This originally appeared in January 2011.
Be careful how you use the following words and phrases.
Should- Phrases include: “The market should have”
and “I should have”. Those phrases are often used to socialize losses.
They are a strong signal something is off. They should be used to aid
you in correcting your vision not make you feel better.
Must- Phrases include: “The market must…”, “I must
make money”, or “I must trade”. The market does not have to do anything
and neither do you. When you use the word “must” it is hardly ever from a
position of strength. The market knows when you are desperate and will
take full advantage of you. Keeping your expenses as low as possible
will make it easier to not make those statements.
Will- Phrases include: “The market will..” and “I
will make money”. Once again the market does not like to be told what to
do. It is the bratty kid screaming at the tops of his lungs. The word
“will” relaxes your mind, similar to “should”, people use it to be lazy
instead of a dark background in an otherwise light picture. You can do
everything right and still lose money. That is why trading is so
effective at diminishing confidence. In most every activity, if you do
everything right you are going to get the desired result. Doing the
“right” things is bare minimum. Of course, over time you will get paid
for doing the right things but it is never when you think it should be
and hardly how much you anticipated.
Won’t- Phrases include: “The market won’t…” or “I
won’t make money”. Notice a theme here? You are part of the market, you
are not the market. Not getting what you expect, even if it is positive,
confuses the brain. If you expect to lose and don’t it is still a bad
outcome. Your brain is going through enough as it is. The market is a
one way walkie talkie, you listen, it talks.
Can’t- Phrases include: “The market can’t..” or “I
can’t…” or “I can’t lose anymore”. Yes the market can, go look at a
chart. Go look at a Fed day or about any chart from 2008. Not only can
it happen, it does happen. There are no more once in a lifetime moves in
the market. There are and always have been life changing moves. No one
ever said trading was easy but at least in the case of futures someone
is taking your money. If you think you can’t, you probably wont. The
market will take every penny you have. If can take every penny you put
at risk. Fix the problem, when you run out of money it is too late.
Impossible- Phrase includes: “It is impossible to
make money”. Once again someone, someone is making money. It may not end
up being an efficient use of your time or capital but it is possible.
You are substituting an excuse for doing work. The work that is
necessary to become a better trader or adjust to current situations.
Sense- Phrase includes: “The market does not make
sense”. Many fortunes are made in an illogical market. Logic is a bigger
driver than risk controls for most people. It is easier to ignore your
P/L when you can see or touch the catalysis. For example, it is cold buy
natural gas. By the time you change your view or are forced to change,
the market flips. Logic will eventually prevail, with or without you.
The motivation for this post came from George Carlin’s famous routine
called “7 words you can never say on TV” and of course many, many times
the market punished me for uttering those phrases.
