I was talking with a trader this week and he reminded me of a story I told several months ago. He mentioned what a powerful affect the story had on him and wanted me to know how much it helped. Naturally that got the wheels turning in my head and I thought I’d put it down on paper for everyone to read. If you’ve been having trouble in your trading I hope this story can help point you in the right direction and get back on course.
Several months ago I was having a conversation with a very good friend of mine about my business. This friend (his name is Mark) has been very successful, not only in business but also in life. He is a shining example that you can achieve great success without sacrificing your moral or ethical values. I have always made it a matter of habit to surround myself with people far more intelligent, successful and knowledgeable than myself.
By this time my business had grown and I was beginning to see the fruits of almost 2 years of work come to harvest. The problem was I felt like I had gotten off track. When I started my company I had a vision of changing the way new traders approached the market. I saw all the crap being peddled in the FOREX industry and saw how destructive it was. Jaded traders who with cynical disdain began to regard any concept or attempt to move them to action as some sinister ploy to separate them from their money. Traders were spending hours in chat forums……searching, clinging to anyone and anything that might relieve the pain and frustration they were experiencing in the market.
What made things worse was that I had been there. Twelve hours a day in front of the computer, constantly refreshing the chat forum to see what anyone might be saying about my slowly dying trade. If someone posted a new EA or trading system I had to have it. I bouncing from system to system hoping something might stick. It was a futile and fruitless endeavor, but it was all I knew.
I explained to Mark how my business was becoming, well, a business. I had begun to take my business in a direction I was not comfortable with. It was becoming a grind and I felt as though I wasn’t having the impact I wanted. I told Mark, “Sometimes I think I should just scrap the entire thing and start from scratch.”
Mark looked at me with confused, almost disgusted look. Then he rocked back in his chair and in a calm quiet voice said, “Oh Jason, I don’t think that’s really necessary. You just made a wrong turn.”
“Yeah” I said, “But how do I get back on track?”
“You just turn around.” He said in a matter-of-fact tone.
I can be a little dense sometimes, especially when I’m frustrated. I wanted Mark to provide me a blueprint. A twelve step process to move me back in the right direction. But he wasn’t going to do that.
“Let me ask you a question.” He said. “When you’re driving in your car and you make a wrong turn, what do you do? Do you turn around, go home and start over?”
“No” I said with a chuckle.
“No, you don’t. You make a quick U-turn or a couple of lefts and get back on course. It’s the same with your business. Just because you’re not headed in the right direction doesn’t mean you scrap everything you’ve done. Sometimes it’s necessary. Again, using the car analogy, if you look up at the road signs and see you’ve been going south for an hour and you needed to be going north, you’re going to have to start over. Businesses that are fundamentally broken will have to die, but you have a profitable business model and good instincts. There’s no need to throw all that away.
He and I talked for another hour or so. By the time I left I felt much better about everything. I felt reenergized. The passion was back and I quickly started putting a plan together to get my business back on course.
On the drive home I started thinking about Marks car analogy. What a great visual picture it painted. Since I’m a trader, I pretty much associate everything with trading in one form or another. So naturally I began to associate the car analogy to trading as well.
How many times as a trader have you been headed down the path toward consistent profitability? You have your system and you’re vigilant in following your plan. You are disciplined and grounded. But then something happens. Normally it’s just a typical drawdown or at least it would be if you continued to stay disciplined. But one losing trade turns to 2, then three. On the forth trade you double down. Another loss. The 5 trade starts to move in your favor and you are so anxious to take a profit you exit the trade early only to see you’ve missed a big move. The process continues until you finally just give up. You throw out the old system and go looking for the next great pipe dream someone is touting on the chat forum.
When things aren’t going right it doesn’t always mean you need to throw out everything. There are times when it’s necessary. If you’re system or trading plan isn’t profitable I don’t care how disciplined you are, you’re going to lose money. But if your plan has merit chances are all you need is a little course correction. This is why it’s so important to know what your plan is. Having your rules for entering and exiting the market clearly defined.
The first question any trader should ask when things start to go wrong is, “Am I following my rules?” If the answer is no (and it probably is) that is a perfect place to start. Don’t fall into the trap of bouncing from system to system searching for something that allows you to earn 1200% a year without an ounce of pain. It just isn’t out there.
Most of the time, if you get off track, some very small adjustments is all that is required to get your trading and emotions back on track. Just remember, if you turn around and go home every time you miss an exit, you’ll never get where you want to go.
Until Next Time, Good Luck and Good Trading
Making a Course Correction