Trading is all about planning and then executing the plan. You should plan for all eventualities. You need to prepare yourself and make sure you have accounted for the potential events that could affect your profit taking. You need to know that you have it all set up as perfectly as possible to increase your chances of success. You need to ensure that you are acting in a sound and rational manner, that you are being sensible in your choices and establishing yourself perfectly in the market.
After all, you are putting your money on the line and risking a lot with each trade, so you must be sensible and seek out the most perfect set up possible. Or should you?
There is a difference between making a sound and sensible plan and seeking the perfect plan.
Whilst ensuring that you have considered and planned for all eventualities, it is in fact impossible to plan for absolutely everything and in seeking perfection it becomes very easy to get stuck. The need for perfectionism can lead to self doubt, second guessing and the need for greater clarity leading in the end to a fear of committing to the trade. The trader seeking perfectionism will establish rules that need to be followed prior to a trade and slowly but surely seeds of self doubt will filter through and the inclination to avoid risk will establish itself. They will spend many hours constantly seeking the ‘right’ indicator or set up for the ‘perfect trade’.
Dr David Burns states “The harder you strive for perfectionism, the worse your disappointment will become,” and in trading it is easy to see how this occurs. As the drive for getting it perfect and right takes so much energy and focus that executing a trade becomes harder. Added to this is the constant second guessing whether this ‘perfect’ setup really is the ‘one’ or if there is a better outcome, is inevitable. Self-doubt leads to greater risk aversion and the feelingn that you could have done it better.
The advice from Dr Burns for coping with such perfectionism is to lower your standards. Lower expectations, reduce your anticipated profit taking, and reduce your long list of essential requirements for the ‘perfect’ trade.
Enter into a world where ‘average’ is good enough and force yourself to recognise that planning is all about establishing a methodology, anticipating key potential events and being prepared but should not cause you to get stuck in the mud of preparation or cause you to miss the opportunity.
Obsessive planning is only going to reduce your potential profits in the long run as it takes so long and causes so much more stress that you miss lots of opportunities in the process.
Whereas, if ‘successful trading’ is all about the numbers and probabilities it becomes self evident that you have to trade often enough to make the statistics work in your favour. One loss in one trade is a 100% loss whereas one loss in 4 trades is only a 25% loss. If you are only seeking lower profits but multiple trades versus planning to get all the profit from one trade then that one loss becomes highly significant.
Managing yourself as being one of the ‘risk’ factors if you are prone to seeking perfection is a sensible way to keep moving forward in the market. Starting to plan for average and moderate and ‘acceptable’ makes it much easier to take a loss as being part of the process and to go straight out and seek the next opportunity.
If you have enjoyed this post, can you do me a small favor and click the ‘Like’ and ‘Share’ buttons on this page to spread the message!