May

28

Trading is toil.

Victor mentioned once: "I never have fun trading. It is too serious".

Trading is toil, especially because it's already hard work in the first place to find a model, a "setup", a strategy that actually works, but then you must adapt it, which is the very hardest part. Once you have a "love" (something that makes your trading profitable), whether it is a strategy, model, parameter, or setup, it becomes very painful to watch your love fade and die.

I know we shouldn't personalize trading, but the fact is we (or I) develop an emotional relationship to our precious tools — every time I come across something worthwhile, after much toil, I feel so glad. I feel a sense of work well done. It's a very pleasant feeling. And I cannot refrain from emotional pain when a market relationship I was profitably trading becomes weaker and eventually non-existent.

To adapt,  one must have the emotional strength to, after much toil, model a strategy, and say to yourself: "you may have no value in the future."

Trading is strange, because it demands skills one would probably not wish to nurture if it wasn't necessary.

Trading is a stoic school.

George Parkanyi adds:

The shorter the time frame, the more frenetic, temporal, and tiring will be any form of discretionary trading. And the greater the need to predict, the greater the effort required as well. You can economize your efforts by researching and planning interim position trades or even multi-year trades, and then letting the positions play out while you comfortably research others. You can also economize by trading statistically –- researching an edge and then mechanically following the methodology you use to exploit it (this is more like a business). Or ultimately you can eliminate the need to predict altogether. You can simply use a passive re-allocation strategy or some kind of averaging approach and let the market sort things out over time.

The sense of toil comes from the feeling of the need to be right, either emotionally and/or financially -– and the market unfortunately is completely insensitive –- nay, gleefully contrary some would say, to that. You will be wrong many times, more so the more active you are, and will have to come to terms with it.

The markets supply a tremendous amount of energy in their own right. If you think of the market as an opponent, as in judo, think about how to use the market’s own strength against it, and to conserve your own.

Newton Linchen replies:

Great point. I actually practice Aikido, which is a martial art similar to Judo, but with more emphasis on letting the opponent defeat himself.

I'd rather not think of the markets as someone, or as an opponent, since I would have to picture "him" 100 feet high and with enormous muscles. (It would certainly come after me in my nightmares!)

I prefer to think of the market as a force of nature, such as water, fire, or whatever. You can develop a safe approach to it, and make it the heart of a nice hot tub or bath, or get drowned or burned.

And to put together a bath tub is toil, at least for me!


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