Hot For Trading

At one of the websites I frequent, someone recently asked “Isn’t trading exciting?” As someone who has been trading for 18 years, I thought I’d share my perspective.

Good trading in stocks, futures, forex or options, whether it is long term or short, should be pretty boring. If it is “exciting,” my guess is that it is stimulating your brain in a manner similar to gambling, which for traders who want long term success is VERY bad. As casinos will tell you, when people get excited while gambling, they tend to make poor decisions. The same holds true with trading.

My personal experience is that if I find myself counting dollars in an open trade, or getting anxious, nervous or excited while trading, I’m usually getting close to being in trouble. For me, this means I am more likely to ignore my mechanical (hands off) systems and take matters into my own hands, which is almost always bad. My best trading decisions are made not in the heat of the monet, but rather when the markets are closed. I suspect most other good traders are like this, too.

I find the exciting part of trading is the “thrill of the chase,” that is, finding a system or idea that works well, that I want to put into live trading. Since it takes me about 100-200 different trading ideas before I find a truly tradable system, and usually that process takes 2-12 months per system, you can probably guess why I get excited when I find something new.

I liken good trading to running a marathon – I have finished 5 of them – where the exciting part is the training, anxiously waiting at the starting line, and the starter’s gun going off (If you ran the Los Angeles Marathon in the 1990’s like me, the runner’s chants of “Ali! Ali!” for Muhammad Ali, who would wave from the elevated starting line box, was so exciting it gave me chills). The race itself, and actually finishing, isn’t as exciting. It is actually a little boring.

As a recent trading example, I was really excited as I got closer to releasing my latest trading system. I was excited to see how it would perform in real time, with real money on the line. But, after a few weeks of real time, real money trading, to me it is not “exciting” anymore, even though it is performing very well, as I expected.

Maybe I’m in the minority here, but good trading is boring. So, while trading with real money, I like boring!