Being a trader means experiencing loss and being wrong. These two experiences will be inevitable no matter how smart we are or how great our analysis is. Nothing in the market will prevent us from experiencing loss. The market is just too random and erratic to be predicted and there are too many variables to consider for any trader to be always right.
What actually happens when a trader finally experiences loss? The answer to this question lies on one’ expectation and how he interprets that loss. Let's take an example of two traders: Bob and Jack.
Bob believes that in trading there’s no possible way to avoid loss because losing is natural and part of the game. This is like a business owner who thinks that expense is unavoidable and therefore must be accepted. If Bob then accepts loss completely and has anticipated that he might turn into profit or loss, there is a small chance that Bob will experience disappointment or attitude deterioration when he faces loss. He can move on easily to the next trade without contemplating too much on his loss. This is an ideal trading belief and attitude
Jack is the opposite of Bob. He doesn't accept that loss is a natural consequence of trading. In other words, Bob’s expectation operates in a belief that he will always make profit by trading. From this perspective, if the market doesn’t work according to Jack’s expectation, he will feel emotional pain. Expectation is our mental representation of how the future will look like. If too much energy is put into the expectation, then this expectation will cause great deal of pain if not met.
Between Bob and Jack, who is likely to be a novice trader? The answer is of course Jack. Only experienced traders whose minds operate in Bob’s perspective can accept loss and realize that the market doesn't work like how we want it to be. Market is not our genie in the bottle who fulfills our every wish and expectation.
The belief of not accepting loss generates emotional pain. If the market doesn't work like our expectation, when we lose, we likely feel that the market did this to us: The market took his gain and the market is to blame. This attitude will prevent us from doing self evaluation, Seeing what is wrong with us, and our analysis.
In contrast, accepting loss means accepting responsibility, accepting the fact that we can be either right or wrong in the market. Experienced traders are responsible for their loss and don't believe that the market did this to them. They can easily move on to the next trade because they have accepted loss before they enter the trade.
These two expectations, from Bob and Jack are the one of main differences between novice and experienced traders. Novice traders believe in their expectation while experienced trader realized that their expectation can be met or not met
If the secret happiness is low expectation then the secret of market survival might just be managed expectation.
What actually happens when a trader finally experiences loss? The answer to this question lies on one’ expectation and how he interprets that loss. Let's take an example of two traders: Bob and Jack.
Bob believes that in trading there’s no possible way to avoid loss because losing is natural and part of the game. This is like a business owner who thinks that expense is unavoidable and therefore must be accepted. If Bob then accepts loss completely and has anticipated that he might turn into profit or loss, there is a small chance that Bob will experience disappointment or attitude deterioration when he faces loss. He can move on easily to the next trade without contemplating too much on his loss. This is an ideal trading belief and attitude
Jack is the opposite of Bob. He doesn't accept that loss is a natural consequence of trading. In other words, Bob’s expectation operates in a belief that he will always make profit by trading. From this perspective, if the market doesn’t work according to Jack’s expectation, he will feel emotional pain. Expectation is our mental representation of how the future will look like. If too much energy is put into the expectation, then this expectation will cause great deal of pain if not met.
Between Bob and Jack, who is likely to be a novice trader? The answer is of course Jack. Only experienced traders whose minds operate in Bob’s perspective can accept loss and realize that the market doesn't work like how we want it to be. Market is not our genie in the bottle who fulfills our every wish and expectation.
The belief of not accepting loss generates emotional pain. If the market doesn't work like our expectation, when we lose, we likely feel that the market did this to us: The market took his gain and the market is to blame. This attitude will prevent us from doing self evaluation, Seeing what is wrong with us, and our analysis.
In contrast, accepting loss means accepting responsibility, accepting the fact that we can be either right or wrong in the market. Experienced traders are responsible for their loss and don't believe that the market did this to them. They can easily move on to the next trade because they have accepted loss before they enter the trade.
These two expectations, from Bob and Jack are the one of main differences between novice and experienced traders. Novice traders believe in their expectation while experienced trader realized that their expectation can be met or not met
If the secret happiness is low expectation then the secret of market survival might just be managed expectation.