The Key to Success

I was fortunate enough to attend and speak at TradersACause charity event in Las Vegas this month. This was my second time at the event and in my opinion it is one of the ‘must-do’s for anyone taking trading seriously especially if they would like to network with like-minded traders and industry experts. In the event you will find real people, real topics, no egos & just pure learning and sharing experience…the way I like it!

The title of my speech this year was: ‘The Path to Self-Motivation & Success’. I didn’t want to talk about just trading but self-motivation and & success in general terms. My speech started with one of my favourite stories, let me share it with you here:

In the middle ages there was a young man who was living in a mountain village. He was a perfectionist and was obsessed with being successful. He wanted to be very very successful. He asked: “What is the key to success?”. People in the village tried to answer but none of the answers satisfied the young man. One of the elders in the village told him about a wise man who was living at the top of the mountain, in a cave, and he might be able to answer his question. However, he also warned him about the dangers of the journey. It would take several weeks and he would need to face wild animals and snow storms on the way up. The young boy didn’t even think twice. He immediately decided to go and find the wise man who could finally answer his question…

1442995-1920x1080-desktopnexus-comThe journey took several weeks and finally the young man arrived at the cave. The wise man was inside. He looked at the young man said “Come inside, Boy! Tell me what is in your mind?”. The young man was very excited to see the wise man and asked him the question at once: “What is the key to success? Please tell me!”. Wise man smiled, looked at him in the eye and said “Come with me, boy!”. They left the cave, walked some distance and arrived at a mountain lake. The water was crystal clear. The wise man went in the lake, water reaching his knees and said “Come here boy, the key to success is right here” pointing under the water. The young boy was so excited; he went in the water immediately. He kneeled down to see and find the key but he couldn’t see anything. The old man said “It is right there, can’t you see it?”. The young boy still couldn’t see the key and put his head right near the edge of the water to be able to see better. Suddenly, the young man felt himself seized by a strong hand at the back of his neck. His head was forced down under the water, and held there firmly. He didn’t know what was happening but he needed to breath. Fast! Just as he was about to give up hope, thinking he is going to die there, the hand on his collar let go. Violently leaping onto the shore, the young man drew in his breath in heaving gasps. Oxygen flooded his lungs. His vision grew clearer, the hammering in his throat slowed down, his hands finally stopped trembling. The wise man looked at him and said ” What was the most important thing that you wanted when you were under water”. The young man answered “It was air!”. The Wise man continued: “You wanted to know the key to success. Now you found it… Do you remember, just a few minutes ago, how badly you wanted to take that next breath of air? When you want success that badly, you will have it. That’s the secret of success. The Success is WITHIN you – it is not somewhere to be found or told, you just needed to realise that you already have it..” and then the wise man left…

Young man sat down there for a few hours. He now realised the power of self and self-motivation and became successful in everything he did in his life….

Ask anyone if they want to succeed or not, and you’ll get a firm ‘Yes’. But ask them what they’re willing to give up, sacrifice, suffer, accept, tolerate and forego for that success, the answer is generally not as clear…

I then continued my presentation with Triangle of Success.

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To be successful in anything we do, we need to have 3 key ingredients: Skill, Attitude and domain knowledge. Due to time constraints, in my speech, I focused on the most important two sub-ingredients which are Goal Setting & Self Motivation…

I have written an article about importance of Goal Setting in the past. You can read it here. I sunmmarised that the most important things to do when we set goals are:

  • Writing them down (It is scientifically proven that you are much more likely to complete the goal if you write it down and make it tangible)
  • Visualising Yourself Completing That Goal Successfully
  • Setting Interim Goals (so you divide a big goal into digestible smaller goals)
  • Evaluating Your Goals (There are thousand ways to climb the same mountain, if one way is not working – find another way)
  • Achieving your goal and Rewarding Yourself (Part of your motivation)
  • Repeat

Setting Goals might be easy enough but how will you motivate yourself to complete that task? In my speech I mentioned about the Self Motivation Formula:

M = E x I x V

M = Motivation

E = Expectancy (Will my hard work result in measurable progress toward the goal?)

I – Instrumentality (How likely is that I will be rewarded or punished)

V = Valence (What is the size of my reward at the end?)

As it can be seen from the formula, Motivation multiplies with combination of the above. When setting goals, you need to think about the above ingredients and decide on the ambition of your goals.

And never forget, The only thing that will stop you from fulfilling your dreams is YOU. Believe you can & You are half way there…

I hope this helps.

Yours,

MT.

Some Useful Trading Tips

Here is a few tips to help you to become a better trader:

Cash is a positon too!

Most new traders think that a trader should be trading all the time, never miss a good opportunity! However, the reality couldn’t be more different. We are humans not algo traders. Day trader, momo trader or swing trader, quality is always more important than quantity. NEVER enter in a trade without a plan and certainly NEVER enter in a trade because of FOMO (Fear of Missing Out). Don’t ever forget that CASH is a strong position, too. It enables you to act when there is a good opportunity.

Consider Swing Trades

I personally like swing trades for number of reasons. I am a busy guy with number of Business interests. I don’t (and some cases can’t) spend my all day in front of a PC watching stocks. In swings, I generally look for good setups to enter in a trade, add, add more, hammer and exit. This tried and tested method generally works very well for me but wouldn’t work for most of the new traders (or traders with small account sizes) because of their account size and the maximum pain they can take in a swing positon. Perhaps starting small, testing the system and learning from it is the best for the new guys. I always have a plan while swinging. This plan includes where I enter, where I add, where I cover or if it goes against me where I exit the trade. Before entering into any trade, I always know what my maximum loss will be (NEVER change this during the trade!) and what I expect from the trade (i.e. how much I want to make from that trade – when reached, I am out). If it works against me and if it makes me nervous, I cut it out and move on to the next one. Sounds easy? Probably yes. However, in practice, this method needs immense discipline which you can’t develop overnight. It takes years for change to take place and constant practise to maintain it. Most new traders are looking for that magic formula to enable them being profitable overnight. Let me tell you: IT DOESN’T EXIST. If anyone telling you otherwise is after your wallet.

Set Trading Goals

I covered importance of setting goals previously in here. Setting goals for yourself will make you not only a better trader but also a more successful person in every part of your life. The goals you set should be achievable and measurable so it is crystal clear to you when they are achieved so you can move to bigger goals. If you are a new trader, your first goal should be not making profit but PROTECT your capital. If you can achieve this, then the sky is the limit…

Admit Mistakes and Learn From Your Mistakes

We are humans. We all have Ego. Admitting mistakes is not in our DNA. However, one thing you will notice from successful traders is they all admit their mistakes to themselves and to others. We all do mistakes daily. Important thing is learning from those mistakes and try not to do them again. It is a process and will take time. In trading, the same mistake can manifest itself in many different ways. The only way to learn is to experience it. You can ask, read or learn from others but the real learning only happens when you experience it in real life. The most important thing here is minimising the impact of your mistake. This in my opinion comes to admitting mistakes quickly, take action and always trade with correct trade size that you are comfortable with. You can read more about trade size here..

Constant Learning & Adapting & Having an EDGE

One of the most important things in life for me is constant learning. I am a student of life and I love learning new skills whenever and wherever I can. Similarly, I love getting more out of my trading and adding more ‘weapons’ to my trading arsenal by learning different types of trading, different types of trading vehicles and methodologies. Don’t forget, the market is constantly changing, there are number of different ‘cycles’ in the market. The best traders can see and analyse these cycles and make informed decisions about their positions and type of stocks in their portfolios. They scan stocks accordingly. They plan accordingly. One thing you need to do to become a better trader is ADAPTING. You need to adapt to the market conditions and change with the market. As a trader, you always need an EDGE. The change in market and your speed of adapting to that market is one way of having an EDGE. Information is another. Always KNOW what you are trading. Research the stock (or chart if more of a technical trader) and always know why you are trading it and what is your EDGE against other traders. If you can’t find the answer, move on to the next stock until you know you have an edge. And don’t foget any fool can enter in a trade, but only smart one knows when to exit a trade. Be smart.

MT