Saturday, August 16, 2008

Gamblers state of mind


My latest thinking is that I'm totally wrong in my approach to trading. Now when I'm looking what is wrong, what need to be changed I see where is my attention. It's on the money and only on the money. I was watching some movie yesterday, one of the side characters was gambler that bet on horses. I just understand his motives. He's only thinking about a win and next win and all in terms of money. My biggest joy in trading shouldn't be how my account is now bigger for x amount of dollars than yesterday and than project it in to the future how long with current rate of return I will make millions or any other imaginary number. That's how gamblers think I believe. I never thought about myself as a gambler because I never bet in my private life, never go to casino. I'm too much risk averse and would never put 10$ on the table and spin the wheel. I just don't like probability of losing money and I'm also pretty much frugal in every aspect regarding money in my life. When I look at myself I think that gamblers aspect of me is that thinking about future big amount that I'm aiming to. I'm not in the now making whatever is my current size, but I'm thinking how would it be when it will all be ten times bigger. It's distraction and it's the force that direct my trading. When I'm approaching the stop loss level I got to move my stop because if I hit it I'm further away from my imaginary picture. I'm not thinking in that moment about what is right I just try to win on every trade. That fixation on future monetary level is so strong and integrated in myself that I don't even distinguish it. It's like my second nature. That is gamblers state of mind. He is not satisfied with himself and his situation in current moment but he thinks about how would it be. He is so strong glued to future projection in his mind that he can't live without it. His life doesn't have sense without it. All his actions are there to move him into that imaginary picture, it's so important that something banal as taking the stop or following the rules can't get in a way. Also he is so convinced that it will be achieved that no risk is too big. There is no risk in his mind because his projected picture for him is reality.

Odd thing is that in trading versus gambling with work you could change odds and put them in your favor so there is no need to gamble. Still it's so hard to trade as you would do any other job. Approach to trading should be of an painter that is painting the picture, he is not thinking when he start to paint about money, how much will he get for the picture. Problem with trading is when you tend to think about assets in your account and amounts that you win or lose as of your money. It's hard not to, but that is just inventory that you are moving around selling and buying. It fluctuate. It's not your income, it's not in your wallet. With money in your account it's ok to do things that you would not do with personal money like lose it on a stop. That is approach that people call treat it as a business, than you treat the money as inventory and not the money. I can't do it yet.

When we trade we talk about discipline and rules. It's funny that we don't think about what is that power that impel us to stray away. I believe that all action regarding changing the way how I should trade and what rules I should follow will fail in the end if I don't address that issue. I can practice taking losses, risk this amount or other, do whatever but day will come when things will just burst and damage will be done. So I'm not in the mood right now after that just happened to start again on a wrong way again. There is now sense in building a house if foundation is not in place. We all rush in our trading life and never look what approach is needed than after few years we face reality that things are not going well. Right now I got to work on foundation because I know that I will fail without it, I'm failing already. Can I transform my thinking and with it my approach to trading from get rich (quick or slow) to right one we will see.

No comments:

Post a Comment