January….the first month of the new year. And it’s the time when everyone mostly thinking about new and new steps and habits to create and cultivate so as to be the best trader, to establish firmly himself as a consistently profitable one. Being a fisrt month of the year, January is a clean slate and this gives a positive effect on all of us. But as the time passes, the effect of fresh slate usually wears off within a few days for some persons or within a few weeks for some other persons. It’s pretty much a meme at this point that nobody is going to follow through with their new year’s resolutions the entire year. Even though most of the people fantasize about changing their lives with their resolutions. During this beginning of this new year, if you want to be the best trader, then you have to make considerable changes in your life to take it seriously. Some of the guidelines have been listed below. They will help you to be the best trader …… Below, I list 6 guidelines that, if observed, will help you be the best trader you can be in 2021. 1) Systematic Rules Everyone makes mistakes in line. Even though one knows better, still he makes mistakes over and over. It is just like a best driver meets with an accident for whatever may the reason be. In market too, traders and investors as a whole continuously make decisions which economists consider irrational. One wants to buy only when one wants to sell. For one it is a good decision to buy at a particular price but the seller of the same consider it is a good decision to sell. Each one has his own beliefs. But when it gets failure, it is not because he is trading without an edge, it is because he himself does not stick to his own edge.  Our brains are never ready to accept complex financial markets. Our brains are really good at dealing with survival points, but they have not enough time to get good in making financial decisions. In the world, all have different biases – confirmation bias, attention bias, anchoring, loss aversion, disposition effect, hindsight bias, get-even-it is, representativeness bias, gambler’s fallacy, framing bias, regret avoidance, plethora of others etc…..so on and on. As result of all these, no wonder, why traders and investors systematically deviate from rational decision making behavior. If consistency is your main goal, if you want to be the best trader, you can be, but you have to set rules that make up your trading system prime over your in-the-moment personal convictions. Again, you see reality through your biases. And this is especially true in the market… your biases will make you see what you want to see instead of seeing what’s there to see. So why to take risk and go on this rollercoaster ride of having unfavorable trading results due to emotional wellbeings, when you yourself are capable to get consistent results just by sticking to your rules..? It is 100% sure, it’s the systematic adherence to your rules that give you consistent results, not the other way around. So start to focus on that. Internalize your rules if required, but stick with them no matter what happens, and focus on execution. This looks unglamorous, unremarkable and boring too, but that is the main point. 2) Pain is Important; Feel It, Don’t Block It It is a fundamental point that losses are part of the process of trading. In trading there will be losses and pain, there will be profit and joy. Both exist in trading. No one can become a great trader without accepting this fact.  We all have natural urge to protect ourselves from pain and difficulty to curl up in a ball or to lash out in frustration. But take some different approach. When pain peeks its head, welcome it, and vow to let it be and to embrace it with gratitude and with a smile too. When we deprive ourselves of the challenges that will help us grow intellectually, emotionally, or physically, we also deprive ourselves of the chance to know what we are made of, to learn to cope with life’s inevitable difficulties, to develop our grit. In other words, we remain stagnate in our trading. So, this does not mean that one should jump for joy the next time when he reaps trading loss. What I want to say is : In such a moments of vulnerability, by welcoming pain, one can actually find a lot more wisdom, strength, gratitude and perspective, rather than remembering that pain. 3) Focus on Trading Well When a trader has primary goal to make money, he cannot stop himself from making trading mistakes again and again. A trader should understand this : when he pays focus too much on what he has earned and what he has lost, he is going to stress out unnecessarily and his results would not be as fruitful as if he had a more detached approach. If a trader craves money, he will fear losing it; hence, he won’t be able to relax. He will get agitated very easily by adverse market moves, and his execution will be inconsistent. In such a situation he is just ruled by his emotions. This is not a way to be in the market.  So take your focus off of money and instead put it on trading rules and being consistent, you will definitely get much better results. The traders who are openly obsessed about money are the most neurotic people. They do not have peace of mind and that’s why they fail at last. This is so because money is the only primary goal for them. In fact
primary focus should be on placing good trades. Some trades go positive for
winning, some may go with losses….it doesn’t matter, because a good trade is
one that is backed by a systematic plan….and at last net net results remain
profitable… So simple as that. If a trader focus on developing such an ability to detach himself from the value of money, his net net results will remain positive at last. 4) Don’t Trade Unless You Get a Clear Signal Warren Buffett once said that his stellar investing performance would have been even more impressive if he went more to the movies. What he’s essentially saying is that he spent too much time in his office watching his investments, and this caused him to want to ‘overtrade.’ If he had just spent more time at the movies and not thinking about his investments, he would probably have made fewer and smarter decisions and would have gotten better results. This shows you that even the best guys like Warren Buffett, Howard Marks, or even Paul Tudor Jones, succumb to these behavioral biases as mentioned above.  So, the message is clear: don’t actively try to find reasons to trade. Let trades come to you. You should create a watch list with a couple of names you like to trade. Only focus on those names and go through the list on a daily or weekly basis to see which one is setting up. That’s it. If you want to be the best trader you can be, begin by acting like one. No mental gymnastics is required. Stay consistent. 5) Cut Out the Noise As a trader, sometimes you have to live in your own echo chamber.  But, trading requires you to stand out. And it’s easier to do so when you cut out the noise from your trading. Tuning out the news is a good start. Good news tends to make us excited and buy high out of greed; bad news tends to make us depressed and sell low out of fear. As you see, news brings a level of noise in your mind and your trading process that you could do even without that noise. So, tuning it out is certainly one of the best decisions a trader should take. So never give importance to any noise nor declare your real trades to any one unnecessarily. These steps will definitely improve your decisions because in that case you are keeping them to yourself, others’ opinions would not sway your decisions and plan. Others opinions may create confusion and doubts about your own decisions and shake your confidence. That’s the thing with people… when you’re wrong, they think you have shit for brains. When you’re right, they say its luck… unless you have a certain number of followers who worship you uncritically, then, if you’re right, they’ll ignore the previous 100+ times when you were wrong and you’ll be celebrated as a hero.  1) not to see evils 2) not to say evils,
and 3) not to hear evils 6) Limit Number of Trades Being a full-time trader doesn’t mean that you have to stay in front of the screen all day and go on trading frequently often every now and then. If you do so, you will undoubtedly end up shooting yourself in the foot.  Keep watching price movement and try to learn therefrom, but take trades as per your plan and rules framed. As said earlier : Don’t actively try to find reasons to trade. Let trades come to you. Doing
some other extra activities (like blogging, emails, recording trades etc)
during market hours will help you calm and cool limiting number of trades. In short : Trade Less, But Wisely…….Get Rich Step By Step. Work in a way that makes the whole trading thing sustainable by protecting your employed capital and yourself both. Prioritize health —
physical and mental Focus on quality vs
quantity Think process Think consistency Trust your plan If a trader do these, he will definitely see some significant changes in his trading style and will be closer to being the best trader he can be. Conclusion People often set their sights on an unrealistic overnight success. They imagine themselves jumping to their goal. But that’s not how things generally are. Whether you’re a trader or investor, success in the market is about planning and being able to stay the course. It’s about consistency, and that consistency starts with you, with your psychology only. In other words, you don’t ‘jump’ to your goals, instead, you build stairs, one at a time, and those stairs lead you to your goal. If you don’t maintain a level of consistency in what you do, you will never be able to make the progress, become the best trader you can be, and achieve the results you desire. This is why so many successful traders talk about the importance of consistency in their approach – whether it is in regards to the adherence to their trading system or in the work that they do on themselves to expand their minds and become more enlightened versions of themselves. So, in the beginning of this new year, resolve to focus on consistency and invest in yourself. This is one of the best investments you’ll make. Set
yourself on this mission. This is the real Holy Grail.  |
To Be The Best Trader
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