“What is this life if full of care, we have no time to stand and stare”

2018 has not delivered what most crypto-currency traders had hoped for and yet I still feel content with what I have taken from the market so far this year — even as I type we are seeing new yearly lows of $4100.

We currently live in a world categorised by Wikipedia as the Information Age which is described as; an economy driven by information technology.

It occurs to me that the rate at which we are being asked to digest information is on the increase and whilst its undeniable that the changes brought on by this new age are in keeping with services, products and even attitudes we have become accustomed to, I can’t help thinking we are missing out on something much more basic — primeval almost and as W.H. Davies put it in his poem Leisure; “we have no time to stand and stare”.

Having a largely scientific background and in particular a degree in Geology, my interpretation of time and age (even these days having long since graduated) is measured less in years or decades and more in terms of millennia.

I recall afternoons observing the different types of sutures on ammonite shells used for dating purposes and the evolution dialogue which spanned the Jurassic and Cretaceous Periods. As great index fossils, believe it or not, in part due to their relatively short period on the planet (200 million years) but also due to their distribution around the globe, Ammonites were prolific and are undoubtedly my favourite fossils not least because of the time I spent drawing and meticulously labeling them in my course books, but also because of the information you can glean from understanding them and their place in natural history.

An interesting concept; Ourselves as humans could be considered the ultimate index fossil in the future, but that’s probably another altogether very different article.

Back to my point; The immediacy and on demand nature of how I work, socialise, shop, eat and ultimately live, I am no longer afforded this fundamental time for thought, based on observation or reflection and I can’t help feeling I’m missing out on the opportunity to properly form opinion and shape theories to the extent afforded to me in my younger years throughout school and further education.

Let me ask you a question;

How many times have you walked away from a meeting or discussion only to immediately think of a key piece of information you wished you had shared or the “ultimate come-back” to re-enforce/influence a debate/argument?

It’s not a new concept by any means but understanding your own learning styles and general personality type should help.

“No time to stand beneath the boughs and stare as long as sheep or cows”

Driven by our hunger for instant access or immediate gratification we are programming ourselves in a whole new way of living to cope with our rapidly changing environment, a bit like ammonites.

When the phone rings we answer it; without a thought, not a second to pause and assess whether what we are currently doing might be more important or valuable .

We are becoming conditioned in that regard much like Pavlov’s dogs.

“Freedom from blind reactivity begins with self-awareness”

Yvan Byeajee; The essence of trading psychology in one skill

We are changing/choosing either consciously or unconsciously, behaviours to suit the environment within which we find ourselves. Just like the sutures on the ammonites shells I used to study, to combat predators, the impacts of fluctuating sea level change and the pressures this exerted on their protective shells, they became more intricate/elaborate not due to a conscious decision I grant you, but to adapt to their environment.

Jurassic ammonite showing sutures.

Now there is a big difference between behavioural change and physical evolution as demonstrated in the fossil record, for sure, but if we continue on our current path perhaps these behaviours will become hard coded somewhere, I’ll leave these here; What May Become of Homo sapiens

What will humans look like in a million years?

Moving on..

“No time to see when woods we pass, where squirrels hide their nuts in grass”

What makes this important for me (and therefore the reason I’m writing this article) is that, drawing some of these conclusions in the here and now I can begin to understand why it was difficult for me to be a consistent trader, successful or otherwise, with all these distractions and constant connectivity. I found myself asking this question;

On what should I base my decisions and how do I filter out the information I need from that which clouds my judgement?

Why is this important and why am I writing about fossils in an article tagged with crypto……? Simply put, I became aware that I was not giving myself enough time to form ideas and therefore opinions properly. In 2017 people were provided a rare opportunity, a chance to make huge sums of money, life changing in some cases in a short period of time with very little capital risk and even less effort or experience. Something unheard of really in recent years, well, since the last time anyway— the Dot Com Bubble.

This all depended of course on whether you were able to overcome your emotional urges, most didn’t and therefore weren’t able to optimise the opportunity or even worse; lost money and in some cases still are.

I believe that this is as a result of being emotionally driven in convictions. No surprise really as this is how we live our lives today, we have become very reactive by nature.

Further to this I now believe through lack of preparatory thought (and practice thereof) it was always going to happen. I was not ready to make the decisions that needed to be made, I had the time to do so but chose to use that time doing other things, checking prices, scanning Twitter, calculating y gains, planning how I would spend my new found wealth, the important things, lol.

“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you‘re wrong.”

George Soros

500 years ago there were far fewer distractions. You were happy when the sun rose in the morning and there was food on the table before bed. I’m not saying there weren’t distractions to everyday life back then, there obviously were, but they were limited by their technology and hours in the day, not like now.

What they saw through their own eyes was real, what they heard in stories was the stuff of dreams (they had to use their own imagination to make the words come alive — we don’t have to do this anymore our stories come on a big screen which brings it to life for us) and the colloquial nature of knowledge transfer somewhat stunted potential for distraction.

The size of audience you could attract or engage, as a story teller, was also limited and it was accepted that in order to get your message out there would take time and considerable effort. However by the 20th iteration you were somewhat of an expert.

These days you can pick up a laptop and write some thoughts, post it on twitter/Instagram and have it land with more people in seconds than the most dedicated scholar/missionary/pilgrim could in a lifetime of trying. And we get upset if the view count is lower than our last???

Have we forgotten how to wait patiently for things? How to work hard for them also? We rarely have to these days;

Imagine having to wait to harvest the corn field at its optimum moisture content, we don’t anymore, we cut it and dry it indoors at huge added cost to production….

Or imagine a world where TV listings were further from your grasp than a menu button, say printed on a weekly basis and called something like the “Radio Times” — Christmas simply is not the same.

Link — Still in print, believe it or not

People consume content completely differently today, more so than even the last decade, no longer do we wait a week before settling down on the sofa to watch the scheduled film on a Saturday night, nor do we religiously tune in (haha “tune-in” definitely not anymore) at the same time each day to catch that soap or news update. We consume on the go on multiple digital interfaces or we write our own schedules and binge as and when we can.

“We have no time to stand and stare” and in some cases we have either forgotten how to be patient or lost sight of the value this added to the experience, the thought process or rationale, the hard work, that gives the sense of fulfillment.

The good news is that these behaviours, can be learned, but it takes time and patience. This is my story and how I’ve spent my year.

“No time to see, in broad daylight, streams full of stars like skies at night”

In 2014 I got into trading, when I say I got into trading I mean I saw a documentary about its accessibility and brokers introducing options through internet applications, the ease of use, I gobbled up the sales pitch of a secondary income and I signed up — hook, line and sinker I bought into it— went straight (not literally but virtually) into the App store and 2 mins later I was up and running!

I experimented at first with forex and commodities, executing trades, closing them and found the process very easy, I also lost more often than not.

I had no real idea what I was doing or why.

Then my broker added cryptocurrency (specifically Bitcoin and Ethereum) to the array of instruments at my finger tips and all of a sudden it became a whole lot easier to make money.

It is important to understand that I hadn’t become a better trader over night, obviously, I was lucky, right place — right time or whatever, I took a gamble;

Because that’s what trading is regardless of what you read — this is one I recommend — Dan Jeffries- Crypto currency Trading Bible Three

And it paid off, I was seeing huge gains in my portfolio for the first time, then came an issue, when/how to get off the ride.

I had no plan, I was void of a strategy still. Lucky for me I did manage to hold on to most of my gains but I still experienced some trades that felt somewhat out of my control.

This is something that I strongly felt needed to change. I wanted to increase my capital, I wanted to hold on to my gains, others were able to do it, so I should be able to also, right?

“No time to turn a Beauty’s glance, And watch her feet, how they can dance”

My first crypto trade was on BTC, I had a very small trading account at the time and it was completely flat (no positions) when I promptly threw a speculative (cough) 100% long position into crypto, unleveraged and left it for a few months. Like I said, I got lucky I had trebled my portfolio by the time I closed that trade.

You could argue that my main objective back then was to make money and that it is the same now so the trade was justified.

We could also talk semantics around trading and investing but I want to keep this simple.

The main difference between then and now is not my plan or my individual strategy, it’s actually that my main objective these days, the driver of my trading/investing behaviour is, not to lose, making money has become a by product of this.

My first crypto trade (along with a few others) was entirely driven by emotions, a roller-coaster of them and was purely about my need to be right and make money.

Remove the emotions from this trade and it wouldn’t have happened, instinct was what took me there. It is why a machine will always be more successful in trading than me, but there are things I can do to combat my disadvantage;

Understand Risk and our own relationship with it — as a trader you definitely have one.
Define/Quantify your own risk appetite — what are you willing to risk in the pursuit of future gains?

Return On Risk-Adjusted Capital

Companies use various risk models for all manner or reasons, valuations, credit, collateral, leverage and many more.

Personally I like RORAC — Return on Risk Adjusted Capital — It’s simple to understand and somewhat transferable.

Let’s simplify things a little bit further — think about crossing the road (stay with me) its something we all feel capable of doing effectively and its something we have all done in our lifetime.

Wait for signal — What’s yours?

We all know the correct way to cross a road, you find a crossing and wait for the little green man to start flashing before you step off the pavement, but how often do you or do you see people not using the crossing?

Back to our risk model for a minute; People who are risk averse will observe the correct pre-determined route to cross the road and will be the ones using the crossing. People who have a higher risk appetite will be those looking to make time/energy savings by crossing where ever they see the opportunity using their own judgment and instincts to guide them.

We can apply the same logic to trading, those choosing to cross the road without the assistance of the traffic lights we can liken to traders not having a clear and defined strategy, they have a plan, to make money (or get to the other side in the case of our pedestrian) but they don’t have anything to fall back on if things go wrong and they often will when all the variables are taken into account.

So back to our pedestrian crossing the road — the plan is to get to the other side, you can either go to the lights and wait for the little green man or make your own way across as best you can, the biggest benefit or end result here is that you achieve efficiency (you save time and maybe don’t have to walk as far if you take the path of least resistance and cut out the lights). In trading you might think you can get ahead of the market and achieve a better starting point in the trade for example.

Now compare that to someone who walks that little bit further and waits that little bit longer for predetermined sequence of lights and duly puts one foot in front of the other when that little green man starts flashing, when the lights change we adjust our course according to the highway code.

Sticking to a trade set-up is the same thing, waiting for the trade to come to you is a phrase I hear quite a lot and only fully grasped its meaning when practising my own trading plan and implementing my own strategy.

You enter your trade when the price hits your target or when your order is triggered (this is the green light) you have your starting point, the pavement (or in the example of the trade, my starting point is always my SL as it’s what I am willing to risk — the value that I have written off) and you have your destination, the other side of the road (or again in the example of the trade, the price target you have identified) both can then be left behind you, the road crossing and the trade can now play out, there is no need to keep checking back over your shoulder looking up and down the road you have just crossed, that would be pointless wouldn’t it, just the same as continually checking the price action.

It is somewhat concerning however the amount of times you feel the urge to check prices whilst trades are underway this I suggest is because the trades were placed based on emotions and instinct, much like our intrepid road crosser in real life who has to constantly look over their shoulders, both ways, using their senses to see if any danger is on the horizon whilst they are crossing the road.

Trading without a plan and a strategy, I would suggest, does not allow the experience to be free from emotional stress as much as it does when trading with one.

That being said it is not a magic pill that takes all of the emotions out of trading, there is still risk present, but it is one you have assessed and should be comfortable with taking according to your own risk model.

“Stress is not caused by whats going on in your life, it’s caused by your opinion about what’s going on”

Timber Hawkeye, Buddhist Boot camp

Now of course, things don’t always go to plan, indeed accidents still occur whilst people observe the correct etiquette when crossing the road much as they still go wrong even when you execute your trade as described, sometimes your price target is not hit, sometimes the price instantly reverses and hits your SL and sometimes price can gap up/down and blast through the SL you have set. In these instances you just have to accept it and move on. Nothing is guaranteed in trading much the same as it is not a guarantee that you will get to the other side of the road when choosing to cross it, but we can remove risk by having a plan and sticking to the rules that have been set.

Clarity of thought and purpose — not; ifs, buts or maybe

Utilising a model that allows you to set your acceptable level of risk should help avoid instances of indecision which can result in watching trades go deeper and deeper into the red, not knowing when to cut loose or on the flip side watching the greens build and not knowing when to take profit and close out.

These are scenarios that need to be minimised because whilst the latter might be a nice problem to have I do believe that without the presence of a plan winning trades will more often than not be cut much sooner than the losers.

Following the crypto boom there were any number of “experts” popping up proclaiming huge gains and selling trading secrets and such is the behavioural norm and hunger for instant success. And again rightly or wrongly they made money from subscriptions selling calls or even indicators all marketed as giving access to huge capital gains at very low risk for very minimal input, we love a bargain don’t we.

The crypto collective were sold this new world order and a financial economy built overnight for which we could all play our part in this big awakening. We were the trail blazers with Satoshi at the helm.

But then 2018 came and along with it those dreams were washed away along with the fireworks over the River Thames or Sydney Harbour, the bubble burst as they do.

Find some details here if you missed it — “Double, Double Toil and Trouble….”

“Being wrong is acceptable, but staying wrong is totally unacceptable”

D. Schwager, Stock Market Wizards

The reason I employ my own rules and stick to my strategy is that it underpins my objectives. I want to be trading in 20 years time, I certainly don’t want to be one of those traders that blows up their account every other month on that wonder trade that is going to make them rich.

“No time to wait till her mouth can, Enrich that smile her eyes began”

Having spent some time to develop a strategy I can reflect on my past 2 years of trading crypto and start to understand where it went wrong for me. I can say hand on heart that the point at which this happened was the moment I pulled the trigger to set my first long position.

Even the trades that went my way and I made huge gains from were bad trades based on my current understanding and strategy. Let me walk you through some of my thought process today;

What am I willing to lose? — Understand my risk appetite and help set both position size and leverage used
At what point is my idea void? — Practice risk management utilising a stop to cut my loses
Does this trade help me achieve my wider objectives? — Depending on the answer to the above, I either progress or not.

Having got these few thoughts out of the way, we can now focus on the decisions we make (or don’t make).

We have all become accustomed to making decisions on all manner of subjects, a deadline that needs hitting, a contract agreement before an offer expires, your wedding venue, a holiday destination, the name of your unborn child. Regardless of the reasoning these pressures are ever present. I believe that we default to instinctive and emotional levers to help answer these questions which is perfectly fine in everyday life but for trading we need to minimise their effects on your trades.

There are many ways in which you can learn behaviours that can aid in your trading success, I’m not selling any, 1. because I don’t know any good ones yet, I haven’t tested them for long enough and 2. because we are all different individuals and what works for me might not necessarily work for others.

So this is where you have put in the hard graft, it’s not enough to learn about the market and the types of influences that are exerted on it, or all the types of indicators used for TA, which ones you can use and understand. Which ones you can access and speak to you best. You have to know yourself first.

If I were to start over I would focus on understanding myself better and how (but more importantly why) I make the decisions I do. What instruments to trade, what indicators to use would all be secondary.

“Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.”

Ed Seykota

I would then figure out my key drivers and objectives which would help form the risk model.

I have often seen adverts for “paid for” trading courses on all manner of indicators and strategies that have been fine tuned or back tested over decades of data. One thing I know for sure and that is there are no guarantees in trading.

There is no trading course you can take (paid for or otherwise) that enables you to go out into the market and make money as a guarantee.

The market in that regard is a weird and wonderful mechanism, an emotion filled lake that reflects every traders doubts and desires. The fear and greed that drives all traders is ever present and feeds both bulls and bears.

A lot of what I’ve just said is about decision making, but the main objective of this publication was to highlight that; In the present we are unable to fully disconnect. This impedes our ability to add value to decisions through focused and deliberate thought.

On what should I base my decisions and how do I filter out the information I need from that which clouds my judgement?

In both cases I found the answer to this was myself;

I inform my understanding of risk and set my risk appetite utilising a trading strategy.
I remove myself (my emotions) from interfering with my trades by following a defined plan.

This is not simple and even some of the greats struggle — See Diary of a Professional Commodity Trader-Peter Brandt

“A poor life this is if full of care, we have no time to stand and stare”

Ending where we began — that fundamental missing part — the primeval disconnect.

Time for unpolluted observation or simply just to dream.

I feel this is a necessary part of my trading strategy now, removal of all the things that cloud judgment to give my ideas clarity and to know that I own them successful or not.

Fire Gazing: You May Already Be a Meditator

Personally I do find pleasure in staring at flames, watching as they lick at the air in an open fire.

It is somewhat relaxing but challenging all at the same time, especially when sitting too close, on a cold dark night, watching the intensity, feeling the heat in your cheeks and the burn in your nostrils. It must hark back to those early hunter gatherer times when after a day of surviving, small pleasures were found in being afforded the time to stand and stare as it were.

What I’m not saying here is that if we all stood around staring at fires we would be better traders. However understanding that in order to make informed decisions about anything, let alone something as dynamic as setting a trade, should take time. It should not be an emotional response to the current price action or the latest tweet from someone you follow. Blindly throwing money at the market expecting huge returns is a strategy based on hope which in trading is not a strategy for success — I’ve tried it.

Whatever enables your own fire gaze moment, whether its time with friends, family or loved ones, a spa treatment, music, food, wine or whatever I definitely recommend it.

It leaves you free to set thoughts in order, achieve unconscious goals, finish those conversations we wished we had had, practice those speeches, address those issues but most of all become more self aware.

Enabling time to be with ourselves and our thoughts, for some that will be a very scary proposition, will give you the opportunity to start to understand your dreams, desires, wants and needs.

Throughout my short trading journey I have come to understand that whilst the focus has been around making money, the biggest gains I have been able to lock-in are my personal insights.

Reflecting on why I make decisions the way I do, has enabled me to become a more consistent trader. Much more than this however, I now understand that in order for me to be rich in life, I will need more than just money. So I’m off to work on that part also.

Claps help me sleep at night as they feed my ego so any you can spare are very much welcomed ;-)

The objective of the above is to offer opinion, your decisions are yours, own them, the good and the bad. Play safe in the market and protect capital at all costs, otherwise you will find yourself very quickly watching from the sidelines instead of participating. I wish you all the best of luck.