The other day I bought a coffee from a local Seattle coffee shop. Perhaps you have heard of them, Starbucks? The last thing I expected from my overpriced espresso and water was sage trading advice but there it was, printed on the side of the cup. Starbucks has printed quotes on their cups for a while now but this quote in particular caught my attention. It is about commitment, which I believe is a core issue among many struggling traders. Here is the quote:

The irony of commitment is that it’s deeply liberating — in work, in play, in love. The act frees you from the tyranny of your internal critic, from the fear that likes to dress itself up and parade around as rational hesitation. To commit is to remove your head as the barrier to your life.

– Anne Morriss

Since I started blogging the two largest issues I see among struggling traders is their inability to commit to either a trading methodology or simply being a trader at all. I think Anne’s quote cuts to the heart of the matter for both issues. Commitment to a trading methodology liberates a trader from constantly seeking the Holy Grail while commitment to being a trader liberates a person from the fear of either success or failure. I want to explore these two issues in today’s post and perhaps it will uncover some hidden obstacles you may not realize are affecting your success as a trader.

I personally do not believe trading is a hard profession to learn. Trading to one’s own advantage is an instinctual process for everyone so you just have to accept currency trading for what it is. Think about it for a moment, any kid could tell you how to trade baseball cards and make a profit but many traders seem to have hard time thinking about currency trading in the same context. Think about how you would buy or sell your home, a car or find a good deal on chicken legs for your weekend barbecue. Trading is simply a process of buying something when you believe it is undervalued and selling it when you have made an adequate profit. Unfortunately many people still confuse trading money with a complex science which requires years of study, powerful mathematical indicators and a gigantic brain in order to make a profit. I actually had one trader tell me he honestly thought he was too stupid to become a trader. Fortunately while learning to identify areas on a chart where currency is under or overvalued with supply and demand takes some practice it isn’t rocket science. It just takes commitment.

Commitment to being a trader means you’re willing to accept the idea that trading isn’t a perfect science and losses will occur. If you don’t buy my thoughts on supply and demand that is fine, you can use your indicator of choice but you must commit to actually trading the live markets! It is amazing to me how many people use back testing and constant analysis as an excuse to avoid actually taking a trade. You can’t optimize every loss out of a trading system and if you don’t commit to the system you’ll never make a profit with it anyway. If you want to be an analyst then fine but if you want to make money, commit to being a trader and start pulling the trigger.

My favorite part of Anne’s quote is her thoughts on fear. For all the talk about greed getting the best of traders I believe fear crushes more traders than greed could ever hope to. You always hear stories about the trader who earned a zillion dollars only to lose it all in one greedy trade but you never hear about the trader who fails to earn a single dollar because they are paralyzed by fear. People fear failure as much as they fear success whether it is an issue of pride or financial gain. The irony for many struggling traders I talk with is their trading systems are sound but they constantly hesitate to pull the trigger because they haven’t truly committed to their trading system. Without commitment traders leave themselves open to personal attacks about missing an “obvious” trade or taking a “dumb” loss. Commitment to your trading methodology will free “you from the tyranny of your internal critic” and allow you to take trades with confidence.

If any of this sounds familiar to you I submit the following advice. First commit today to being a trader, not a back tester or an analyst but a trader. Second, stop visiting internet forums. Many of those people are stuck in a loop of testing, trading and testing again; they haven’t committed themselves to being anything but someone who is searching for a better mouse trap and will waste your time. Third, learn how to read price action. Supply and demand is the only driver of price, indicators do not predict anything. I think the suggestion of indicators being a “self fulfilling prophecy” is misleading since one thousand traders can look at an indicator one thousand difference ways. Finally commit to spending time with the live markets. You’ll be amazed how quickly trading instincts develop after watching and trading live price action on one or two currency pairs for a few weeks. Remember, everything looks rosy on a back test but the real experience is gained only by working with the live market.

I am traveling this week but I’ll be back in a few days with some more videos to discuss supply and demand based trading. Don’t forget about the Fed statement tomorrow (Wednesday)! I hope you have a great trading week!

Ryan