Defining Failure

So my old foe trade avoidance reared his ugly head again, leaving me asking why.  I wanted to be more brutal in terms of honesty as some new and continuing issues are coming to light.

Well I hope it is...

issue 1: defining failure

I noticed I had defined success in my trading truths but hadn't defined failure. This was a major omission, here are my updated truths.

1. Trading is based on probabilities
2. Probabilities produce random results but over time, predictable patterns/KPIs
3. Your patterns/KPIs, be they good or bad, will always tell you how to improve
4. The only way to reveal your patterns/KPIs is to build your numbers up
5. Success: is simply winning more $$$ through your winning trade(s) than you lose through your losing trade(s). Failure: is simply not finding out what your patterns/KPIs are!

issue 2: procrastination

 I have written my SBP (Strategic Business Plan) and TTP (Tactical Trade Plan) but guess what? I haven't been looking at my TTP every morning or my SBP every month and I get up 15 mins late every morning?! What the hell am I doing?

Amazingly in everyday life, even my wife says, I am not a lazy person. I get up more or less on time, I do my prep, I exercise daily, I coach people (fitness), the house is tidy, my accounts are filed, my taxes are paid, my responsibilities are accounted for... So I think it's not unreasonable to assume what I thought was "inherent laziness" in my trading is procrastination / just another example of my FBT.

issue 3: self doubt

The fact is I am now not so worried about the outcome of each individual trade, which is definitely progress. However these worries have merely shifted to the completion of each of 30 trade sample size. I've completed my first sample, now I'm having internal conflict about starting the next.

What happens if it fails? I know the correct answer is "well I try again learning from what my KPIs suggest". But the answer that is always there, niggling at my subconscious is "it failed, it was my work so technically I failed, I've been doing this for ages, am I always going to fail? I have to date, it's possible I've wasted many years of my life pursuing something I might never be able to achieve, what kind of man/husband/son does that make me?"

All pretty depressing stuff. I suppose the good news is I do understand the process, the problem is I don't believe it. With any luck "defining failure" and "taking responsibility" will start to combat my self doubt. 

going forward

When I stand back and look at the big picture the horrible irony is; I'm failing because I'm scared of failing!

Now that I'm older, cynical and grumpier I find that there aren't sexy solutions to problems, they're all boring, mundane and (annoyingly) usually quite obvious. With that in mind...
1. I've update my trading truths with my definition of failure.
2. I've update my TTP with correct time get up.
3. I've set my morning alarm.
4. I've updated my TTP to look at it first thing.

Additionally...

5. I want to be honest about who I am, a FBT and am adding a further truth to my TTP: "I am a FBT: I must take responsibility of unwanted behaviour to take control my actions".
6. A slightly esoteric idea here, I'd like to focus on accepting my outcome bias instead of trying to kill it with execution bias. With failure now reclassified as "not finding out my KPIs" my hope is that my fear of failure will turn into a "productive worry", if that's possible?!

My Trading Truths

a conversation 

A few weekends ago my wife and I were talking about our jobs and how easy it was to over-think them, get bogged down in the detail and completely lose track of our long term goals. Three thoughts have been repeating on me.

1. How is this impacting my present?
2. What power does this hold over my future? 
3. Paul quoting Sun Tzu all the time is starting to make sense.

the present

In regards to trading, and life for that matter, I constantly get distracted by details. Moving averages, candle patterns, economic data, to paying bills, and doing the cleaning. I find it so easy to busy myself in the method of something instead of keeping my focus on the overall strategy. Of course as Sun Tzu says, without one the other could not be achieved, however perhaps the truth I'm missing is; it doesn't really matter what tactics you use.

If you're a trader with a high hit rate and average returns or a low hit rate hitting home runs, to be successful you just need to win more $$$ through your winning trade(s), than you lose through your losing trade(s).

the future

My coach along with quoting Sun Tzu, is always saying to keep things "desperately, desperately simple" and in the past few weeks I'm starting to see how desperately, desperately easy it is to do the alternative.

I've been reading a lot about WW2 recently, the allies got off to a terrible start but ultimately they beat axis to the hydrogen bomb, the rest is history. I can't hand on heart say that I start my trading day thinking about dropping the H-bomb, or even creating it and this is solely because of my propensity for over-thinking tactics.

Going forward one of my main objectives will be putting on my strategic hat more often throughout the week. This will mean a rethink in how I work my day and actually what I believe is important in it.

To start with it feels identifying my trading truths is a good place to start.

my trading truths

I am certain I am paraphrasing some of these from Mark Douglas...

1. Trading is based off probabilities.
2. Probabilities produce random results but over time produce predictable patterns/KPIs.
3. Patterns/KPIs be they good or bad, tell you what strategy you need, no guess work is needed.
4. The only way to reveal your patterns/KPIs is to build your numbers up.
5. Success is simply winning more $$$ through your winning trade(s) than you lose through my losing trade(s).

summary

The lesson from WW2 seems to be, it doesn't matter how many battles you lose as long as you win the war. The lesson for trading may not be identical but it certainly isn't opposed.

There will be many battles and I won't be able to predict the outcomes however over time they will reveal my patterns. It is those patterns that will tell me what to do next, one could say; 

it doesn't matter how many battles you lose as long as you win the war,

the only way you can win the war is if you know you patterns

and the only way to reveal your patterns is to build your numbers

The December Trading Issues post was not off the mark. I suppose today I have simply thought a little deeper on exactly what "just build your numbers up" means.