“It took me all my life to learn what notes not to play.”

[marc walton]

“It took me all my life to learn what notes not to play.” Excellent original article by Michael Standen.


Traditionally the New Year is for many people a time for reflection on the past and the formation of new resolutions for the future.
This, to my mind, should also be the case for us all as traders. John C Burford in his Spread Betting Blog dedicates a lot of space to his belief that self-knowledge is the way to make yourself a better trader.

He writes that…
“We all have our demons to deal with when trading the financial markets. In fact, I would say that along with sport, trading can uncover your innermost qualities more directly than probably any other activity. The hard part comes in recognising and acknowledging your strengths and your weaknesses.

Successful traders invariably have a keen understanding of themselves and how their personalities affect how they operate in the highly emotional and often fast-moving world of trading.”

We have all no doubt experienced the common pitfalls which often hinder our development and success as traders; don’t we all…

Enter too soon
Enter too late
Take on bad (Reward-to-Risk ratio) trades
Take trades that were really not in our Trading-plan
Place our stops too tight
Initiate trades with too many (or too few) Lots
Take on too much risk
just to list a few of our everyday challenges?

As the New Year begins it’s a good time then to take stock of our lives in general and our trading in particular. So, where best to start?

With regard to trading, perhaps a good place is either one or both of the two sites listed below that provide free personality tests which can help us see if we are really cut out to be traders or not, and/or help us identify what we need to work on most to become even better traders.

Market Psychology Money and Investing Personality Tests

Tharp Trader Test - Enable Cookies

They delve into areas such as:

• Conscientiousness – ability to plan trades with self-control
• Emotionality – stress sensitivity – do you get angry at the markets?
• Extroversion – tendency to optimism
• Openness – to new experiences, ability to expand your horizons, accept new ideas
• Agreeableness – concerned with cooperation and harmony
• Confidence bias – a key indicator, as too much can be dangerous!
• Over-optimism – do you overestimate your abilities?
• Risk aversion – describes itself
• Emotional vulnerability – do you suffer from ‘analysis paralysis’?
• Impulse control – do you have high self-discipline? Can you delay gratification?
• Instant gratification – do you take small profits rather than larger ones that take more time to work?
• Intellectualism – too much leads to over-thinking a trade, and hence paralysis
• Herding – do you follow the crowd, or are you more of a contrarian?

which are all important issues vital to our success in the markets. You can pay for enhanced reports if you feel it necessary but for me the free ones provide more than enough data for most of us to work with in the coming year as we seek to improve our trading performance.

Finally, on this point, l would add one more question to these tests, one which for me is absolutely essential, and it this …

“Are you committed to trading for a living or just interested in it?”

If you answer is “just interested”, l would certainly think about giving up the notion of trading right now to save yourself a lot of unnecessary stress and financial pain, because without a deep commitment we are beyond a shadow of a doubt simply destined to join the 90% of traders who consistently lose money!

Moving on and widening the focus from just trading in particular to life in general, there is an excellent little story that has been doing the rounds recently called “A Story of Priorities and a Jar”, which reads like this,

“A professor of philosophy stood before his class with some items in front of him. When the class began, wordlessly he picked up a large empty jar and proceeded to fill it with rocks about two inches in diameter. He then asked the students if the jar was full.

They agreed that it was full.

So the professor then picked up a box of pebbles and poured them into the jar. He shook the jar lightly and watched as the pebbles rolled into the open areas between the rocks. The professor then asked the students again if the jar was full.

They chuckled and agreed that it was indeed full this time.

The professor picked up a box of sand and poured it into the jar. The sand filled the remaining open areas of the jar. “Now,” said the professor, “I want you to recognize that this jar signifies your life.

The rocks are the truly important things, such as family, health and relationships. If all else was lost and only the rocks remained, your life would still be meaningful. The pebbles are the other things that matter in your life, such as work or school.

The sand signifies the remaining “small stuff” and material possessions.

If you put sand into the jar first, there is no room for the rocks or the pebbles. The same can be applied to your lives. If you spend all your time and energy on the small stuff, you will never have room for the things that are truly important.”

Obviously it is up to each of us to set our own priorities and decide which things in life are critical to our happiness and well-being; which things are our “rocks” and which are “pebbles and sand”.

l strongly feel that this is something very worthwhile for each of us, periodically, to reflect on deeply in our own way and, furthermore, right now would be a great time to start if we haven’t already done so!

As l mentioned in the article entitled “Everyone gets what they want out of the market, including winnings!” which l submitted for the last competition Marc and Dean ran, there is strong scientific research that shows that the truth about what ultimately motivates us all as people is quite surprising; we are, it seems, “purpose” seekers not just the “profit” seekers many of us believe ourselves to be!

As l said then, l have found what to me, over time, have proven to be some very fine free tools to help in my search for self-knowledge and “purpose” at the following site…

Words of Peace Global

and, possibly, you may find them useful too.

However, in conclusion, my point is that it seems to me that we are all learning and growing as people just as we are as traders, and we should be prioritizing, planning and, crucially, enjoying, as much as we possibly can, the journey we are on.

As in the title of this piece, Dizzy Gillespie famously said that it can take a lifetime to find out what notes NOT to play, and with that in mind l would like to wish every one of us a 2011 full of Peace, Prosperity, Abundant Health and Harmony with very few, if indeed any, “bum notes” sounded!

Thank you for reading and Happy New Year!

Michael Standen.

[lparks]

Trading is indeed something serious, it requires emotional and psychological preparation since patience, discipline and critical thinking should be at hand. Some people might enter into forex trading just for curiosity's sake but then one should take it seriously to be successful in the field and be able to reap its winnings/rewards. I say, it is not something that we can be successful at overnight so traders should really be able to learn the ins and outs of the business.