Sometimes I like to grab a book, turn to a random page and see where I end up, giving my subconscious an opportunity to point something out to me. Today I picked up Eckhart Tolle’s “A New Earth”, which has absolutely nothing to do with trading, and I discovered a passage that is very relevant to a topic I touched upon a few posts ago. When you decide to be bullish or bearish you pick a side, and when the market goes against your bias it’s easy to become defensive. It’s almost natural for a trader to want to pick a side, but as soon as you do your ego gets involved. Limiting your ego’s role in your bias will help you be able to flip sides more quickly, and allow you to trade with the trend.
In the paragraph below, the two can really be separated into your opinion of what the market should do, and your reaction of what really transpires. Have you ever decided that the market should rise (bullish bias), and it does exactly the opposite causing you to be annoyed? How do you trade when you’re annoyed or frustrated? These are imporanted questions that each trader needs to ask themself.
As this week went on I was becoming more and more bearish and when the market turned around on Thursday I was in denial that the market could sustain this rally. Each wave up I felt would be met with a wall of sellers. It didn’t even occur to me to look for bullish set-ups until after the Thursday’s market close, when I saw just how bullish the tape was. What I should have been doing was positioning for the following day. After the gap up on Friday it made it even harder to go long, because the previous day I had been bearish.
“What is an argument? Two or more people express their opinions and those opinions differ. Each person is so identified with the thoughts that make up their opinion, that those thoughts harden into mental positions which are invested with a sense of self. In other words: Identity and thought merge. Once this has happened, when I defend my opinions (thoughts), I feel and act as if i were defend my very self. Unconsciously, I feel and act as if I were fighting for survival and so my emotions will reflect this unconscious belief. They become turbulent. I am upset, angry, defensive, or aggressive. I need to win at all cost lest I become annihilated. That’s the illusion. The ego doesn’t’ know that mind and mental positions have nothing to do with who you are because the ego is the unobserved mind itself.
In Zen they say: ”Don’t seek the truth. Just cease to cherish opinions.” What does that mean? Let go of identification with your mind. Who you are beyond the mind then emerges by itself.”
Remaining market neutral is imperative to your trading success, leaving your ego to melt into nothing. I would suggest that every time you find yourself leaning to one side of the fence to try and flip the scenario around and look at it from a “what if” angle. Don’t allow your ego to get in the way of your trading. Remaining calm, focused, and flexible are the keys to navigating today’s volatile markets.