One of the hardest things when you begin trading is focusing on what is important. At most firms there are leader boards in full view. On your screens it’s impossible to miss your P&L. But it takes about three years to become a great trader. And you can’t make a ton of money until you have developed significant trading skills and learned to improve your mental weaknesses.
Let’s take a step back and expand this to people often focus on the wrong things. For example, let’s suppose that you’re interested in becoming a DI basketball player. Let’s say your dream is to play for Coach Calhoun at UConn and helping us win our third national championship. A very worthwhile goal indeed. You’re pretty good with a legitimate chance at a scholarship, yet you recognize that you must work on your conditioning and ball handling. UConn loves athletic players who can run and handle so you have some work to do. If you do then you might just become the next Ben Gordon (btw, anyone who has ever seen Ben Gordon practice understands why he’s so skilled offensively). And you have an important summer league game against a great local player in a few weeks. You craft a plan to work on these weaknesses. You drill on these areas. And then the game comes. And you touch that local talent for 35 points. Are the results of this last game significant?
I don’t think so. Just like when you acknowledge that you must work on controlling your emotions as a trader and putting up $5k one day, you must see the big picture. You must focus on that which is important. Where do you see yourself in 5 years? What is most important to doing that which you love for a career? If you need to work on your conditioning and ball handling then judging that big summer league game based upon points scored is misguided. And judging your trading improvement on one day’s P&L when you main concern should be controlling your emotions is also mistaken. Were you tugging on your shorts with a few minutes to go? You should ask whether your handle against pressure had improved. This is what will get you that DI scholarship. As a trader, did you spend the entire trading day in the zone? Everything else is a distraction.
This week while watching tape the market hit its new lows. Some of our guys were concerned about missing future moves like this. One even sent me an email about this topic. Well we can make adjustments for this. But what is not ok is to think that missing an hour of trading on most days is more important than working on your skill development. There is not going to be any significant money unless you develop lifelong trading skills. Our goal is to develop skills that will make you money in any market, over many years, and from any location.
One of our traders printed out John Wooden’s Pyamid of Success for me, which I keep by my desk. Thank you, JB. And next to this pyramid is a quote from Coach Wooden that is meaningful to me: “Success is peace of mind which is a direct result of self-satisfaction in knowing you did your best to become the best you are capable of becoming.” For you new traders, stop trying to make money. And if you are not making as much as you think your talent warrants stop worrying about the immaterial. Did you do everything you could to become a better trader today? If yes, then you had a successful day. And if yes then you are going to make more money than you deserve one day. And if no, yet you made $5k, then you need to do better and starting tomorrow.
New traders tend to struggle because of two reasons: lack of experience with market patterns, and mental weaknesses (we all have some). Your day should find time to gain more experience with market patterns (think video review sessions). And as Dr. Steenbarger wrote so well in a recent blog, you must find 15 minutes everyday to work on your mental weaknesses. You are not going to get better if you don’t.
The good news is that we can always get better. And that our past trading results without enough experience with market patterns and/or a lack of commitment to improving mental weaknesses are irrelevant. Over the next several months we can watch tape of our trading and tape of others, and we can spend 15 minutes working on our mental weaknesses, and then truly get better as traders.
Best of luck with your trading!