CHANGE IS THE ONLY CONSTANT IN THE MARKETS.

We would never put on a trade if we didn’t think it would not be successful, isn’t it? So, every trade begins with an expectation of success and therefore profits. Think like this often enough and then you will soon convince yourself that you are actually owed success. In life outside the markets, it many times works. Like, for e.g., you take up jobs that you think you can do well or efficiently. You pick challenges or take bets that you think can win. Most of the time, you are often in control of a lot of the process- the job, the challenge or the bet and hence can reasonably assess the outcome and you take the plunge when you feel reasonably confident.

But when it comes to trading the market, you suddenly find that there really is nothing that you can control. Can you control how the market will behave today? No. Can you control how the stock will move today after you have bought it or sold it? No. Can you control what can happen to your trade a week from today? No again.

If you are never going to be able to control any part of the process, then where do you get off creating expectations of being right, of winning, of profiting? Isn’t that a completely misplaced or even incorrect way to think? But can we think in any other way, really?

Market therefore is one of the most paradoxical of places- you cannot know (at all) whether your trade or investment will succeed but unless you think that it will, you can never bring yourself to take the trade!

The problems really show up when the market does things that are different from our anticipations! When there have been a series of mishaps, the natural consequence is creation of hesitation or procrastination of the trade. He who hesitates is lost, said Confucius. Trades are taken when they are to be taken- not before and not after. This is one of the reasons why many people lose. They are in too much hurry to get in (fear of missing out on an opportunity) or delay getting in (fear of being wrong) and the correct time passes them by.

The only solution to this is to entrust your decision making to a system, a method, an advisor or a software (algo or otherwise). Realization of this truth is dawning on a whole lot of people in this day of tech-driven market trends.  So, a whole lot of automated support systems have been springing up- whether to invest (Small-case types), analyse (Neotrader, Option analysers), trade (from charts and thru algos) etc. The numbers are still small but they are growing steadily. The good news is that the availability as well as access to such systems are increasing day by day and their costs are decreasing too. Alongside, brokers have now enabled their trading front ends to accommodate such tech-driven changes. Further, penetration of 4G services (and soon, 5G) will only push this along further!

If you don’t adopt this path, you will be forced to go on an unavoidable self-destructive path. As you keep racking up losses, the capital dwindles and you are unable to answer questions by others around you and you begin to avoid them. Progresses to a time when you can’t answer the questions that your own mind asks. Here self-doubt emerges and slowly confidence crashes. Progresses to a point where loss avoidance becomes the dominant behaviour. Realise that inherent in that behaviour is also missing of good opportunities. When that happens you begin to wonder if you really know anything at all??

At this stage, you will either completely quit or shift tracks towards educating yourself- something that you ought to have done before starting. But at the start, you were full of confidence and felt that market really owed you profits, because, after all, you were a smart guy by any definition! When the path of education makes you aware that there is a whole lot of work involved here, many more quit- because, they came to the market for easy money and not to do any hard work! For those that still stick around, the greed for profits and the sense of entitlement has now receded a great deal.

That is when you start tasting success, some at the start and more as you work a process, doing what is needed and not what you feel like doing! Understanding that the market has rules and those are to be created by yourself and that you need to adhere to them becomes the stepping stones to success. W D Gann, the famous Wall Street analyst has said “Follow All the Rules ALL the time” (in his book 45 years in Wall Street) and it was not stated lightly.

Times are a-changing. Today’s tech-driven environment shifts its horizons every now and then and we have to shift with it. After having been a mechanical trader for decades, many a veteran are now recognizing that they too need to adopt automated systems and executions.

Nowhere is the phrase ‘Change is the only constant’ applicable more than in the market. Because a change in market keeps occurring whether we recognize it or not. And, we need to keep changing too, to be able to handle the constancy of change that is occurring around us.