Don’t Swing For The Fences Until You Are Ready

Don’t Swing For The Fences Until You Are Ready – 29/01/18
One thing that I get to see all the time in my consulting work with traders is people wanting to make back what they have lost. Almost every second trader who I get to meet is chasing down one of the two things- his earlier losses or his big winning trade. And how do they want to achieve this? By going aggressive on some play or the other. They reckon that all they need is that one or maybe two (or at the most, three) big ones – and its all done. The loss will be recouped, the money will be made. Then he can chill. And buy that office space he always wanted to. Or go on the vacation that he had always planned on. Etc.

But it never works out that way, does it?. Time passes by and the losses just become a bit bigger. And bigger. So the size of the solution trade that is needed, alongside, also starts becoming bigger! They ask you for some solid tips, some pataka, and you give them something. Immediate response is, Can I make X lacs on this? Obviously, you are not going to commit any such figure. So you say something realistic, like, it should give you 25-30% return for sure and they respond by saying, but what can that do for me? I need multibaggers, man. Don’t give me this 25% crap!

And so they go on. To the next guy. And to the next. In the hope that they can find someone who will say Here’s is a ten bagger just waiting for you! And of course, that will be a guy who will be playing them for a sucker. The market is full of such people. All of them are decent, sincere people who believe that they are just down on their luck. It is just that they haven’t got the correct tip yet. And they genuinely believe that there really is someone waiting to give them such a tip. All it needs is for them to meet such a person. So the endless search continues.

But is it really so?  Of course not. You and I know it. But many of us still play this game. What can be done to make a difference? See it this way- why not go at it gradually? In cricketing terms, why not chase the total with singles and twos instead of trying to smack everything to the fence? Many are good traders but their needs gradually become so large that they believe they cannot afford to trade “small”. So it HAS to be at least a 10000 share position for them. Or more. The larger quantity works well when you succeed. But it smacks you even harder when you lose. With every trade you are moving closer and closer to your “cant lose now” point. And this puts enormous pressure on the outcome of the next trade.

Unfortunately the next trade does not know and neither does it recognise or acknowledge this pressure. What if you do not give it that pressure in your mind? What if you tell yourself that I am going to make a series of trades with an expectation of a small gain? Collectively, across a month, this can add up to a decent sum. At the end of a year it can become a tidy enough amount that can either reduce the losses or build your nest egg.

Being consistent with your actions, with your expectations makes it easier. You do not have to work so much harder. What you really need to do is to make something on a consistent basis. Start small. Then ‘ graduate’ to something bigger. When you start becoming consistent, it becomes a habit. That is the real deal here- building new habits that allows you to win. Once this new habit is learnt and slowly ingrained within you, it produces many a positive mental change that will then allow you to slowly up the ante. Since a good habit of consistency has been now inculcated within, you will more than likely be able to graduate smoothly to a higher scale.  By the end of another year, the tidy sum will grow into something substantial.

It doesn’t matter whether you are recovering trader or one trying to make your capital from the market. Start at any level but make it consistent. Create a process but detach yourself from the outcome as much as possible. Then concentrate on intensely improving the execution of the process. Whatever you practice, you will become good at it. After a while, you will start becoming proficient at it. When it reaches a high level of skilled execution of the process, success, which began in a trickle, begins to flow in spades.

Don’t swing for the fences until you are ready for it. The singles and twos matter a great deal.