HANDLE WHAT YOU SEE

All of us run up losses. That’s pretty normal in the markets. Odds are that you blame a whole lot of causes for the loss. Is any one of them pointing to you? That’s what you need to look for! Seldom happens.

But if you wish to become a professional at the trading and investing game, it is this aspect- looking at yourself- that you need to work on.

What does that even mean, you wonder? Its quite simple really.

All it requires you to do is to handle what you see.

What do you see while in a trade? You know the price of entry. You know what profits you are looking for. At the start of the trade, you are confident that it is going to work out. As time passes, that confidence begins to wane. Now its well past lunch time and the trade hasn’t come through with your expectations.

Now, when you look at the same screen, you see something different. You see a stock that refuses to move in the direction you want. You see some feeble moves that look like a rally but are really not. You are only hoping they are. So, every time there is some move in your direction, your heart surges. Only to fade away soon. You live in this condition until you can’t bear it any longer. Then, you throw in the towel and exit.

What should you be seeing? That your trade has not been working so far. It has probably started off on some lower top and bottom pattern on the intra day charts. Or creating a small consolidation with mostly top shadow candles. Both these are telling you that the stock is not keen to go higher. Maybe you look at Pivots and the stock is gliding around the Pivot or worse, challenging the support pivot extensions. This too is saying that stock is not going to move higher.

But is it information that you want to see on the charts? No way.

You are now hoping that the prices will, somehow, will make it higher, probably towards your cost, so that you can exit with some sheer relief!

Wont happen. If you don’t address what you see, loss is inevitable.

Instead, if you actually saw what was going on and decided to face up to what the screen is saying, then there is a chance that you may not end up with a loss. Even if you did, it may be a smaller one, something that you may be able to handle.

Its not just about losses. When we are in profits, we go the other way. Every small squiggle against our profitable position looks like the one that will take all our profits away! Once in profits, we are all mortally scared to give it back. Sometimes, there is a lot of profits and now, you don’t want to give anything away- because this profit is going to make so many losses of the past okay! So, the second that you see a squiggle against you, bang goes the Exit button! Lock that sucker in, is the uppermost thought in your mind.

In the meanwhile, the small squiggles quickly disappear and the prices continue to move in the trend, raking up more probable profits for you. But by now, you are unfortunately out, having bailed out with some profits that you hated to leave on the table.

Both situations, the deal is the same- you are not dealing with what you see but rather with what is in your head. In the first case, not facing up to the fact that you are in a wrong trade and in the second case, unable to see that there is no signal from the market for you to exit. It is really your inability to deal with what you see or face that is the root of the problem.

So, the way to beat this problem is to practice a new way of being- one in which you be truthful about defining or identifying with what is in front of you in real terms- not in the way you want it to be. Market just is- it is seldom what you want it to be. This is a slow process because it takes quite some effort to develop this kind of thinking. And then to practice it.

But without doing it, you will remain lost. The sooner you start on the path of this new thinking, the faster the changes that shall happen. Go for it.