Traders often complain about the “dark forces” of high frequency trading robots, market makers, the “plunge protection team,” dark pools, and insiders as being part of a vast conspiracy to steal their money. The perception is that all of these forces trade with complete and absolute knowledge of all information and are guaranteed to win at the expense of the little guy every time.
Of course this is not true, but it makes for an easy scapegoat for a trader who isn’t willing to look himself/herself in the mirror and recognize the flaw in their process staring them right in the face.
I’ve always believed that those who are so firmly in the camp that “markets are being rigged to only go higher” should be rejoicing in the fact that they’ve figured out the market while swimming in the pools of cash they’ve earned with their most certain prognosis of the state of markets! If you’re so certain in this belief and the market backs you up? — Baaaaam! You’re rich beyond belief!
Oh wait…. you keep losing money? Ok, then the problem isn’t “them” and your belief. It’s that you’re using this story to cover up your own lack of discipline and rigor in your own approach to trading.
Regardless of the truth (or lack thereof) of these dark conspiracies to steal your money, it should be no matter to me. I can’t control that. There is no sense in getting upset about it. Or allow it to put me on tilt. There is absolutely nothing I can do about that. Right or wrong, real or not real, its just part of the trading landscape that we all must navigate.
But this much I know: every market participant — whether honest or nefarious — provides liquidity to the market place. And liquidity offers opportunity. Liquidity offers me a chance to get in and a chance to get out. Without liquidity, paper gains might never be realized, and losses might be limitless with no bids in sight to take me out.
Here’s what I can control:
I decide when to enter new trades. Nobody but me is responsible for that.
I decide how frequently to trade.
I decide which instruments to trade. Where do I feel like I have an edge?
I decide how big or how small to trade. Risk management starts up front, before the trade is on.
I decide how much portfolio risk to take.
I decide when to take profits. The market offers clues for timing, but I pull the trigger.
I decide when to take losses. I decided my max loss beforehand, but I get to choose to take my losses even earlier/smaller.
I can find happiness in these tasks. I must. You see, traders with longevity in this business have to find happiness in these seemingly mundane processes. If our happiness is tied to and as volatile as our equity curve, we’ll quickly find there is no happiness there at all — only frustration, fear, self-doubt, resentment, and despondency.
Whenever I’m unhappy with my trading, I have to remind myself to stop doing the things that are causing my unhappiness (because it’s always something I’M doing) and aim my direction, my thoughts, and my energies towards the things which I can control that do bring me control, calm, and ultimately happiness.