When to Change

[Posted on Apr 16, 2010 @ 14:45]

Sometimes in life, we have to change. When we are children, we have to change the way we see the world after attending school because we begin to slowly find out what the real world is really like. When we are teenagers, we change our outlook on girls because we find out that girls don’t like bugs and worms. When we are adults, we change the way we dress. We change and evolve throughout life.
Those who never change, those who always make life stay the same are missing out because as the world changes, sometimes we need to change with it. If I move to a different country, I may need to learn the culture and the language. If I change professions, I will need to change the things I do for a paycheck. In life, I will change many times the way I eat, the way I sleep, even the way I love. Change is all around us all the time.
Likewise in the markets, we need to change and adapt to changing events. Sometimes we have theories that may work for awhile but like everything, those theories and strategies may come to an end and if we don’t change, we are dead. The market will eat us like the big monster who eats little children.
The market has no mercy but it can be your best friend at the same time. As long as you do what he is telling you to do. Sometimes the market, who from here on out will be named ‘Fred’, will make you the happiest trader in all the world. Sometimes Fred will change his mind without telling you. He expects you to know when he changes his mind. And sometimes, Fred has always been the same and it is us that has always needed to change. It is all on the way you see things.
So here is my story…

I started trading with a demo account a few years back. I lost and lost and didn’t know why. I saw that other were making a killing on Wall Street and I knew that if they could do it, so could I. I may not be the smartest man in the world but I know that I am not the dumbest so I set out on a mission to learn.
The first year was mainly studying everyday. I studied about 10 hours every day and 12 hours on the weekend. I used every spare, waking moment to have my head in the books, watching videos, testing theories, writing out math, calculating, observing, thinking, thinking, lots of thinking.
I would place a trade and immediately lose $1,000 in 5 minutes. This $1,000 was fake money but it would still upset me because I was trying and trying and trying. Sometimes i would study some book and find myself thinking things like, “this guy is stupid.” or “I dont need to know that.”
When the price was falling, I would buy. I would ‘buck the trend’. I was doing everything wrong. I would win a few dollars and then lose a lot more. A crazy idea came over me, “If I just had money on the line, I would not make these stupid mistakes.” So I dropped $200 in an account and in the first day I tripled my account to $600! Oh I was a god…or so I thought. That sudden increase in money was gone the next day.
So I had to change. I had to change the way I thought. It took a year before I became profitable. I was doing good by increasing my account at a rate of 1% every time I traded. If I kept this up, I was on my way to becoming a millionaire. I was so excited.
Well, now, the account is larger so I had to change again. I became aware that there is a huge difference in trading $1 and trading $10 or $20. These amounts are 1000% and 2000% more than the $1 I used to trade. This would be like going to a job where you make $20,000 per year and the next month, you have a job making $400,000. The difference is so huge, it would send you for a flip for a few weeks.
So I had to adapt or Fred would slaughter me. I started losing. Lose Lose Lose. I would be frantic. My heart would beat out of my chest. I was worried that my wife would lose faith in me. I would worry that life was coming to an end. I was a mess. I called my wife and cried my heart out. Then a moment of clarity came.

I started from scratch again. I listened to my hypnosis mp3’s. I did all the mental things I needed to get my mind in sync. I stopped trading for a few weeks. I just stopped cold so I would not continue to lose. I was trying to figure out what the problem was.
So I changed. I opened up an account with $25 just to play with the market to see what was wrong. I went back to trading with $1. To my surprise, I began to win again. Win win win. I had figured out the problem. It was the amount of my trades. Thats all. My plan was good but my mental blocks were not. Instead of losing $1 on a losing trade, I would lose$10 or $20 and this was a big blow to my account.
Trading with the smaller amount is reinforcing my confidence in my trading abilities. I know how to be profitable. I just need to keep emotions out of it. This is the key.I am almost ready to go back to our standard account to trade for ‘real’ money but I will always leave this smaller account open to use from time to time to reinforce my beliefs.
Sometimes changing means to change the way you think. Your mind can keep you from profiting when there is nothing wrong with your skill. I am now always willing to change if the results I am seeking are not the results I am seeing.

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