Belief
If
you must play, decide on three things at the start: the rules of the game, the
stakes, and the quitting time...Chinese Proverb
Never
in the history of mankind has it been easier for people to tap into the
financial markets. Millions of people visualize themselves sitting in their
pajamas at home or on mobile devices as they
play or travel about--trading and earning a really good living. Trading
goes on all over the world and people can buy and sell at almost any time of
the day or night. What's not to like about this? How easy can this be?
Not easy at all. Simple, maybe--but not easy. Markets are open,
complex adaptive systems that are always in motion. Other than the regulations
set by the exchanges, there are very few rules. Trading is a game where we make
our own rules and strive to take money from other people before they take our
money. This is serious business, because it is our hard-earned money that we
put at risk every time we enter a position. There is almost no way, short of
very complex hedging strategies ( that often don't work) to put money into the
markets without putting it into the realm of risk.
Why do so many traders
fail? Why are so many called and so few chosen? There are several main reasons
for this, but the fundamental one centers around belief systems. When you think about it, the market is pretty
much a level playing field. Everyone has access to similar information,
charting systems, and trading platforms. For a price, you can get just about
anything you need in terms of trading. The two things you really need to be
successful are not for sale: Your belief system and the belief system of
others.
You are not really
trading the markets. As Dr. Van Tharp often says-- and I agree completely-- you
are trading your beliefs about the markets against the beliefs of everyone else
who is trading. This is the area where
the majority fails. They do not have a good understanding of their belief
systems, yet struggle to put them into action to generate profits. You are what you believe, and if you don't
know who you are or what you believe, the market is a very expensive place to
find out. Why? Because you will act out your neurotic tendencies and
insecurities to others in the markets who will exploit them. This happens every
day on a very large scale--those who know themselves take money from those who
do not know themselves.
Let's look at a price
chart as one example of this. What is a price chart? It is emotions plotted on
a grid. That's it. A price chart is the sum total of belief and emotion. Why do
you execute on that chart? Because you believe something about it. The
thousands of others who are executing on that chart are also trading their
beliefs. In order to have a
chart, it is necessary to have both buyers and sellers. In order for price
movement to occur, there have to be both buyers and sellers. Someone is buying,
and someone is selling to them. That means that these people are trading their
beliefs in that moment. That also means that they have beliefs which are
diametrically opposed. If it were not so, there would be no price movement and
no chart.
How can we understand this even more clearly? A price print means
different things to different people. Those who win have learned to focus on
what the price means to others, rather than to themselves. Put another way, top
traders are always looking to find out where the other person is going to
execute. Where is the person who is already in the position going to get out of
that position? What does that person think or believe about his position, and
what is going to cause him to get out? Therefore, it is the beliefs of the
other person that matter to you in terms of profit. When everyone who is going
to get in is in, and everyone who is going to get out is out, there is no price
movement. Movement occurs when the loser decides to get out, because the winner
can wait. This is the edge that people have when they let profits run.
Put yourself in the position of the loser and try to fathom what
that person believes about his or her position. See if you can do that over the
coming week and see how it feels. Constantly question your own belief systems
until you know why you are doing something. Always ask yourself, "What do
I believe that is not true? What do others believe that is not true?" That
is a good place to start.
No belief is neutral. Everyone has the power to dictate each
decision you make. A decision is a conclusion based on everything that you
believe...A Course In Miracles
Janice Dorn, M.D., Ph.D.
