How do you Stay Motivated as a Stock Trader?

Stay Motivated

It’s hard to stay motivated at any new venture. Trading is no different.

I’ve spent a lot of time studying the track records of the great traders. Those track records are freely available om the internet. By studying the track records and the performance of great traders, and varied traders, you come to appreciate what is required in the trading journey.

A lot of people come to trading thinking that trading is making money every day, every week, every month and every year. For some people that may well be the case, but for the rest of us who are just common people in the street trying to make a go of it, that’s not the case.

Losing Trades

You’re going to have losing trades, you’re going to have losing days, you’re going to have losing weeks, losing months and yes, you will have losing years. If Warren Buffett has a losing year, why the hell shouldn’t you? That’s what it comes down to.

First and foremost, you’ve got to have a strategy that has a mathematical edge.

Then you have to follow the strategy and allow the math to play out.

Certain strategies will play out quicker than others. For example, trend following tends to be more sporadic because it doesn’t do that many trades per year. To achieve an edge, your trade frequency is slower than someone who perhaps day trades or uses a five minute chart.

The edge will take a little bit longer to evolve, and that can be frustrating for people. I certainly have clients that find it frustrating to be a trend follower. You have to wait for the trends to start to evolve.

Trend Following

That’s normal for trend following. That’s why if you go back and you look at all the great trend followers, who’ve got thirty year+ year track records, you can see that, “Hey, it’s happened to these guys!”. They are managing hundreds of millions of dollars, sometimes billions of dollars, so therefore if it happens to them then it can happen to me.

If that doesn’t sit well with your personality, then trend following is not the way to go. You’ve got to look for a strategy with a higher trade frequency.

Your edge is a significant part of the trade frequency, so to make that edge move along faster you’ve got to increase your trade frequency. So for those people who struggle with trend following, i.e. they want a lot more consistency, you have to move your strategy down time frames or you have to change your strategy to short term swing trading types.