What the “trading coaches” don’t tell you

This year, the family summer holiday was taken in the south of France. That was one week basking in the sunshine and enjoying oysters on the beach, neatly sandwiched between three days of travelling to get there, and three days on the way home.

Mrs Trader’s Bulletin, in her infinite wisdom, had decided that it would be “fun” to spend a good chunk of our holiday on the French road and rail systems …

So, at midnight, in a Paris train station, relying only on my schoolboy French that this was the right train, all five of us lay sardine-like in a family “couchette”.

‘The Journey’

It’s a cliché to say that it’s ‘the journey’ rather than ‘the arrival’ that matters (and I certainly wouldn’t have given up my week of poolside lounging) but it is true that in many aspects of our lives, we get so hung up on our destination, that we fail to pay attention to how we’re getting there …

This is as true in trading as in any other area.

It’s important to trade with a “big picture” of where you want your trading to take you. But focusing too hard on where you’re trying to get to financially, can make you lose perspective on the day-to-day decisions you’re making with your money.

Too often, the result is unnecessary risk taking.

Goal-oriented blindness

It horrifies me how often I hear investors talking about their income targets, and working their staking strategies backwards from this – i.e. ‘I need to earn an extra £XXXX this month, so I should up my staking by £XX to achieve this.’

This kind of planning is madness.

It takes no account of the kind of risks being taken, the kind of success rate the trader can expect to achieve – and where a losing run could lead (losing runs do happen – they are unavoidable).

Trading psychology books are filled with advice on how important it is to be “goal oriented”. In fact, many would have you believe that being mindful of yourself and your goals is all you need to be a successful trader.

With the visualizations, the coaching and the self-help exercises, they completely bypass the idea of a set of skills and strategies that you need to trade!

Yes, my trading goal is to earn more profits (of course it is!) – but the best way to achieve this, may not be the most obvious one …

Shares, spreadbetting, options, fixed-odds, cfds … there are so many ways to go, and so many different approaches you can take to each …

Whether you trade because you love the thrill and challenge of it, or because you want a tool to boost your income – it’s the choice of trading strategy that you use each time you trade, and the discipline with which you apply it, that will make the difference between success and failure.

The right tools for the job

I will accept that being determined and goal-oriented are important criteria for success in trading – but they simply aren’t enough on their own.

I may feel very determined to achieve my goal of becoming a brain surgeon – but no amount of self-reflection and positive visualizations will get me there! On the other hand, learning the necessary skills just might.

In Trader’s Bulletin, I like to highlight any skills and strategies that have helped me in my trading, and that I think might help you too. If there are any particular areas that you’d like me to cover, then please drop me a line and I’ll try to focus on the aspects of trading that interest you.