If You Can’t Do This In Your Trading, You Will Fail

There’s one thing that, if you can’t do, will virtually guarantee failure for you as a trader. It’s counter-intuitive because it actually seems like you shouldn’t do it. But who said good trading was intuitive?

Not being able to do this one thing will be responsible for more missed opportunities than anything else I can think of. It’ll have you doing the wrong things, entering in the wrong places, and staying on the sidelines when you shouldn’t be.

So what is this thing? It’s not being able to sit comfortably with uncertainty. You see us human beings hate uncertainty and every part of us will fight that feeling. It seems very reasonable to want certainty. Yet in trading, wanting certainty will kill you. Instead of thinking in probabilities and taking trades with good odds or good reward-to-risk, you wait for the move to confirm by extending a bit more. You want to be certain that it’s the right trade to make and that you’re not making a bad decision. Instead of focusing on a few things and using those to develop correct mental maps of how the markets work, you look for more and more indicators and tools to increase your certainty. Instead of executing decisively, you hesitate and wait for more signals to line up.

But all you’re really doing in these instances is giving yourself a false sense of certainty. You’re making yourself feel better psychologically, but you aren’t actually improving the odds of any trade. To the contrary, you’re missing trades, and over-complicating your trading, and ultimately chasing moves that don’t wait for you while you’re trying to gain certainty.

So what’s the solution to this? Do what’s counter-intuitive. If it feels hard and uncomfortable… do it. And what could feel harder and more uncomfortable than accepting and sitting with uncertainty? Yet if you want a comforting thought, here’s one: do this and you instantly separate yourself from the masses. Because doing this puts you on the opposite side of the field. You’re no longer being run by your instinctual ‘caveman’ programming. Instead you’re choosing to reprogram your mind and think in a different way. And this will make all the difference.

So from now on when that feeling of needing certainty rises, don’t succumb to it. But also don’t fight it. You can’t fight what’s hardwired into you. Rather, choose the middle road and accept it. Sit with it. Let it be there. Do this from a place of awareness and a certain level of amused detachment. Wouldn’t you be amused if you saw a caveman in front of you? Well, in a sense you’re just looking at your inner caveman. So smile and sit with him, because when you don’t lose sight of  him and you don’t fight with him, he can’t run the show.

 

 

  • GMB

    First i want to thank you for a great blog.

    Learning to handle uncertainty was one of the key points in my trading career and a way of reducing the stess that comes with trading. So i would like to share some lines here

    Always remember that growth in trading is eternal, and there is no such thing called perfection, to allow yourself the freedom to explore and don’t seek certainties about everything. To feel certain is not a reality of trading. If you keep trying to be certain, you will feel stuck and confused, you will no longer have the independence to explore. You need to have freedom even from your inherent need for absolute security, without this freedom you will become too rigid in your movement.

    • Thanks for the great lines. They ring very very true. And it was a key point for my trading career too. The better we handle it, the better our results seem to get…

  • som

    Hey Ziad….great article. Very true and great pickings from this post. Have a question though if you could shed some light….when do we know if the uncertainty we were sitting with is now the incorrect setup…when Stp Loss hit?…or do you think this uncertainty could change on entering the trade:) which makes sitting around difficult.

    • Hey Som. Usually it just makes sense to let things play out because your mind will start fooling you once you have a trade on, and often you’ll just end up hurting yourself by trying to exit before your stop is hit. Also, thinking of it as an “incorrect setup” is not the best way to approach things. It’s not incorrect just because you take a loss. Think in long-term probabilities and realize that it’s not about the results of any specific trade. It’s a “correct” setup if it makes money over the long-run, whether it works out this time or not.

  • Thanks for this article.
    For me, sometimes there is still need for certainty, especially in times when I focus on market analysis and forget the psychological part of trading. And as GMB said I feel sucked and confused. So it is strongly obvious how many problems can need for certainy cause to trader.
    Anyway, in the article is write do what’s counter-intuitive. My question is, does certainy relate to intuition. Isn´t it rather need or part of emotion like a fear? I would say you have fear in some situation, because you’re not feeling safe, because you perceive that particular situation as uncertain. To me intuition is something that actually helps trader to make right decision. It’s based on experience and feel for market and it’s on the contrary hard to follow and act according to it.

    • Yes intuition is very important and I certainly recommend listening to it. But that’s not the same kind of thing I was talking about when I said do the “counter-intuitive” thing. In the post I was talking about the instinctual behaviors we have. In that sense, it would more aptly be described as doing the “counter-instinctual” thing. But that’s not the term that we usually use so I went with what people understand and said counter-intuitive.

      The intuition that you refer to is gained through experience and is very important. In itself it’s actually already counter-instinctual, because it’s based on your experience with pattern recognition gained over time. The problem though is that what most traders think of as intuition (which they think they should follow) is actually nothing more than instinct because they don’t have enough market understanding and experience. And this will get them into trouble. Learning to differentiate between the two is the tough part, but in reality the more experience you gain the more you naturally think from a correct intuitive perspective.

      Thanks for the great question!

  • Ryan

    Trading is a business and with any business you have to have a plan. While uncertainty will never be swept away, if you’ re disciplined enough to stick to your trading plan, a significant reduction with uncertainty can be achieved. As a probability based trader ‘ I plan my trade and I trade my plan’.

    • Thanks for the note Ryan. I definitely agree that traders should have a solid trading plan heading in to each day. However, what most traders try to do is to create a rigid black and white plan that is not grounded in market realities because they want certainty. In my experience, even a good plan will contain a certain amount of ambiguity, and it has to have a dynamic nature to be effective in the real world.

  • EasySkanking

    In trading, you have to be okay with losing money, you have to be okay with not knowing what will happen, and be willing to work hard on being experienced in trading. We somehow have the idea that getting rich is easy, but it’s not – even in the lottery it’s hard as hell! (how easy is it to win with 1 in 176,000,000 odds?) We have a better chance of being crushed to death by a vending machine ;)(true). I think this is why we are inclined to look for indicators, easy solutions, or even robots (lol) to do our trading… I’m not laughing at anyone here, I have done those things too (well except for relying on the robots – I’m not THAT dumb (kidding :) ). We have to realize that “getting rich” or “making it” in any field, is hard as hell (as I mentioned above, even winning the lottery.) But one thing I have learned from pursuing things that I want to achieve, is that there comes a happiness from working towards things that you want and achieving things, that gives meaning to your life… that it’s probably even better than achieving the actual thing that you want to achieve. Does that make sense? Working towards the thing that you want and achieving things in that field could feel/be even better for you than achieving the thing you are working towards (I don’t know yet, I haven’t achieved what I want yet :P).

    Awesome insights Ziad, as always :) More please!

    • Thanks for sharing! I agree that the journey itself is what really counts, and there is a joy in working towards your goals. But it’s definitely also nice to achieve your goals :) In terms of getting rich, it certainly takes a lot of effort, but it may not be the most conducive attitude to think of it as really hard per se. The better attitude is to recognize that you need a lot of effort, but that it can also suddenly come easily after you’ve invested the time and built up your skills. This attitude will allow you to not push success and riches away and limit yourself into thinking it has to be harder than it really is.

      • EasySkanking

        Good point! I guess in trying to make one point, I neglected another :).

        What I was trying to say is that most people have the mindset that you can somehow strike it rich in the stock market [or other markets). Yet, don’t realize that it takes effort, dedication and commitment.

        And with this mindset, they go out looking for indicators or the “holy grail” in trading, but they don’t recognize that it requires the same principles as it does in other disciplines to “make it big”. Once you realize this, you can make more progress because you know what you’re working with.

        Check out this video, it gives a good general idea of the “success principles” that it takes to “make it big” in any undertaking. I like this man because he used to be an average Joe (for the lack of a better term) and used the principles/ideas he talks about in the video to earn a 6 figure income and also lose 115 pounds.

        Check it out! :)

        http://www.youtube.com/watch?v=FZk40J_drws&feature=BFa&list=UU77WzpPRrYr0W5oeFjVIqwQ

  • agnnis

    Very nice and informative article thanks.

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