This year, we just experienced a turbulent year for our portfolios. There were a few optimistic events, but we also saw a flood of negative news.
When the markets were doing well, it was viewed as a ‘risk on event’. When they were not doing as well, it was deemed a ‘risk off’ event. We witnessed the global markets fluctuate widely as a result of fear that the U.S. economy was going to fall off the edge of a fiscal precipice and concerns of a euro-zone break-up, among other events. Achieving positive returns in light of continuous fluctuations was not easy. Yet, Rivkin Global was able to close the year out on a high.
It is difficult to stick to our directional trading strategy when the market is as volatile as it was in 2012. For those of us that are less experienced or are afraid of taking risks, I certainly can understand how unnerving it can be to watch a portfolio become profitable and then lose money after several months. However, if we give in to our emotions and abandon our strategy, we jeopardise our long-term chances of success.
There are a number of behaviour patterns that I have seen that seem to be good predictors of trading failure. Let’s take a look at some of them.
- Not sticking with every trade
- Inconsistency when it comes to trading size
- Focusing too much on short-term performance
- Behaving too aggressively with trailing stop losses
- Cashing on on profits too soon
When we are anxious, we tend to engage in ‘fight or flight’ behaviours. This is most apparent when we face long periods of drawdown. It is certainly understandable that we would go into this mode of behaviour. But I can’t stress enough how damaging this can be in the long term. Our hard-wired instinct to go into ‘fight or flight’ mode whenever there is danger, may help when we are in a stand-off with a wild animal. But, it will harm us when it comes to trading.
In the trading arena, we must do the exact opposite of what our basic instincts are telling us to do. Difficulty going against nature is often the reason why those of us who are new to trading fail. If we are to be successful traders, we need to work hard at training and educating ourselves and work on self-improvement. Otherwise, our inherent nature will win.
So, what should we do to become successful even when our portfolio is losing?
- Stick to our trading rules
- Keep our eyes on the big picture
- Focus on process, not outcome
- Cut our losses and let profits run
It is my goal to help others become free from financial fear and have access to the life they have always wanted. We will be held back if we hold on to this financial fear, lack a trading plan, and let our inexperience and emotions influence our trading decisions. No matter what our experience, skill level or knowledge, Blueprint can create the freedom to professionally trade in the global markets at a low cost.
Trading with the mindset of making money quickly and not following a trading plan will diminish the likelihood of our success. However, if we use a short-term directional strategy, the odds of success increase significantly.
The Blueprint portfolio faced numerous ups and downs and this year was a challenge to our discipline. Some of us were able to stick with it, even when there were several consecutive months with downturns, but others gave in to those behaviours that I mentioned previously. For those of us who did follow our plan, saw profits. Unfortunately, for those of us that didn’t, there were losses. Following a long-term wealth creation tool like Blueprint in the proper way, will allow any of us to trade just like a professional.
How can we be the most successful with Blueprint?
- Never abandon our trading plan
- Make a commitment to sticking with our strategy for a minimum of one year
- Never give in to emotions, even when our account is experiencing short-term losses or gains
- Make sure that our account size matches our own situation. No matter how large or small our portfolio. We must make sure that it is in accordance with our long-term goals. We must also take into consideration our risk tolerance, income level, timetable, age and other factors.
- Always be willing to ask questions in live coaching events when feeling unsure or in need of support
- Tune in to the weekly Inner Circle updates
Any of us can have the ability to trade like a professional in the global markets through the use of Blueprint. Just remember, we must choose the correct account size, commit to a trading plan for the long-term, keep an eye on the big picture, Blueprint even when we experience short-term turbulence, in order to become profitable and achieve our investing goals.