The Break-even Trader
I get emails all the time from traders telling me they have been kicking around the markets a few years taken some lumps, but they are now a break-even trader. They then opine about how they feel they are very close to flipping the switch to being consistently profitable. They want advice or help in finding that last piece to the puzzle. So I ask them to tell me about their trading. What I find the vast majority of times is a trader that is now solely operating out of fear and isn’t in a position long enough to either lose much or profit much. In essence they have become an efficient commission generator for the broker and monthly fee payer for whatever tools they employ without any real chance of becoming that consistently profitable trader they desire to be. Don’t take what I’m saying as if they can’t do it,they can. The thing is they aren’t nearly as close as they think. They believe that they are close to flipping the switch and my thoughts are how do I begin to tell them what they need to hear in a nice way.
The fear of loss and the fear of losing a gain is controlling all of their trading decisions. They have acquired so much “scar tissue” from their previous time in the markets that they now extrapolate loss or giveback on the slightest wiggle in the market. They have become such a slave to the ticks that the fix isn’t easy even though they believe it is. Once you allow the ticks to be your master you might as well just take your money and send to someone.. anyone because you aren’t going to get to keep it. So rather than go through the anguish and frustration of months and years in the markets just get it over with quick and be done with it. Am I being a bit harsh here? Yes. Why? Because that is what you need to hear. Change has to be made. Risk has to be accepted and taken. Without risk there is no reward. The markets don’t let anyone consistently profit without taking real risk. The markets are hard, contrary to what much of social media would have you believe. If you can’t find a way to overcome your fear and break free from living and dying on every tick then get comfortable being stuck right where you are.
Get in front of a mirror and take a look. What you see looking back at you is who can change and has to change. That person has to be the one to get over being scared and get to work and find a way to take risk and be comfortable with it. That person is the one limiting what you want. That person looking back is the one that needs to change and stop with the self delusion of “break-even”. Trading is hard and edges aren’t lying around waiting for you to trip on them. Getting to work and finding edge and understanding that all edges require risk is a start. Figure out a way to unchain yourself from the ticks.
Sometimes my answer to these emails may piss people off. Maybe just enough to elicit change. Hopefully.
