The roof leaks, the rains are coming and the drive takes over to get up onto the roof to put a layer of protection in place to keep the house dry inside. The motivation to keep the house dry is instinctive and is what generates the energy to get on and do it. The same is true for protecting any assets that we put a value on especially as it also protects the human need to remain in control.
How can you convert such a physical response to the markets and protect your trades? There is no physical need for a shelter to be built and indeed it might not be possible to put in place the protection that you are instinctively seeking as it is impossible to control enough elements of the markets. So the energy needs to be focused on what can be done and go with the flow of the markets.
In the “Way of the Warrior Trader” Dr. Richard McCall describes how the issue is to become astute and approach the markets like a skilled warrior, where the winning is down to perception and application of strategy. Just applying energy or trying to impose actions is not going to win anything but will be physically draining. Fundamentally it comes down to acknowledging what you can and can’t control and focusing your energy accordingly.
So what is it that you can’t control? Well there are a multitude of things starting with the entire list of things that can impact the price of a stock and the markets around them. For example world events, media reports and hype, interest rate decisions by the Feds or the controlling body, company earnings and how they report them and mass reaction to all of the above.
These are all pretty fundamental to what creates the shifts in the markets and individual stocks so it can be hard to acknowledge that they are all outside your control. What is essential though is to avoid wasting energy on those items other than to incorporate them into your strategic thinking to identify trends where possible. For control purposes though accept that they are not worth expending energy on.
However, in spite of the fact that you can’t control those elements and so many others within the trading environment it doesn’t mean that you can’t gain from them. It is a question of focusing the energy into looking intellectually at each element, working out if there is some evidence that helps identify a direction, the trend and make it a part of your analytical process. There is no pure physical action involved with trading but the mental challenge can be draining so you need to ensure you are as physically ready for it as mentally through focus, stress management and preparation.
This will then enable you to be in full control of those elements you can control such as planning the trade, managing the risk and executing the plan with focus that allows you to react to market events. The successful trader is the one who acknowledges what they can’t control and when there is something that they can act to manage. In this way they maximise their profits and focus their energies appropriately.
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