Trader Problems TO Solutions or

“Being Stuck”

This is a very important topic this week. WHY? because all traders go through this at some point in their trading and some more often than others.

It’s getting “stuck” in the trading problem that doesn’t seem to have clear solution. The trader typically continues to repeat the problem regardless of their intent to change things, and the undesired outcome is exactly the same.

Usually when I get a phone call from a trader going through this I can hear the frustration on the other end, in a whinny voice that this or that is happening. Surprisingly, this is very common in almost 75% of cases with my clients. After all they are calling me because they have a problem so it’s understandable and I feel for them.  I can also feel their “stuckness” (my new word). 

My point is though, that most trades can clearly define the problem they’re having and they just get stuck in it and never work it through to a solution on there own.  Now I know we discussed the “emotional block”  and what can happen, solutions do not always come easy and the reality is we all have the answers within us if we look hard enough and don’t give up.

All to often the problem arises, takes over the mind and then we become trapped in the problem and consumed by it. This is more common than you might think and tends to pop up in all areas of our lives as well.

So the key is to work the problem through to a solution instead. By now you are saying but I tried and I can’t find away.  That tends to happen if the problem has been there for awhile or keeps coming up over and over. Each occurance strengthens the previous one and before you know it we’re stuck again.

Think of it as a scale of measurement one side has the problems piled on it and the other side has the solutions. When the scale gets over weighted on the problem side that’s when getting stuck happens. We become powerless and solutions are no where in sight.

Back when I was first was learning to trade and I was in an open room filled with day traders, they would call out trades like “Microsoft is running” so everyone would rush to get into the trade.  Of course I would always be late and as soon as I bought it, it would go down.  I did this over and over and chased the trade with the same bad results, I would lose. Not only was I chasing the trade but I found myself getting “hooked” into the emotions of the trading room.

But I was very determined to fix this so my first solution was to make a rule, and to adhere to the rule I wrote up a small post-it note that asked the question “Are you chasing the trade?” (Always write small solutions in the form of a question – to avoid going into the emotion)

So, when the situation comes up again I will stop for a second read the post-it and not take the trade if the answer is YES. Sounds good right? Well shortly after I set it up the next call came into the room “Intel is running” so I pulled up Intel looked at the screen quickly read the post-it note “Are you chasing the trade?” answered YES > and I took the trade AGAIN!  And you can imagine it went against me again and I lost money again. I became angry and frustrated, but my determination to fix this was stronger. I had to find a way to stop this pattern before the end of the trading day.

So I thought: There must be away, it’s there somewhere. My mind knew what to do but my fingers felt like magnets directly connected to the keyboard each time one of these calls came out in the room. I was so compelled to take the trade I felt like an addict that couldn’t stop. This is the power of money, desire and the growth of greed and also an indication there is an emotional block at work too. 

Because I felt it was a physical compelling desire I looked for a physical solution and I found it.  When the next call came: “KLAC is running!” I pulled up KLAC to my screen, read my post-it, just in case, the answer was YES and literally sat on my hands.

Now this may seem silly but I was very determined to fix this. The next 3 calls in I did the same thing and it worked. I had avoided taking 3 bad more losing trades.  YEAH!  Thought I was done and had it under control but the compelling desire was still there.

Finally I used my technique to break the block that evening and the next day I really was back in control. And I have to tell you I did one more thing, I asked for advice from another trader. I told them my problem and said: “When they call out the trades and I get in it always goes in the opposite direction, and I lose what can I do?.”  This wise trade said “Then go in the opposite direction, if they call out long get ready to short.” (stocks moved so fast in those days you could do this – not today)

I sat there thinking why didn’t I think of that?  WHY? Because I was so stuck in the problem any solution was out weighted. Be determined to work each problem through to a solution.

So the fix:

1)     Clearly define the problem

2)     Make it a strong MUST to find a solution

3)     Try ANYTHING you think will help

4)     Never give up

5)     Ask for help

Remember YOU and only YOU are responsible for your trading!