I took some time off from trading last year to give my full and undivided attention to the autotrading platform.
I'm back to trading now (with bots of course!), and I wanted to share the things that stuck out most during my time not trading.
While I was aware of many of these lessons, they became even more apparent when I stepped away.
I was able to observe markets and reflect on my trading habits. Some lessons were tough to learn, but self-reflection is necessary for growth. I hope this list can help you as much as it helped me!
I Lived in My Own Trading Bubble for Too Long
I realized I was very stuck in my ways, and it was not an easy lesson to learn and change. But we have to be open to finding new methods and strategies to grow as traders.
I spent time focusing on education and helping others, which has led me to be quite regimented and inflexible. I have wanted to try plenty of strategies but have not followed through on them in the past.
In the end, we should not classify ourselves as one kind of trader. Instead, we should continue to incorporate new ideas as we go.
That’s why the Community is one of my favorite platform features. Traders can share ideas, discuss strategies, and crowdsource bots.
Momentum is a Force. Don't Fight It
I have said it before, and it is worth repeating: you cannot fight the market!
Being consistent and persistent will always be more important than being right, picking stocks, or timing the market.
Unlike us, bots are not emotional. Bots only send an order to your broker when the opportunity you identify presents itself. This means better trades, no more chasing markets, and no FOMO.
Excess Levels (in Both Directions) "Mostly" Correct
I had fewer distractions when I wasn’t trading. I didn’t have to focus on positions or adjustments. I could see how the market behaves more clearly and without bias without distractions.
For example, I noticed most of the excess highs and lows would typically correct rather quickly.
This does not necessarily mean the market (or stock) will swing violently to the opposite side, but it will usually revert or trade sideways.
However, it’s impossible to know precisely when the market will turn or stall, so it’s important not to try and predict or fight the market (see above).
People are Highly Emotional Creatures
All the time I spent watching, reading, and listening taught me a lot, and it was very impactful to see just how shortsighted we are as humans.
Emotion does not serve us well when trading. It causes us to make poor decisions, and I believe we should actively try to curtail it when trading.
I Lacked Discipline and Patience When Entering New Positions
I routinely slacked on order entry because I was impatient.
This was another tough lesson about my manual trading habits and a great reminder of our weaknesses in strategy execution.
When we do not adhere to strict rules, we can lose a lot when rushing through seemingly small tasks. It is much better to have patience.
Better yet, use bots and you never have to worry about checking open interest, volume, probabilities, and so much more.
Systematic, Rules-Based Trading Wins
We are not good at sticking to a plan. We tend to drift and lose focus even with simple trading plans.
Funny story: there were times when I forgot about a bot for weeks. The bot stayed on and just kept doing its thing automatically without interruption.
Looking back on those trades, I can honestly say I would have made different decisions than the bot and had worse results.
I realized that taking the time to set up a strategy and letting it run via automation is much better than trying to micromanage every little thing manually.
'Focused But Nimble' is My New Mantra
Working without a clear focus is irrational and chaotic, and being too rigid is equally reckless.
We can’t just throw ideas against a wall and hope they work out. But we also must continue to try new things as markets, and technology, change.
I would suggest we approach our investing like driving a car on an open highway: keep the wheel straight and make small adjustments when necessary.