and what is happening now, from that, we can use several different price action strategies to build a framework into the future for what MIGHT happen next. But, it’s important to understand that digesting more and more and more trading news, or even staring at the charts for hours and hours, is simply not going to help you figure out what will happen next. You can’t know what WILL happen, only what MIGHT happen. Remember, we are ‘playing the odds’ of our trading edge in the market, not acting on certainties.
You can never know what will happen FOR SURE in the market, until it happens (and it’s too late to take advantage of). So, as traders, we are trying to make consistent money in a game with inconsistent outcomes, not easy to do, especially if you have not yet accepted the outcomes are going to be inconsistent. However, it can be done, you can make money trading but NOT if you are micro-managing every aspect of the trading process and trying to control the market. It’s what so many of us get caught up in when trying to run our trading or our businesses or even our relationships.
When you finally understand, accept and then LET GO of the primal urge to control the market and micro-manage every little detail by believing more information will give you more control over your trade outcomes, you will be entering the beginning phases of the proper trading mindset. Trading success is mostly the result of proper mental thinking patterns and then using those to control one’s behavior in the market; proper routines turn into proper habits, etc. Once you master yourself, you will begin to see improved trading performance over the long-run. That may sound cliché’, but it’s very true as well.
A big reason traders don’t accept losses is micro-managing. Micro-managing means you’re trying to control everything, every little detail. People who get caught up over-managing their trading tend to think if they can adjust for every little variable, they can avoid losses somehow. Or, they start to think that since they’ve spent such a huge amount of time studying and researching that they are somehow able to avoid losses due to their ‘vast knowledge’ of trading.
You can’t avoid losses – they are as much a part of trading as your blood is a part of you. So, all you can do is figure out how to best manage them and remember to always understand that any singular trade can result in a loss.
This will remove an element of stress as soon as you place your trade. There are costs and expenses associated with doing business. For traders, a loss is a running cost. Accept it.