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Some Trading Inputs

Monday June 14, 2021

Colin writes,

I have been getting into trading, mostly stocks, some crypto, but it’s really making me stressed out. I don’t know what I should expect of myself, I don’t know what I can accomplish, and I feel really overstimulated after trading. It seems like one really simple trade can ruin my whole day, or make me feel amazing. Any advice?

Hi Colin,

I’m not sure what kind of trading you’re doing—day trading maybe? But this really sounds like a great opportunity to try a new approach.

First, it sounds like you are trading on tighter timelines than are (yet) comfortable to you. This takes some adjustment. It will just take some time for you to start learning the best timeline-related lessons for you.

For example, maybe you are trying to day-trade, but that’s just not a good fit for you. Or maybe you are day-trading, but your approach is focused on too many variables or practices. Maybe your daily schedule needs to be simplified.

Second, I really recommend that you think about the daily, weekly, monthly, and yearly experience you want from trading. I remember my first big #showerthought about my own trading system: “I guess I could just design my own system and it’ll work however I want it to…!” That was a really liberating feeling.

This could be a big deal if you’ve been learning about trading the standard-INTJ way, i.e. reading from books, taking courses, watching videos online, etc. In other words—consuming everyone else’s system but not really developing your own.

You can start down this path by writing down what your trading system needs to give you. Examples:

  • I want to be able to take a week off, with very few exceptions requiring me to trade during a week off.
  • I want to feel like a single trade won’t break me and ruin my day / week / life.
    • Note: Some will say—“easy, just diversify and go risk-off.” This is a common INTJ contingency planning POV. However, I’ve found that I can also do things like integrating more technical factors into a single large trade, increasing the odds that the trade is a good one. There are lots of ways to handle this—find your favorites.
  • I like to trade (crypto), which works really well for me, more than (stocks) … or whatever you like best. Maybe you love OTC stocks and you crave the the very sudden, very risky “BOOOOM” of a chart going vertical. Just not every day! My point is—you don’t have to do everything. Feel free to pick your favorites, and then your emotional core will respond in turn. You should feel more anchored and ready to engage with your choice.
    • Note: You may not have a good “feeling” about something you haven’t really given a chance yet—keep that in mind too.
  • I want to be able to sleep well at night, and sleep in past 8 or 9 if I want.

With your decisions made, you can then design a trading system that fits those criteria. Maybe you end up with a system that involves making only one or two big trades in a year. (Keep in mind that in the interview, the trader in question is assessing securities from a value standpoint, which is only one way of assessing a good trade or investment and not the main draw for me personally)

Third, you asked about what you should expect of yourself. I’d offer this, for starters: Compare against your past self, always, and in a number of different ways. Keep a spreadsheet, keep a log of your thoughts on trading.

Expect to do better, in some ways, than you did last year. Maybe you achieve faster portfolio growth, or you save more of your profits, or maybe you just find that you’re able to sleep at night again—plus, this gets at a possible need to track your emotional workload.

Regarding the higher-end outcomes, try not to make the mistake of thinking that there’s a ceiling on what you can do. Don’t get into the “let this be a lesson to me, I was too hoggish” mindset. If you feel like today’s loss of X% was a lesson, force it toward specificity and a numeric formula if possible, and make it prove itself again. Test your ideas before they turn into over-emotional maxims about what you can or cannot do.

Finally, you may find that you can accomplish a lot more than you felt comfortable predicting. And here’s a big tip that helps to get to that point: Always dislike something, always regret something from your past. Then work on it. Theorize about it—what can you try in the future?

I hope that helps Colin! Good luck to you.

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