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Processes and outcomes

Once you have accepted achieving consistency as your major skills goal, what other skills goal can you set?

Perhaps you could set a goal to become the ‘perfect trader’. What would this mean – no losing trades? Is this possible? I can assure you, it is not. Randomness will take care of this. A perfect trader would be an individual who can perceive every variable in the market and know the affect that each variable would have on the market, they would also need to be totally error-free in the execution of his or her processes, regardless of the outcome of the trades. I raise this point to have it dismissed just in case any readers had it on their mind as a possibility!!

To become a profitable trader on a sustained basis? What skills do you need to become profitable? I suggest the skills of consistency and objectivity.

You see, ongoing profitability is an outcome. It is not something that you can become. It is an outcome of who you are. And so are ongoing losses …

It’s all about the mindset. The right mindset in the trading philosophy is to think from the market’s perspective, as we have discussed on a number of occasions. Because this perspective of the market is crucial, let’s dig deeper.

To think from the market’s perspective means:

  • to be empathetic with the market, as if you are the market,
  • to learn to think in terms of probabilities. The market is a probabilistic environment and it offers opportunities based on probabilities,
  • to have a big picture perspective, knowing that ups and downs come and go, just as difficulties come and go, and successes come and go,
  • to achieve neutrality. The market is neutral. It has no inherent bias about you or any other participant. You need to view the market with an open neural mindset with no bias about its direction; it will do what it will do.

Think is defined as: “form connected ideas” or “exercise the mind in an active way”.

“A view of a visible scene or of facts and events” is a dictionary definition of perspective.

To think from the market’s perspective might be verbalised another way: “To form connected ideas from a view of facts and events”. We will discuss these connected ideas next week.

One Comment

  • Colin Twigg says:

    Hi Gary,
    Your blogs have helped guide me to find my way in some areas….Much appreciated!
    I’m discovering for me it pretty much all comes down to a clear mindset (Improving) & staying consistent to my rules regardless of the relentless uncertainty generated by the randomness of price action (struggling with that sometimes). Not to diminish the unbalancing pull of putting money on the line (scared money?). My rules – relatively fixed, with a modicum of judgement – May need to be tweaked. Although they show a ‘backtested edge’.

    ‘You need to view the market with an open neural mindset with NO BIAS about its direction’……? I’ll admit I’ve missed trades because of having a ‘bias’. But I have trouble resolving ‘no bias’ with ‘probabilities’ which will form my view with enough conviction (confidence) to back it.

    How can I do both? And if I have no bias, am I just putting my money on red or black (with a stop loss & maybe reverse) I’m starting to wonder if thats all there really is to it all. Maybe I should call a spade a spade.

    Homing in? Breaking even so far!

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