Trading has been a journey for me which could be best described with the maxim “Penny Wise, Pound Foolish”, Life too follows the same dictum. All crafts allow themselves to be a miniature versions of life if done enough. Be it Music, Chess, Making Furniture or Cutting Grass. Stare long enough into the abyss and the abyss stares back.The Trading Journey usually follows a path like this.
1. The Great Accumulation : You are thrown into a world where there are 5 million ways to accomplish a task. All those million ways come with their own garnishing. Body triggers a fight or flight response and the only thing you have a control over is the accumulation of knowledge. You don’t know if it will work or not. The only thing you know its the easiest thing you can do.Here begins the agnostic accumulation of information–buying books, going to seminars and researching blogs, asking questions, watching documentaries.
2. Trading The Information : We begin to trade with our ‘new’ knowledge.Some of it works, most of it doesn’t. But the one that does is enough to get you hooked and trust the process. When you hold a hammer every problem looks like a nail. You don’t care about who Fischer Black or Myron Scholes were, or why they made their now (in)famous equation. You have an equation and that’s enough.
3. The Great Donation : After you have ‘donated’ a considerable sum to the markets you realize you may need more knowledge or information.The one that you had wasn’t enough, or wait you may have used it incorrectly. Doesn’t matter. More information is always good. The Donation Continues.
4 Finding your Instrument : It all makes sense now. You were trading the wrong instrument all along.There is no way you could have known more about a stock than the players who make the stock that stock. But for some reason you are supposed to have a better time relationship to USD/INR Futures. You switch the underlying and something works, you don’t know what, but that doesn’t matter.
5. The Second Wind : You go back into the market and trade with your ‘updated’ knowledge. This time its different.
6. The Great Donation Part 2 : You get beat up again and begin to lose some of our confidence. Fear starts setting in. There is no way someone “less informed” than you can be making money and is a professional trader. Maybe you don’t have it, maybe your dad was right, FDs was the only way to way to accumulate any money, your friends are getting married with that FD money, and doing pre wedding photoshoots who noone wants to see, and, here you are staring into a screen trying to do big boy stuff, and the only big thing you are doing is losing every morning. Time is money, you’re losing both.
7.The Exit* : Most People Will Give up at this Point as they Realize Work is Involved or the Saturn in their Kundalis isn’t well placed. Money Gods, atleast the gods of prospective gains aren’t pleased with your pursuit. Better things may await elsewhere but surely not here.
8. The Atheists : The Atheists continue to pursue, either disregarding the Kundali or that by now markets have given you a thicker hide than an Assamese Rhinoceros.It wasn’t about the money anyway. Its the only thing that makes you get out of the bed everyday, the photoshoot can wait. The Dollar is about to crash any second now.
9. The Serious : Here a trader begins to get serious and start concentrating on learning a ‘real’ methodology. Learning from his own mistakes, betting small, betting often. This is where the craft is born. The trader realizes that everything their past self did was stupid, but it was important, they gave birth to seriousness. More mistakes await, but donation has stopped since a few months. Winning small, winning often, losing small, losing less often. Whatever it is the trader was after is close, the trader can smell it. This is his year.
10. The Professional : The Trader finds their system. It is at this point the question arises. Whether to make a career out of this, join a desk, start a fund or work with other traders on the floor. Make it a profession or if age or circumstances do not allow. Just use it to manage the savings. The Formers make it a lifelong pursuit, the latter make it a lifetime hobby.
Pick your poison and let it kill you.