In a fantastic interview with Aaron Fifield, veteran trader John “Rambo” Moulton unleashed a deluge of commercial gold wisdom focused on the negotiation process. Perhaps one of the most shocking moments was his admission that his best trading days came after he had completely divorced his business profits.
New traders and old traders alike struggle with the constant triggering of their statements, their profits and losses. It’s like an ever-present cancer that reduces the mindset of the process in which we strive for a lot of quick profits, super-negotiation, and stop-cuts.
If you’re interested in watching the interview, it’s well worth it. Be sure to follow the Chat with Traders podcast, as Aaron constantly posts fantastic interviews and content.
In this post, we’ll delve into some of the concepts John discusses and expand the negotiation process with some practical ideas.
How many times have you found yourself in the middle of trading thinking about the profits you’ve already returned the day, the week?
The business plan is clean. Price action is normal. Nothing is offline but the second guess crawls like an unwanted guest. The invisible virus of doubt and fear triggers your best judgment as trade rallies occur.
Your perception of danger and threat prevents you from leaving the trade long before your stop is actually affected. Because? You don’t want to miss the week any more. Your subconscious mind is telling you that you are responsible, right?
And the moment you drag the trade, it moves on and reaches your initial goal without you.
Divorce Your Money: Marry the “Now”
At the heart of this problem is the inability to focus on the present, on the process. This may be obvious. And rest assured that this task is not easy to accomplish.
So where do we start to mitigate this business problem?
As Dr. Brett Steenbarger writes in his lesson 7 The Daily Trading Coach, “If you want to change the display, you must change the display.”
In his lesson, he shares his own experience with minimizing operations as a reaction to thinking about his profits / losses and his previous performance.
“Instead of responding to the market,” he says, “I’m now reacting to my own concerns about profitability.”
And that’s the crux of the matter: reacting to performance concerns.
It was this theme that encouraged John Moulton to make a change in his own business. As he recalled his first days of negotiation in the interview, he recounts a crucial moment when things changed for him.
First, for a few years he would write down every operation he did and keep track of his P / L. He had plenty of time to do it on the 45-minute train ride that took him home from Chicago every evening. For him, this was part of the negotiation process.
But then something happened.
Although initial monitoring of his progress felt important to him, it became less important over time. Eventually, he decided it wasn’t that important. In fact, he realized she was holding him back. He wasn’t really worried about the negotiation process, but about the results that worried him. This led him to this thought:
In the interview, he goes on to say, “I have spent months and months without looking at my statements to see if I have made or lost money.”
How deep is that? Imagine spending months without looking at your agent’s extracts, let alone your P / L on a daily basis. What a new idea!
Of course, John began trading in the 1970s, when computers and retail platforms were less accessible. The Internet did not really exist. It probably didn’t have a nice window at the top of a screen showing its P / L running all day.
While the temptation may have been less present to him, the importance is still applicable to the current negotiation process.
How can we divorce money
In short, it is a four-step process. The emphasis is on “the process”.
- Next mentality
Recognition of the need for divorce
Going back to our lesson 7 with Steenbarger, recognizing the problem is step 1. You clearly thought when you drew up the plan for the trade. But the trigger for your past losses caused danger and anxiety to your negotiation.
Create the habit of taking breaks during your negotiation and participating in the thought patterns that concern you. When you do this, “introduce an element of psychological distance,” as Steenbarger points out.
This distance gives you time to readjust and refocus. And that’s the goal, focusing on the market, not yourself (performance).
Pause and affirm the process
Just like in a bad relationship, sometimes you need a break. It can be too much with constant frustration and emotional changes.
Distance to the problem through breaks, meditation, walking, music, or other therapeutic means can provide the space needed to objectively think about what influences you.
Emotions are high in full operation. Take the time you need and decide if your P / L affects your decision-making process.
Then, with a clear head, reaffirm the reasons why you are in business. You may need to make small adjustments to size or positioning. But you will probably find that the original motives of the trade are still very good to the touch.
Shoot, you can even find a good reason to add to your position.
You have a “next” mentality
The trades are not permanent. This gives you a chance to wait for the next play. The last work does not define or limit you.
John Moulton is a master able to move on to the next trade. Probably what defines your ability to operate so well.
Each of his trades is an opportunity in itself. It is focused on the now. As he says in the interview, “When you lose, you have to experience the loss, feel it, learn from it, spit it out, and let it go.” For that:
This mentality comes from ignoring the results. To understand this, let’s take one from the playbook of legendary college football coach Nick Saban.
The process of
Nick Saban, a football coach at the University of Alabama, is a living legend, like him or not. No one has ever achieved what he has as a football coach.
What makes Saban so successful with their teams? It is often known as the process. Simply put, it’s about the relentless pursuit of making the most of every moment and then moving on to the next moment and repeating.
Results and intangibles are of no importance to coach Saban, and he passes it on to the coaching staff and players until they believe it and believe in themselves.
Divorce of results
So is trade. While preaching “Rambo” Moulton, you need to disconnect from the results if you are to succeed. It is no different from performance sports. Focus on scoring and you will fail. Focus on every step of the way and what you need to do to overcome adversity.
Run your entry criteria. Fight for the best price. Go into business management and follow your rules. Add it to a winner with the right skill. Exit the trade according to your rules. Check, rinse, repeat.
Do enough and the results will take care of themselves.
Ignore money, increase your self-confidence
Believe it or not, your self-esteem in trading is often tied to the money you earn – your performance. And that shouldn’t be the case.
Be honest, how many times have you seen marketers flashing their big day P / L on Twitter and felt sorry for you? It makes you feel unworthy, right? Less?
The success of theater is just that, theater. All of this is “rat poison,” as Nick Saban would say, referring to how ESPN commentators think about their team and their players and their wins and losses.
Focusing on your results or anyone else is a poison to your operations. All you have to worry about is the next operation and your execution.
As your business evolves, you will find that your belief in yourself grows. Just as young footballers who “buy” Saban’s process are beginning to believe they can beat anyone, so will you.
But that belief doesn’t come from focusing on your results. You just have to be more discriminating with the help you render toward other people. It comes from the discipline of the little things every day.
What are you doing to improve this week?
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