Thursday, September 27, 2018

The Gateless Gate.

I have been watching Tim's video lessons from Profitly and they are resonating in a way that they never have before. I am not learning a single thing (that I can tell), which I think on the surface sounds bad until I continue with the fact that it is simply solidifying everything I already knew. Do I think I know it all? Not in a minutia way, but honestly yes, in the "What matters" way.

Like I said in my previous post, if you can't cut the inevitable losers, no strategy matters, so ultimately the real strategy is to cut losers quickly.

The reality for me, is that I honestly feel like Tim was my problem. Ironically, as things often are, the setbacks I encountered as a result of following Tim, created the ground work for the beautiful self sufficiency I am now experiencing. The contrast between what he was teaching and what I felt in my gut all along makes seeing what I see have much more of an impact. He was both the problem, and the solution. Every "problem" is actually just a force that guides you forward, and it is essential, if proven by nothing other than its existence alone. It was totally necessary to see through him in order to more clearly see myself. What the evidence is showing me in my own data, is that I can be profitable trading only 1 hour a day, without spending hours each night creating watchlists and delving into SEC filings or reading the news.

So much more to talk about, but I have to get back to work.

Wednesday, September 19, 2018

The Art of Is: Standing forward in reverse

With everything I am about to say, I'd like to preface it with you not getting caught up in the language as if it were being used to make me sound wise, esoteric or sagely. I am saying what I am saying specifically because it is the best way I can muster to say what I'm trying to say.

Life is crazy isn't it? Well, yes and no. The crazy nature of humans makes life seems crazy, but, there is no problem that exists outside of human perception of a problem. There is never anything wrong, and as wrong and ironic as it sounds, there is nothing wrong with feeling like everything is wrong. All of it just is, and has its purpose, as evidenced if only by it's very existence. Discomfort is the driving force in it all. Discomfort is a good term to apply to the human condition, but in general, imbalance is what drives everything from one place to another. Existence is a sea of imbalance, that is simultaneously producing chaos from one vantage point, and harmony from another. To be clear: Imbalance, not wrongness.

No matter what I say or do, (no matter what any of us say or do) the drama that permeates being a human with emotional attachments will always be there in some form or another. One can understand very clearly that they are (to put it plainly) simply a program occupying some hardware which is involved in a dramatic play, and yet be so overrun by that programing to the point that they wouldn't be taken for having awareness of that at all.

What the hell does this have to do with anything? As usual, and quite appropriately; everything.

I have said it so many times I want to gag each time I spew the phrase, but, "I've spent my entire waking life trying to dismantle the mechanisms that I operate by". I say waking, because to me at this point in my life I view person-hood as being in a dreamlike trance so deeply, that there is no other way to explain being so caught up in things that are not actually real. Rightly so, to stop dreaming, you have to wake up. What do I mean "not real"? By not real, I mean the very concepts from which we draw pleasure, pain, hope and fear from. They are almost entirely concepts that exist not apart from the brain that computes their imaginary outcomes, or replays things that no longer exist apart from the imagining of them. This thread is the basis of this blog post, and ever more the basis of my life and way of being. Both knowing about it's sincere lack of tangible reality, and knowing that it so acutely produces tangible reality as far as anything else can, it might as well be called "The Art of Belief", insofar as we are basically an imagination of ourselves. That imagination, crystallizes into physical manifestation.

So how did I get here and what have I done about it?

As you know I have been involved with trading for many years now, and my efforts have been very sincere in the last couple of years. A pattern I have been repeating consistently during these last few years has been one in which I have several great and disciplined days of trading, only to blow it all away with some gigantic lack of discipline, throwing all my gains (and much more) completely out the window. In my last bout of depression over this loop of behavior, I was able to come to some very important breakthroughs and I would like to discuss them, along with the proposed solutions I have come up with to rewrite the programming. One of the most notable things about this entire experience for me, has been to watch the negative programming's behavior. I wanted to say "grip on me", but, it is me. We are the programming. I guess what I really find amusing is how part of the programming can watch the other destructive part, be aware of it, and yet struggle with such futility only to watch itself succumb to it. It's just another layer of perceived chaos and harmony. Quite interesting.

So as I was saying, a few great days of progress only to find myself being stubborn and giving it all back. I don't just take a big loss, I get angry and completely disregard the trade altogether because I just don't want anything to do with it anymore. To be honest, in that moment I don't want anything to do with trading ever again. I eventually cut the loss as my rationality comes back around, but besides the lack of discipline, the real problem has been the depression that immediately and without hesitation moves in and takes complete control.

The thought that moves into my mind is always "Dammit! I did it again, I'll never be able to trade for a living!". That always felt like the perfectly logical observation to me. I've been trying to trade profitably for around 19 years or so now, (very sporadic to be fair) and this is the umpteenth time this has happened to me, so it is obvious I will never get this, right?

That thought, I thought, was rational. But, I have been able to see it for what it is. It is nothing more than programming. Even if you could argue it is logical based on the statistics gathered throughout my attempts in life, I have come to understand something far more important I think.

I pondered what the hell was different about anything. What was the difference between my good, profitable, disciplined days, and the days where my discipline failed? One critical question is: Why am I lacking discipline in the first place? What is the underlying reason that I can't cut these bad trades? While I want to answer that as best as I can, I first I want to handle what happens to me after that evaporation of discipline and why. The whys have always fascinated me in life.

The hell that follows after a day like that is one that I absolutely would not wish on anyone. Well, definitely one person, but that's another story. I get so depressed and angry at myself that I feel worthless. I eat like crap to feel at least some satisfaction, then I feel like an even worse person for binge eating garbage. I sleep in, because when you are depressed you are tired and unmotivated. I am an absolute energy vampire for my wife to be around, and we both cause each other to spiral into darkness because I get so low that she can't help me at all. It is always something I have to simply endure, and it is complete hell. But why does this happen?

After a few days of pondering it all very seriously, I had only the semblance that there was something out there to grasp. It was similar to just barely being able to hang on to the feeling a dream gave you, with no discernible details. It's this feeling of deep meaning and detail, but you just can't break below the surface to discover it. (Also, it's not like I have never tried to ponder these things, it's just that this time I actually got lucky and broke below the surface.) Then finally while talking to my wife about it on a walk around the neighborhood, I began to make some breakthroughs. I discovered that my depression gets worse every time I have an undisciplined losing day, because there seems to be a subconscious part of me that operates on a logic something like this: Last time you broke your discipline you were a loser, so you deserved to feel bad and be punished, but this time you broke your discipline again and that means you must endure an even worse punishment because obviously the last punishment was not severe enough to change your behavior. I came to realize that it is not simply making mistakes that sends me into a depression, but making repeat mistakes of the same action.

The depression itself hinges on the idea that my failure to do it right this day, means that I will never get it, which obviously means that trading will never actually be a thing for me. That thought of course is crushing, because although I love my regular job, it is not something I want to be doing the rest of my life. I understandably want the freedom to go and do what makes me happy, not to be tied to a job because I am trying to pay off my house. And honestly, due to self driving vehicles being a thing, I don't know that I will even have the option to do this long enough to pay my house off. I am not qualified for other high paying jobs at the moment, so naturally that paints a bleak picture in my mind, which just enforces the depressive thoughts.

So what are my solutions to replace this programming? First of all it has to be recognized so that it can be corrected, which thankfully I feel I have done. I have since then developed some phrasing to help focus my mind on some important things.






































#1. There is not a problem with your discipline, there is a problem with your process to obtain it.

This phrasing is not only correct, it takes the blame off of me in a way that makes it easier and healthier to look at what is going on. Obviously if I am not as disciplined as I need to be, it can be argued that the way I have gone about to acquire discipline needs to be tweaked. We will get to my solution to acquire discipline later on in the post.

#2. Error is part of Trail, Error, and Refinement.

It's super important to put it in the forefront of my mind that making mistakes is 100% natural. Use your errors to refine your process, not beat yourself up.

#3.It is absurd not to eat just because you know you will be hungry again. It's just as absurd to disallow yourself happiness because you know you will feel bad again.

I really was getting hung up on this one, but my wife presented it in this really beautiful and relevant way that just clicked with me. There are endless things we do and cycle through over and over that we don't and should not feel stupid about. There is this innate thing in me that always resists starting to feel good again. It's the whole idea that I'm just going to screw up and find myself feeling like a fool again. The desire not to feel like a fool again keeps me from feeling like it's okay to follow the natural flow back into happiness and goofiness that makes me who I am.

#4. Poor outcomes and negative feelings have their place. Do not wallow in them past their usefulness.

This one is from a long time ago, but it's super easy to forget. I was first introduced to the concept of "Just suffering" (or something like that) from a book called "The Four Agreements" by Don Miguel Ruiz. The point is made that we make one error, but often continually punish ourselves over and over for it. What I wanted to drive home further in this thought was that negativity is the outcome of error, and that once the solution to the error is found and understood, there is no more reason to feel negative. Suffer justly.

Lastly: The only way to progress and feel joy is to keep moving. The root of joy seems to stem from the resolution of conflict. We call this progress. There are always conflicts and areas of resistance to perceive and overcome. I literally know of nothing more that brings peace and joy than to have a resistance, and move past it either through problem solving, or perspective shifting.

So, why am I undisciplined? As I came to understand it, I simply was not operating with the right thoughts about what I was doing. If I genuinely thought the trade was never going to turn around, I would cut it and be happy to have cut it. What I needed to do was actually find a way to operate from a point of genuine conviction about losing trades in order to enact discipline and cut them off quickly. Think about it. Isn't it rare that we knowingly do something that is going to gravely hurt us physically or emotionally? No one gets married because they believe they will get divorced, no one eats a food if they truly believe it will cause them some acute reaction, and certainly no one invests money into something they believe will cause them financial loss. The fact is, even though I had been through multiple events where holding losers hurt me with catastrophic depression, doing so had worked out enough of the time to teach me the worst kind of habit. It is the random outcome that keeps people doing unhealthy things, even if statistically in the long run you will endure ruin.

How I am fixing my discipline.

My solution to acquire discipline felt once again like the hidden details below the surface of that powerful and important dream you can't reach.  I knew that if I wanted to teach myself to put the toilet seat down, all I had to do was consciously go through the physical loop 30-50 times and it would just ingrain itself into my motor memory. What I was struggling with was how to translate that into making sure I cut losers when I need to. I kept equating one as a physical task and the other as a mental task. After an hour or so of contemplation, I laughed at the obvious answer that took so long to become obvious: just open trades and close them as soon as they move against you. The idea had to consciously be about cutting the loss, not trading to be profitable. I'm no expert, but to me ultimately all subconscious behaviors are mental because the brain controls the body, but you can program the subconscious mind through conscious thought and the body.

While the physical act of opening and immediately closing trades that go against me is like planting seeds, equating logical reasons behind why I would want to do that is like getting the soil of my mind ready to hold deep roots when those seeds begin to germinate. One perspective that is helping me to actually enjoy cutting losers is that if I just take very small losers, I can get back in a few times without much total loss if the stock sets up for another trade. I will say, it is really enjoyable to exit very quickly only to see the stock continue to free fall without taking your money. That has happened several times and each time I see the stock continue down through resistance I am just thinking about how horrible I would be feeling if I had been stubborn and held.




I still find myself feeling some resistance creeping up when it comes to cutting my losers, and that is natural because I have only just started to implement these things. I imagine it will be a habit I will have to put work into maintaining for the rest of my trading career, but it will save me a fortune. My current stance, is that whenever I feel a resistance to cut, I just cut immediately. If I am noticing any resistance, it is there for a reason so I just force myself to cut.

THE REAL STRATEGY

Through the literally thousands of combined hours watching video lessons, DVDs, reading books, blogs, and actual time at the market watching charts, I have come to a very specific conclusion about what successful trading is. I certainly don't want to speak too soon here as I can't consider myself a success just yet, but I feel a great deal of conviction about this, and I see a direct correlation to my profitability as a trader.

Everyone advises to cut losses quickly. It is rule number one for pretty much every educator or trader that I've seen or studied from. The strange thing is that it is one of the hardest things to do because it flies in the face of what being wrong traditionally means about someone, even if only even on a subconscious level. So much time is spent talking about the strategies; what stocks to trade or avoid, and how to trade them, but I would go so far as to say that "Cutting losses quickly" IS the strategy. It truly doesn't matter if you find the very best stocks, if you can't cut the inevitable losers, you won't make it long term. Yes, it is understanding the particular nuances and context of each new moment on the chart that that lends to your probabilities and thus your long term edge, but no one is ever right all the time. It is simply imperative to cut off trades that aren't working, and for me, the sooner the better. As of right now I am going into each trading day saying aloud to myself "The strategy is to cut losers quickly". Distilling it down to such a simple phrase keeps my mind honed in on exactly the way I need to be thinking about these trades. Another thing I have been doing, is trading the chart and only the chart, meaning I am not looking at profit or loss to determine my exits. If the trade is breaking below my support level or not bouncing quickly enough after I buy it, I just get out.

So much goes into the gigantic machine that is trading, and I have up until the last two years always sought out the very easiest way to trade. What I have learned and what becomes continually clearer to me as the months pass, is that trading truly is just a mirror that reflects your character right back at you. I had heard that line a few times before throughout the years but just held it as a romanticism of sorts, but now it means something entirely different to me. It's exactly similar to the how the company you keep is simply evidence of your real inner constitution. It says just as much about you as the quality of your work when no one's looking. It's funny because the motivator behind all the effort I have put in my life through doing the hard work first, was so that I could relax after. When it came to money, I wanted to save to buy, not buy on credit and pay 30% more just to have it right when I wanted it. I never wanted to go to therapy or seek medication because I was always convinced that it was only a journey in which I could find the true answers for myself, and that if I could just find the programming mechanisms I could change them on my own. In retrospect I think a little therapy might have aided me, but I don't regret my path. I have had several loved ones who I would imagine are equally qualified or greater anyhow. Those that love you will tell you what they think is true at all costs.

Anyhow, the reality is, even though I have spent hundreds of hours learning to trade before I started to take it to this level, I somehow still wasn't serious about it. Maybe my standards for what that means are too high, as I still question myself here and there to this day... I think in the end, to be a great trader you have to possess the qualities of a great person, and I just want to be the best person I can be. I am ever grateful for my wife and family that has continued to slowly draw out the best in me.

Without them I would not have the motivation it takes to get past the delusions that harm me, nor the desire to continue in the delusions that serve me such a beautiful life.