Trading Has to be Boring

I could have written about the Japanese elections' outcome, I could have written about China facing no big pressure to ease aggressively or about the Bundesbank questioning the basis for Eu bank union… I will not write about anything news' related, because these news were just fact that did not led me to think about anything at all except for the mere fact.

Why writing about facts that you will be able to find anywhere if those facts where unable to challenge your thoughts, it's like trading on some others' tips.

But there is a difference between writing and trading:

• In writing, you search for an inspiration, something that “breaks” into your thoughts. Based on the inspiration you start writing, the fact become the “sparkle” of the whole story, then you start searching for connections to other facts (ie Economic indicators, assets' past behaviour) to support your own thinking framework, which ultimately will lead to a trading hypothesis that will be exposed to the Market validation.

• In trading you cannot base your decision onto “temporary” inspiration, because inspiration is expression of your emotions, here come the reason why although what others say…”trading is boring”. Be careful I'm not using the negative acceptation. In trading when you have built your own edge you are done: what I mean is that you will do over and over the same thing, because what your edge tells you is that you have a certain amount of probability of making money therefore any loss you will incur will just be seen as another step in the direction of a trade with a positive outcome.

What will happen if you approach trading as you approach writing?

You will trade without an edge, you will trade based on your emotions.

So, are you trading or are you writing?

Before answering to this question check your trading diary and look at how many times have you applied your edge in the past ten trades, and how many times have you pulled the trigger based on your emotions?

I'm writing this post because for example I would love to short this market here, I have weighted my risk/reward but my edge is not there and I'm not a writer, I'm a “boring” trader. As a matter of fact I'm in front of my monitors looking at the DJEurostox50 Dec futures  going from 2635 to 2621 possibly to 2600 without any position on, because I do not care about “lost” opportunities, it could also be the best trade of the year not a problem, the market will always be there tomorrow while once I have cleared my own trading account I will not be able to trade anymore.

To discern when you are behaving as a writer as opposed to a trader is the most important finding in your trading journey.

Originally posted at www.77sigmatrading.com