Thursday, June 12th, 2008
Letting go of control in trading
I recently used skiing as an analogy to help solve a trading psychology problem.
I actually got the idea from trading coach Ari Kiev who says both skiing and trading require letting go of control.
In his book 
The Psychology of Risk, Dr Kiev says:
“Skiing is one of the best metaphors, because the ultimate challenge is to master the art of sliding gracefully down a mountain. To accomplish this you must let go of control at the same time as you are balancing the out-of-control act of sliding. The natural tendency of most beginning skiers is to try to control the sliding. But when they do that, they tend to fall.
“As you master skiing you learn to control the out-of-control felling associated with sliding by progressively learning more and more skills … Trading is very much like skiing. Letting go of the controls, participating in the process, and accepting a little bit more of the phenomena of the trade itself are all important steps in learning to take more risk. As the trade is going right you must learn to relax, to go with the flow of the trade and be able to hold your positions longer or get bigger instead of getting out and taking your profits.”
He says auto racing provides another metaphor, quoting a successful a auto racer: “When racing a car, you make a decision early in a turn and then relax, let go of control, and go along for the ride.”
I’ve found that ’letting go of control’ is largely a function of sticking to my system. I don’t think there’s much point in putting on a crap trade then trying to relax and let go.
When I put a trade on where my edge is clear then I automatically let go of it psychologically. I can sit there and have a stock go up 30 per cent, then watch it retrace most of the move, and not be too worried. It’s because I know the general market, and the stocks fundamentals and technicals mean there’s a strong probability that it will resume its rise.
The point is that working on psychology is no good with out having a profitable edge.
Word Count: 346. This entry was posted on Thursday, June 12th, 2008 at 3:45 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
