Seriously, we have one day left for 2014 and the market shows little sign of slowing down. Not everyone it seems is on vacation mode with the S&P 500 managing to eke out a record high once again, and a possible move to 2100 in the next few days. This year, my best and worst is all about discipline. Trading requires discipline and much of it involves focus and timing / time management, and this year my performance was hugely affected by my body and mind conditioning. You think it hasn’t happened to you… maybe it did… read on.
Nope it’s not BHP, the oil and iron ore pricing since that’s caused by the market, the tragedy is how I manage my investments given the market conditions. I did suffer losses on this investment but it is not the worst thing for me because of the size of the investment.
It was more about the change of my active / daily trading to the US Market which starts at 9:30pm local time. I really needed to adjust because I got the kids to monitor / help for assignments plus the bedtime storytelling and at the onset I was rushed in my preparations and nervous all the time. I knew striking a balance was necessary … but definitely not easy, since primarily, I am a mommy and I enjoy giving them the cuddles and giving massages to the children … but also makes me fall asleep ! I really had to change a lot of my routine schedules, my exercise, even taking a bath! It’s because I found that my body is not conditioned to “work” at the trading session opening times, because I was feeling refreshed and ready for bed after a long day. That also seemed to signal to my brain to also slow down, so my sharpness in decision making dulled and even absorbing what’s happening. I found that even with a reliable system, an overwhelmed, stressed up body and consequently confused mind is NOT up to the task — won’t follow the rules. There was one night that my 1R loss ballooned to a 5R loss! Yep, I was disappointed at myself, loss felt very painful and I had to cry.
At the start of the year I was expecting that my new life goals and situation (we moved to a new house, new environment) would need me to update my business plan so I set about doing that. The beautiful thing about having a written business plan, is that you have a reference point to where you are, where you’ve been and it is easier to assimilate what you are now. I definitely find it is easier to pinpoint what does not work and needs changing / improving. And the easiest way to improve your investing / trading results is to zero in on the following components of the BUSINESS PLAN :
I was active in forum once and one of the members said he wants to be the best investor / rock star traders in the likes of Warren Buffett, George Soros. To which, many in effect, said “dream on”. Yes, it’s true, in this day and age, there are “well-meaning people” who feel they must give a “reality check” to others, but, they are NOT helping that person and even more importantly, THEMSELVES with such a thinking! One person put it this way — “I just want the money, I don’t care about being the best.” Lots of people agree… Certainly nothing wrong with that? WRONG!!! How can a person with so so skills get paid more? Or put it this way, is it right, is it fair, if your colleague gets paid more than you, when you know you are far more competent? Something’s definitely wrong. To be paid the best, you must be the best. Period.
How to be the best —
a. Having clear Goals
b. Develop appropriate mental capability (decision-making strategies, mental processes etc)
c. Being aware of your competencies and improve on weaknesses
Going back to my essence as a person, right now I am a mother first and foremost. True, I love the cuddling and looking after them is a full-time job. However, part of that job is to secure the well-being of ourselves and our family, so we need to stay connected to our finances, to invest wisely to improve our life now and for the future.
2. POSITION SIZING — definitely a biggie. For those who are new to this blog, “position sizing” is how much you are willing to Risk in a given position. In short, how much you can afford to lose as a percentage or your capital or in money terms $1 for out of $10 stock. The best thing is of course to maintain discipline in following your position sizing. The other important thing is, making sure that position-sizing satisfies your goals. Like for me, I have twin goals for having a monthly income, and also to grow my capital. For example, I would have a 2% Risk and I check that this is within the 15-day ATR or average true range of your stock so that it is beyond the noise or volatility of the market. This worked well for these stocks that worked well for me – FB, AAPL, MA, CVS – technologly, finance and healthcare sectors. Strong stocks that have been moving well with the bull market.
3. BODY AND MIND CONDITIONING
I mentioned about the “worst” thing that happened to me given the sad state of my “body and mind conditioning”. This happened because of my new life situation, new house, new school for my kids and I drive and pick-them up. I am a new driver so I didn’t realize it at first but it seemed that the driving is wearing me down. So I really have to pay attention to my time spent for these errands, plan the best window of opportunity and taking rests and of course exercise and eating heathy food. I also have to identify my other stresses and so far I’ve been able to manage and protect myself after doing a thorough evaluation. It is not easy, I have to limit things I like to do like always updating my blog (from 4-5 times a week down to 1x a week), dinners with my friends / family, intermittent errands to the mall, now I have to really schedule when I go there because I need to reserve time to nap in the afternoon so I wouldn’t be bogged down by night. I make it a point though that I do not “sacrifice” and give up pleasures entirely, I just have to reschedule them – weekends are all for fun and relaxation. And looking forward to it for the New Year holidays….
So definitely, the best investment for me for 2014 is having my updated Business Plan — taking the time to write it down, update it to the challenges of my new life, and having long-decided to be a tradermom, to protect myself so that I can follow the business plan.
So here’s to a fantastic 2015 … The Mommy Returns
To learn more about developing your Business Plan, attend our workshops :
1. Low-Risk High-Reward Investing Workshop for creating systems and market understanding
2. Investing in the United States stockmarket – for active and income investors
3. Investing Success Bootcamp – business plan and investment psychology