{"id":54211,"date":"2021-03-04T15:22:03","date_gmt":"2021-03-04T20:22:03","guid":{"rendered":"https:\/\/www.t3live.com\/blog\/?p=54211"},"modified":"2021-03-04T15:22:03","modified_gmt":"2021-03-04T20:22:03","slug":"sami-abusaad-4-tips-trading-mess","status":"publish","type":"post","link":"https:\/\/blog.t3live.com\/2021\/03\/04\/sami-abusaad-4-tips-trading-mess\/","title":{"rendered":"4 Tips for Getting Out of a Trading Mess"},"content":{"rendered":"

\"\"<\/p>\n

Do your palms begin to sweat just before the opening bell?<\/span><\/p>\n

Are you elated when a trade goes your way?<\/span><\/p>\n

Do sexy, high-risk trades distract you from your plan?<\/span><\/p>\n

If so, your trading is in a mess.<\/span><\/p>\n

That mess is a result of your belief systems.\u00a0<\/span><\/p>\n

If you\u2019re a rational person with common sense, you\u2019re smart enough to be a professional trader. Most struggling traders don\u2019t lack intellect– they lack a belief system that is in sync with the market.\u00a0<\/span><\/p>\n

These 4 trading tips will help you begin to change your belief system and get yourself out of that mess.<\/span><\/p>\n

Trading Tip #1: Understand the problems caused by hope and fear.<\/b><\/h3>\n

\"\"<\/p>\n

One of my favorite trading books is <\/span>Reminiscences of a Stock Operator<\/span> by Edwin Lefevre. In it, he writes:\u00a0<\/span><\/p>\n

\u201cThe speculator\u2019s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation, when the market goes against you, you hope that every day will be the last day – and you lose more than you should had you not listened to hope – the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way, you become fearful that the next day will take away your profit, and you get out too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping, he must fear; instead of fearing, he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. It is absolutely wrong to gamble in stocks the way the average man does.\u201d- <\/span><\/i>Reminiscences of a Stock Operator, page 114<\/span><\/p>\n

Hope is essential. It keeps us going through tough times. Without hope, we would probably perish as a species.\u00a0<\/span><\/p>\n

But in trading, if a trade starts going against you, hope might keep you in the trade and cause you to lose more than you should have.\u00a0<\/span><\/p>\n

On the other hand, fear can cause us to pull out of winning trades too early. When things are going great, fear kicks in and keeps us from making as much money as we could have.<\/span><\/p>\n

The way our brains are hardwired for survival can get in the way of our trading. While you can\u2019t stop being human, you can pay attention to the ways hope and fear affect you. Then you can begin to minimize their impact on your trading.<\/span><\/p>\n

Trading Tip #2: Understand what you really want<\/b><\/h3>\n

\"\"<\/p>\n

\u201cWin or lose, everybody gets what they want out of the market\u201d – <\/span><\/i>Ed Seykota<\/span><\/p>\n

Most traders don\u2019t want to get out of their mess. They don\u2019t want to be consistently profitable.\u00a0<\/span><\/p>\n

They want to win.\u00a0\u00a0<\/span><\/p>\n

They want emotional satisfaction from trading.<\/span><\/p>\n

They want a thrill.\u00a0\u00a0<\/span><\/p>\n

This is the same reason people go to casinos, despite consistently losing money for years.\u00a0 They do it for the excitement.\u00a0<\/span><\/p>\n

Trading randomly is gambling, and it gives you the same thrill.<\/span><\/p>\n

When I first started trading, I thought my number one goal was to be consistent. But that wasn\u2019t true at all.\u00a0<\/span><\/p>\n

When I dug a little deeper, I realized that I didn\u2019t actually care about consistency — I cared about winning money.<\/span><\/p>\n

When I worked for a Big Four accounting firm, we used to say \u201cgarbage in, garbage out.\u201d To develop consistency, you have to audit your inputs.\u00a0<\/span><\/p>\n

You must develop a consistent trading routine and system so that you can pinpoint what isn\u2019t working. Once you find the problem, you\u2019ll be able to stop doing what doesn\u2019t work.\u00a0<\/span><\/p>\n

For now, forget about figuring out what works and just worry about what doesn\u2019t.<\/span><\/p>\n

What works for me may not work for you. So I can never tell you what works. But what I can tell you is that when you start focusing on <\/span>eliminating what you know does NOT work<\/span><\/i>, your trading will take a giant step forward.\u00a0\u00a0<\/span><\/p>\n

Trading Tip #3: Your attachment to money is the main cause of your failure<\/b><\/h3>\n

\"\"<\/p>\n

When you\u2019re attached to a certain outcome, the first thing to go out the window is objectivity.\u00a0 You don\u2019t see things as they are anymore.\u00a0<\/span><\/p>\n

Most traders are constantly checking their P&L because they\u2019re attached to the money.<\/span><\/p>\n

This is why it\u2019s easy to trade on a simulator. You aren\u2019t attached to the outcome.\u00a0\u00a0<\/span><\/p>\n

The biggest difference between simulator trading and actual trading is the psychological element, the emotional part.\u00a0\u00a0<\/span><\/p>\n

When you're trading your own account, your money's on the line. If you are too attached to the money, you can neither lose it nor make more with it.\u00a0<\/span><\/p>\n

Trading Tip #4: Reading charts won\u2019t solve your problems.\u00a0\u00a0<\/b><\/h3>\n

\"\"<\/p>\n

\u201c<\/span>A blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts.<\/span><\/i>\u201d – Burton Malkiel<\/span><\/p>\n

Most traders can quickly become proficient in reading charts.\u00a0<\/span><\/p>\n

It\u2019s not that difficult. There are two colors (red and green) and three trends (up, down, and sideways).\u00a0<\/span><\/p>\n

What\u2019s more difficult is developing the psychological intelligence required in trading.<\/span><\/p>\n

Psychological intelligence relies on developing and maintaining an objective state of mind.\u00a0\u00a0<\/span><\/p>\n

When I first started trading, I recorded my entire screen so I could go back and review the trades I made. Once the market closed, I would be baffled, wondering why I got in on some trades and got out of others.\u00a0<\/span><\/p>\n

At first, it seemed like there were no reasons why. But there was a reason — it\u2019s because I was psychologically messed up as a trader.\u00a0\u00a0<\/span><\/p>\n

No matter how well you understand charts, it won\u2019t overrule the psychology behind your trades.\u00a0\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Do your palms begin to sweat just before the opening bell? Are you elated when a trade goes your way? Do sexy, high-risk trades distract you from your plan? If so, your trading is in a mess. That mess is a result of your belief systems.\u00a0 If you\u2019re a rational person with common sense, you\u2019re smart enough to be a professional trader. Most struggling traders don\u2019t lack intellect– they lack a belief system that is in sync with the market.\u00a0 These 4 trading tips will help you begin to change your belief system and get yourself out of that mess. Trading Tip #1: Understand the problems caused by hope and fear. One of my favorite trading books is Reminiscences of a Stock Operator by Edwin Lefevre. In it, he writes:\u00a0 \u201cThe speculator\u2019s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation, when the market goes against you, you hope that every day will be the last day – and you lose more than you should had you not listened to hope – the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way, you become fearful that the next day will take away your profit, and you get out too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping, he must fear; instead of fearing, he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. It is absolutely wrong to gamble in stocks the way the average man does.\u201d- Reminiscences of a Stock Operator, page 114 Hope is essential. It keeps us going through tough times. Without hope, we would probably perish as a species.\u00a0 But in trading, if a trade starts going against you, hope might keep you in the trade and cause you to lose more than you should have.\u00a0 On the other hand, fear can cause us to pull out of winning trades too early. When things are going great, fear kicks in and keeps us from making as much money as we could have. The way our brains are hardwired for survival can get in the way of our trading. While you can\u2019t stop being human, you can pay attention to the ways hope and fear affect you. Then you can begin to minimize their impact on your trading. Trading Tip #2: Understand what you really want \u201cWin or lose, everybody gets what they want out of the market\u201d – Ed Seykota Most traders don\u2019t want to get out of their mess. They don\u2019t want to be consistently profitable.\u00a0 They want to win.\u00a0\u00a0 They want emotional satisfaction from trading. They want a thrill.\u00a0\u00a0 This is the same reason people go to casinos, despite consistently losing money for years.\u00a0 They do it for the excitement.\u00a0 Trading randomly is gambling, and it gives you the same thrill. When I first started trading, I thought my number one goal was to be consistent. But that wasn\u2019t true at all.\u00a0 When I dug a little deeper, I realized that I didn\u2019t actually care about consistency — I cared about winning money. When I worked for a Big Four accounting firm, we used to say \u201cgarbage in, garbage out.\u201d To develop consistency, you have to audit your inputs.\u00a0 You must develop a consistent trading routine and system so that you can pinpoint what isn\u2019t working. Once you find the problem, you\u2019ll be able to stop doing what doesn\u2019t work.\u00a0 For now, forget about figuring out what works and just worry about what doesn\u2019t. What works for me may not work for you. So I can never tell you what works. But what I can tell you is that when you start focusing on eliminating what you know does NOT work, your trading will take a giant step forward.\u00a0\u00a0 Trading Tip #3: Your attachment to money is the main cause of your failure When you\u2019re attached to a certain outcome, the first thing to go out the window is objectivity.\u00a0 You don\u2019t see things as they are anymore.\u00a0 Most traders are constantly checking their P&L because they\u2019re attached to the money. This is why it\u2019s easy to trade on a simulator. You aren\u2019t attached to the outcome.\u00a0\u00a0 The biggest difference between simulator trading and actual trading is the psychological element, the emotional part.\u00a0\u00a0 When you’re trading your own account, your money’s on the line. If you are too attached to the money, you can neither lose it nor make more with it.\u00a0 Trading Tip #4: Reading charts won\u2019t solve your problems.\u00a0\u00a0 \u201cA blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.\u201d – Burton Malkiel Most traders can quickly become proficient in reading charts.\u00a0 It\u2019s not that difficult. There are two colors (red and green) and three trends (up, down, and sideways).\u00a0 What\u2019s more difficult is developing the psychological intelligence required in trading. Psychological intelligence relies on developing and maintaining an objective state of mind.\u00a0\u00a0 When I first started trading, I recorded my entire screen so I could go back and review the trades I made. Once the market closed, I would be baffled, wondering why I got in on some trades and got out of others.\u00a0 At first, it seemed like there were no reasons why. But there was a reason — it\u2019s because I was psychologically messed up as a trader.\u00a0\u00a0 No matter how well you understand charts, it won\u2019t overrule the psychology behind your trades.\u00a0\u00a0<\/p>\n","protected":false},"author":21,"featured_media":39779,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[644],"tags":[],"class_list":["post-54211","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sami-abusaad"],"_links":{"self":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/54211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/comments?post=54211"}],"version-history":[{"count":4,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/54211\/revisions"}],"predecessor-version":[{"id":54220,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/54211\/revisions\/54220"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/media\/39779"}],"wp:attachment":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/media?parent=54211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/categories?post=54211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/tags?post=54211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}