From The Economist, a piece studying judicial rulings:
Decision making is mentally taxing and that, if forced to keep deciding things, people get tired and start looking for easy answers.
As active intraday traders do we hit a point where we want easy trades? Do we stop thinking as thoroughly as we should after a series of trades on the Open?
Is this part of the reason why you hear the banging and screaming on some desks? Some traders are just tired of doing all that thinking and just want an easy trade that doesn’t require a lot of thought. I have sat at a desk where uber-bright traders don’t simply get pissed when a trade doesn’t trade in their favor. They’ll often step back and say something like this:
OK, so that stock didn’t break out like I thought it would. Let me sell some and reevaluate. This is just a failed breakout and let me think through what might happen next. The market just gave me some valuable information and I will use it with my next trade.
But sometimes it’s the mostly cool traders who start the banging and screaming, yelling at the stock for not acting as they had predetermined. Maybe they’re just tired of having to now think deeply about the best next course of action. That is a lot of mental energy. They just wanted that last idea to work so they could stop thinking.
You do need to step away from your trading screen from time to time during the day and then come back refocused. This does not mean a two-hour lunch. It does not mean getting up and quickly talking to a trading neighbor about a trade. It does not mean five, twenty-minute cigarette breaks throughout the day talking Celebrity Apprentice. (I’m always amazed at how many non-smokers start smoking after they start trading. Is the habit developed in place of doing your trading work?) Stepping away does not mean constantly Gchatting with your buddy About Last Night. Stepping away means taking a lunch break and then going back to work. It means taking a quick break after the Open and perhaps one into the Close while still staying in touch with the market and your best trading ideas. Refresh and then refocus. This leads to better trading decisions.
You can be better tomorrow than you are today!
no relevant positions
” They just wanted that last idea to work so they could stop thinking.” oh I CAN relate to that…maybe I will give the trade a bit more room because I am tired/feel lazy and its still only a small loss…and it takes energy to get ouf of a losing position, kind of like the judges in the article whose default or lower enrgy decision is to say no…
As a matter of complete coincidence I wrote a similar post as well today –
Trader,s Exercise for a Primed Mindset
Another thought here that’s helped me from taking Andrew Menaker’s online class.
Learn to focus on process and not individual trade outcomes (easier said than done).
At a minimum I think that processes must include:
Macro chart analysis
Micro chart setup conditions
Tape reading for entry
Trade management to target (this is proving to be the most difficult for me and has the most dramatic impact on P&L)
Post Trade review
Objectively, once you’re in a trade you have to know that whether price hits your target or not is out of your control, completely out of your control….all the banging, gnashing of teeth, Tourettes outbursts won’t change that.
*Emotionally* is a different story (as we all know or should know)…
Therefore, you also must implement processes to work on yourself as well…..you have to know why you bang the desk after a single loss. A single loss in a lifetime of trading will not change your career success path but not understanding yourself and the reasons that you go on tilt over a single, stupid loss absolutely will.