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The last year or so have been tough for
fund managers, particularly commodity fund managers. Many have left the
business or are looking for new stakes to begin again. The easy money of
the endlessly rising stock market has gone away, too, and funds and advisors
are having a tougher time picking their way through the debris and creating
a sustained advance in equity.
Speculators are a tad different. We bust out now and then, just as gamblers
do. And the cure may be just like a gambler's: step away from the table,
get your balance back, and come around again when you've committed to your
basics. (You read STOCKS & COMMODITIES
at that point, right?)
Coming back means stepping up to the plate personally. After busting out,
you're in despair. You're alone and no one wants to take your call. No
ideas come your way and your own brain has rotted as well. Plus you don't
trust what it comes up with, anyway. You're explosively angry, frustrated,
and depressed. You've got a thousand names for yourself, all abusive. The
market gods are hearing from you and not on friendly terms.
About then, it's time to take an objective
look at what actually happened. If you haven't traded correctly, then you
have failed. But if you traded correctly and lost money, you haven't failed.
YouÔre just suffering from a bad run of circumstance.
Trading "correctly" means you performed according to your plan.
You pulled the trigger correctly, you cut losses appropriately, you did
everything humanly possible to manage the situation. If you didn't, the
question is, can you perform better in the future?
The other situation should be easier to take. You did everything according
to plan but fortune did not favor you. Having enough capital to absorb
the inevitable losses, trading the right size, and taking the correct losses
help you handle a bad set of circumstances. Those parameters were
all part of the plan. Still, you could do everything correctly and you
could still take 50 straight losses! Don't write yourself off as a loser.
That would be crippling.
When I bomb a trade or a series of trades, I don't consider that I have
failed unless I've gone against my plan. I do go against the plan on occasion
because I get ideas, intuitions, and guesses that suggest going early or
late, adding more than I should, trading something I don't know. In theory,
a computer could and should play the game for me but I can't pull myself
out of the equation. I have to admit I've failed when this happens and,
truthfully, it still happens after 18 years of experience.
People fail; I know I do. I compare trading to weight loss in the difficulty
rankings; it's that tough to accomplish personally. However, I don't add
abuse to failure as I once did. I revisit my plan to see if it's still
performing, as it should. I add the mistake I made to a Post-It note in
front of me on my desk to remind me. The next morning, I try again to make
money and lose 25 pounds.
So don't count yourself out if you hit a string of bad trades. Distinguish
between yourself and the plan. If the plan's still solid, then you still
have the same simple problem every human has: getting up in the morning
and trying again.
Good Fortune!
