Loss Reframe

“Some people say, “I can’t sell that stock because I’d be taking a loss.

If the stock is below the price you paid for it, selling doesn't give you a loss; you already have it.”

—William O’Neill, Founder, Investor’s Business Daily

Beware of Etrade Account Hackers

In case you haven't heard about it as yet that there is a security breach for E-Trade Trading accounts!

http://www.smh.com.au/business/online-brokers-hit-by-run-of-bogus-trades-20120120-1qa58.html

"ASIC believes the attacks are organised, but has yet to determine how the hackers are obtaining client's passwords. The hackers pillage the accounts by engaging in trades that lose clients money. ASIC is co-operating with international authorities to trace preceeds reaped by the other party in ... " unfortunately I can't read the rest of the article anymore sorry...!!!

Well, it could also be a great excuse for my not so flash performance last week!! It wasn't me who had that losing trade, it was those hackers! Really! I swear! 🙂

The Problem is that e-Trade says it is the responsibility of the account holder to keep passwords safe and will not reimburse any losses caused by this security breach...

Wish you all a fabulous Australia Day and yes, Gung Hey Fat Choi - Happy Chinese New Year

 

No More Groundhog Years!

Knowing what you want is the doorway to getting what you want.

Knowing what’s holding you back from having it is the turbo charger to creating a life that you love.

 "When you can't wait to get up in the morning to do what you love serving the world you have aligned with your highest values and feel like you are fulfilling your mission." Dr. John Demartin

For many it feels like Groundhog Day, when come January they seem to write down pretty much the same trading goals without ever achieving them … until they finally figure out why it doesn’t work.

So, here are 3 common mistakes why traders don’t achieve their goals:

1.   Focus On Outcome Instead Of Process

Thinking of a goal and writing it down is the fun part and that is where it stops for most. But the real essence of goal setting is to create a process of how to get to the goal and follow it through no matter what!

Instead: Focus On Process: If The Process Is Good The Profit Will Take Care Of Itself!

Write down your goal, and then create an action plan on what you will do every day with no excuses in order to achieve your dreams. Also, consider what resources you need in order to be able to do what is required. Do you have any time restrictions, do you have any financial restrictions, are there still more techniques you need to practice the skill of?

2.   Dreaming Too Big Can Lead To Overwhelm

By all means, think big, but I question if it is useful to put a goal to make $10,000 a month net profit if you are currently only producing losing months. That can not only lead to overwhelm, but also promotes self-doubt, with that little voice giving you a lot of reasons why you will never achieve it.

Instead: Set Yourself Up To Win By Having Goals That Are The Natural Next Step!

So, if you are currently making $1000 profit per month, set your target for example on increasing your profits by 10% each month.

3.   Not Dealing With What Could Stop You From Achieving Your Goals!

This is often the most important aspect and the most uncomfortable area for traders. Ask yourself what has stopped me in the past from achieving my trading goals? This might include time, money, not having the right opportunities, lack of motivation, procrastination, lack of self-belief, not knowing how to achieve it, or maybe you don’t know what has stopped you.

If you look back to the past with regards to not achieving your goals and failing to follow through on your plans, what patterns have you noticed occurring? For example, do you often put lots of energy and enthusiasm in at the start, then within a couple of weeks find you’ve lost motivation? Do you put off getting started for so long you just give up? Do you start too many projects at once, and end up overwhelmed and under-motivated? Identifying your unique patterns is key to changing them.

What about limiting beliefs? What you tell yourself can also stop you from achieving your most prized goals and visions. For example, if you have decided that this is the year you will achieve financial freedom through trading, but you have an underlying belief that ‘It’s impossible to make money in those markets’ or believing ’I don’t have what it takes’ (it doesn’t always need to be a thought, it can just be a feeling) those subconscious influences will sabotage your plans, you will miss the opportunities, you will never feel confident enough to pull the trigger and take a risk etc. Listen to what you tell yourself about what you believe limits you and then find a solution for it!

If there were 2 important changes that need to occur in order for you to be totally successful and reach your goals, what would they be? i.e.) Have more confidence in yourself? Be more disciplined? Break patterns of self-sabotage? Get over fear of taking a loss? Write down anything and everything that comes to mind. Most of them can be resolved if you would just acknowledge it and do something about it!

What help, support or resources do you need? This could be a trading mentor, learning a new trading technique such as ratio trading or pattern recognition to learn additional skills, a ‘how to’ guide, a clear action plan, sounding board or someone to brainstorm with, etc. Take advantage of anything that teaches you the strategies and techniques that change limiting behaviours and improve your trading strategies. This will set you on a clear course for success.

List 3 things you can do each day starting now to move forward with achieving your goals. Maybe read 1 trading book per week, listen to webinars, or learn how to meditate. Enlist the help of a trading buddy, partner or coach. To establish your own accountability, tell them what you intend to do. This puts the power squarely in your hands to determine your results.

Take action daily and review your goals weekly. Many small steps towards your goal will move you towards the accomplishments you wish to attain. I have a strict schedule each day, like an elite athlete on what I will do to become a better trader than the day before. I always strive to be better than I was the moment before.

Remember, there are no limitations, except those that are self-created…and those you can change!

Winners Start Where Losers Give Up

Newsletter excerpt from 15 October 2010

Winners Start Where Losers Give Up

Trading is not just about charts, bars and moving averages, because trading is a behavioural activity. Your trading performance is purely a reflection of your behaviour. And your behaviour is a reflection of your knowledge, skill and attitude.

Last week I worked with a trader who was stuck in a losing BHP CFD position that was A$17,000 down. Ouch! So I asked him:"What stops you from closing out this trade?" He answered: "Every time I want to press that button to close the trade I wonder what if it turns around now and goes back into profit - leaving me behind with that massive loss? I really don't want to lose all that money! What am I going to do?"

And that's where most traders stop thinking! They stop thinking at those really important questions and they go back into that vicious loop of thinking "I am such an idiot! I don't want to lose all that money! What am I going to do? I am such an idiot..."

But this is exactly where you need to start your thinking! If you have a loss there is only 2 reasons for it:

- either there was a lack in trading knowledge / skill

- or there was a problem with your behaviour in terms of you are not doing the things you know you must.

That is all there is to trading!

This trader's logical thinking was overridden by self-sabotaging emotions. He felt unwell, his thoughts would race around his mind a million miles an hour and he felt helpless and stuck, didn't want to face his wife and couldn't focus on his job which annoyed his boss.

Whenever you feel like that, the first thing you need to do is change the spotlight of your focus back to facts. And facts are: What is your technical analysis telling you? Are there any fundamental facts that give you an indication for the probable future behaviour of this stock?

 The problem with this trader's behaviour was not only didn't he know what constructive questions to ask that would give him clear answers and end his misery one way or the other, he also had no structure and written down step by step system on how to analyse the markets for profits.

During last weeks VIP Trader's Conference someone asked me what the main thing was that made me successful. And I must say it was no 1: I always look for the next thing to learn. I have amassed this massive amount of knowledge and by applying it I developed a high level of skill. Yes, I also worked a lot on my personal development, but in having met and worked with many accomplished traders I would say, that if you are exceptional at your craft, even if you feel bad about yourself, even if you are messy and have no discipline, even if you are full of yourself with a big ego you will be successful in trading...

So Traders, if you are stuck in a losing trade, ask yourself: "Is that trade still making me money? If not, what does my trading system say? Is there something that I need to learn?"

For your trading system I would recommend that you have a step by step written down trading system laminated next to your mouse and any time you go into an emotional overload or you get angry, annoyed, frustrated, helpless, disappointed, despondent when you really should make a sound trading decision simply shift the focus from yourself to the facts in trading: What does your trading system say?

Then after you have dealt with the loss position you need to do a post mortem:

If you followed your trading system and you still incurred a loss, I guarantee you there was someone else who made money. So that means that there is some new skill or knowledge that you can learn in order to make money on those kind of trades too, right?

And if you didn't follow your trading system by being impatient, impulsive, indecisive, anxious etc, well then do some work on yourself by looking at what is the underlying reason for this behaviour? Social pressures? Wanting to live up to your family's hopes and expectation? Feeling of loneliness and boredom to be filled with the excitement of trading? Fear of missing out - scarcity thinking? Looking at trading as your only way out of the job that you hate? When you solve those issues, then the resulting sabotaging behaviour in trading will dissipate automatically...

The Longevity Study

Dr. Lewis Terman started a study in Stamford in 1921 to follow the lives of 1548 children over the next 90 years as he wanted to find out what the secret to success and longevity is.

In 1990 Howard Friedman Ph.D. and Leslie R. Martin picked up the study and looked at what was associated with health, success and longevity. In their book ‘The Longevity Project’ the results of their study shows surprisingly that the happiest people the ‘don’t worry be happy people’ often underestimated the risks in life, made stupid decisions and died from either accidents or preventable illnesses.

Those in the group who lived longer were also generally living a successful, meaningful, and productive life suggesting that those factors played a very big role in achieving health and happiness.

And the no 1 predictable trait for longevity  was conscientiousness. So many traders complain about a lack of discipline and look for a magic trick to learn how to be disciplined. I personally think that one of the biggest downfalls for traders is a lack of conscientiousness rather than a lack of discipline.

People who get themselves into trouble, financially, physically, emotionally, spiritually, relationally, they lack forethought, they are not thinking beyond the moment. They are just thinking about now.

If they would imagine how their bloodsugar levels are screaming and the fat clogs up the arteries instead of imagining how tasty the pizza or the cake is right now, they wouldn’t have that cake. If they would imagine how damaging not following their trading system and entering trades on a wimp is they wouldn’t even consider behaving in such damaging ways.

Conscientiousness is simply: When you say you show up, you show up. When you say you are going to do something you do it. You don’t look for reasons why not to, it is just not an option.

Always ask yourself: if I do this, then what? The trick is to stay in the present moment but to plan for the future.

The brain likes simple chunks. Trading success is simply about accountability, about conscientiousness! And when you sleep enough, and you eat properly the quality of your decisions goes up, your conscientiousness muscle is in top form and therefore your confidence, your trust in yourself skyrockets.

One skill that helps me with pursuing conscientiousness is to ask myself those 2 most important words in the English language: “Then what?”

If I do this, then what will happen, if I say this, then what will happen?  Conscientiousness is not something that you do, it is who you are as a trader.