In his book S.C.O.R.E. for Life, Jim Fannin outlines 5 keys for achieving what you want. The focus of the book isn’t on trading, but the principles still apply. S.C.O.R.E stands for self-discipline, concentration, optimism, relaxation and enjoyment. Here’s my own adaptation of how these principles can be applied to making yourself a better trader.
As a trader this will be your main tool. You need it to get started, and you need it throughout your career as a trader to stay on track.
One thing I have learned about self-discipline is that many people think of it as something you have or you don’t. Not true. Self-discipline is developed, usually slowly, by forcing yourself to do something even if you don’t want to. It means putting in the time to research and build a trading plan, then sticking to that trading plan even when your mind is screaming at you to do something else. Saying you will do something and then following through builds self-discipline.
Trading for yourself, especially from home, isn’t like how it is portrayed in the movies. Lots of times it can be boring. Yet trading opportunities can happen in a flash. If something isn’t happening you still need to stay alert, because a good trade may be just around the corner.
There is a balance here…what many people call being in the zone. You need to be focused enough to spot opportunities and act them with zero hesitation when the trading signal occurs. But to remain in this state for long periods of time you can’t be obsessive or insanely focused. You’ll burn out. Sit back, keep bringing your attention back to the market, but don’t obsess about every tick of movement (until required, and if required, for your trading style).
For some reason, if you don’t believe you’re strategy is going to work, you’ll find a way to mess it up. Many traders have a great trading system, but they fail because they don’t think they deserve it, think being successful can’t happen to them or think the markets will always find a way to scam them. There are loads of ways to be negative, and with that attitude you typically get exactly what you are expecting.
Optimism comes from working hard at something. I mean really hard! Even with ten years of trading experience behind me, when I start trading a new market, I demo trade that thing for at least several hours a day, every day. I pour over my charts and see how and where I am not (and am) following my plan. I do this for at least 2 months—hundreds of trades–before ever risking a real dollar. By the time I switch to real money I have a solid belief in what I am doing. I feel confident, and am fully convinced I can implement the trading plan successfully.
Optimism is both something you decide to do, and something you need to work at.
This applies to both trading and your down time. To me relaxation and concentration (discussed above) go hand and hand with trading–and both help to get you in that “zone.” A relaxed-concentration is the state I find ideal for trading. I don’t burn myself out, but I am also ready to pounce on a trade if a signal occurs.
Watching the markets I can see when a trade may develop. If the price is far away from triggering trades then my state moves to more relaxation. This continually flow and balance between high concentration and some relaxation keeps the mind in peak condition to respond to market changes.
Outside of trading, or any career, relaxation is paramount to a healthy and full life. When the trading day is done, and your trading homework is done, get out there! Smile and preferably doing something physical to keep your mind and body in shape for trading.
People typically come to trading either as a way to make money, to work for themselves, because they love it, or a combination of these factors. You may have other motivations, but ultimately you should enjoy what you do. This goes for anything you may do with your life.
Trading will kick the sh*t out of you some days, and many days if you trade for a long period of time. It may even beat you up for weeks on end. If you don’t enjoy trading then these times will most likely do you in. Nobody loves losing money, but if you trust your system you just have to accept that good and bad times both occur; this is the path chosen so enjoy it. Good times will come again if you have a system that is well researched and tested.
This is pretty simple advice, but often gets forgotten in the heat of the moment. To keep it simple, be aware of your self-discipline. Concentrate and temper it with a bit of relaxation when market conditions allow for it. Choose to be optimistic, and then work on it by building your confidence through research and practice (most importantly practice) so there is no doubt in your mind you will succeed. And ultimately enjoy what you do. Trading is great fun. I love it, and assume everyone else will too. But it takes a lot of work, and is stressful for many people. If you don’t get enjoyment out of it, apply your talents to another field.