Life, like Forex, comes down to choices and decisions… or wait, should I say, Forex, like life, comes down to choices and decisions. Either way, you get the point.
A while back, thanks to the ‘modern miracle’ called Facebook, I got reacquainted with my childhood best friend, whom I hadn’t seen in nearly twenty years. You know the story; the closest of friends in school, the pair that used to do everything together, then school ends, and life happens. Years pass and you happen to catch the tail-end of some movie you two watched a million times together, and you wonder how your old chum turned out? So you do what everyone does… you cyber-stalk him on Facebook.
On the face of it, my cyberstalking, er, sleuthing, showed that he was doing well; he had a nice job, a decent place to live, and he and his wife looked happy. After an awkward first chat, where I seemed to confirm what I saw on his timeline, and where we reminisced about years passed, I got a follow-up call from him a few days later… and it was a WHOLE different story.
Come to find out that colorful and joyful social timeline was a ruse, who’d a thought? In reality, my old friend was utterly distraught. He goes on to tell me that he and his wife are a ‘couple’ by name only, any resemblance of a relationship fizzled long ago. Not to mention his house, which was bought on an adjustable line of credit, was absolutely killing his finances. And to top it off, he was suffering from a bought of homesickness, having moved away from his family to accommodate his marriage. To make it short; he made a bad choice, well, honestly, he made a LOT of bad choices.
The real irony here? We ALL make bad choices. If fact most of us make MOSTLY bad choices. Life doesn’t come with a manual, and unfortunately, once you know how to live it, or at least have a better idea, you’re normally to damn old to enjoy it. In life when we are aware we have made a bad choice, it’s time to slow down, regroup, and make a decision, to either stay with the choice we made or accept the fact we made a mistake, correct it, and move on.
In forex, however, there IS a manual, in fact, there is a shit ton of manuals, however, somehow, we STILL make bad choices. Whether we misinterpret the market, or misread fundamentals, or follow the wrong technical indicator, invest in the wrong PAMM at the wrong time… just like in life, those bad choices have a COST, and just like in life, bills, unlike mail you actually want, never arrive late in the mail.
And here comes the hardest lesson of all… when you are faced with a tough choice, a choice between two shitty options, and you are forced to make a decision. Many people, when they find themselves in such a dilemma, assume they need to fix something. We have all heard the saying, ‘If it ain’t broke, don’t fix it,’ well today I am going to introduce you to this lesser known gem, ‘If it’s broke… buy a new one.’ If you KNOW you made a bad choice, living with it until it destroys you is NOT an option… for sane people anyway.
Step one is to acknowledge the mistake. OWN it. You made a choice, it’s your fault, and despite repeated attempts, no, you cannot blame someone else. The reason it is so damn hard to get past this point is that pesky thing psychologists like to call self-righteousness, one of those inherent human traits that help slow the evolutionary process. Unfortunately, self-righteousness doesn’t get along well with wisdom, and you guessed it… it takes wisdom to acknowledge when you have made a mistake.
Step two is all about courage. Now I am not trying to say that most people are cowards, but nearly ALL of us are afraid to admit when we are wrong, which in forex means almost NONE of us are keen at a taking a loss. You know, those of us that mutter ‘An equity loss is not a REAL loss,’ under our breath as our account slowly gets slaughtered by one of those aforementioned bad choices. And for the record… a loss is a loss. Equity, balance, whatever.
In the end, when most of us are faced with the choice of cutting the loss or taking a stand, making a clear decision, and actually doing something to correct the mistake we don’t want to admit we made… we simply do nothing. The irony here is that not making a decision is, in fact, making the WRONG decision, the de facto decision of letting fate decide the outcome for us.
Instead of closing the trade, the trade we KNOW was a mistake, we just let it run, and hope the market will turn in our favor. HOPE is NOT a form of market analysis. Next time you want to rely on hope do yourself a favor and walk away from your desk, smash your phone, throw your tablet out of the window, and HOPE that your internet falls offline so you can’t trade. Oh and call yourself Mr. Retail, and Mr. 95% for a few days to let it sink in how NOT ready you are to trade alongside the big boys.
It turns out my friend didn’t make a decision either. So there he sits, in a bad relationship, a mountain of debt, and with a cloud of depression hanging over him. All because he did not want to admit his mistakes, and decide to cut his losses, clear his mind, and start looking for the next market opportunity, on the road to recovery.
On occasion, the market does give you a second chance. Life? Not so often.
Oh, and my friend and his ‘loving’ wife now have a baby on the way. So much for cutting your losses. It seems he now has no choice but to go down with the ship like any self-respecting Captain.
Me? I would MUCH rather be a Sailor… getting away on the last life raft. Dignified? Maybe not. Honorable? Not too sure. Smart? You better believe it…
Sometime ago, when I started writing this blog, I had to make a pledge that I will not involve politics, nor any of my political views. Being a political scientist in my original vocation, I must admit, that has been hard for me, but I kept my word.
But the past couple of months, or better said a year and so , it has been extremely hard to distinguish where life ends and politics begins.
Everything just seemed to melt together, politics, pandemic, economics, fundamentals, and we got what they say the NEW NORMAL, which is everything but NORMAL.
Now, I’m not one of those conspiracy theorists, and I will surely not write 500 words here blabbering about aliens, 5G and Deep State, but let’s pull the break, for staying sane sake, please.
I went out few days ago to do errands… Sun shining, birds singing from the trees, the grass freshly cut…And I sneezed! A nice, deep and very sincere SNEEZE.
A woman, that was literally at minimum 5 m distance on the other side of the street, a neighbor that I have known for years, pierced me with her eyes, start mumbling something while she was wrapping herself with a huge scarf, though she was already wearing a mask, gloves , a shield, and who knows what not. I’m not saying that being my neighbor she should have known that I’m allergic to cut grass, but she didn’t even try to listen my humble justification, full with unnecessary guilt, as I tried to explain the reason why I sneezed as If I have committed the biggest crime in the century– I’m allergic to grass…
No, she was already wrapped up as a mummy, and a mile away from me … I’m allergic, Fu***ng allergic … I was repeating as I continued walking grateful that no one else was around to stigmatize me for a stupid sneeze, with an inexplicable feeling of shame mixed with embarrassment and guilt, convincing myself that this IS the NEW NORMAL, trying to grasp to my, as I tend to consider always, rational brain, what has happened, I simply gave up. This is the NEW NORMAL, some will get out of it normal and sane, and some won’t.
Let’s do some recap – the Covid Pandemic started in China. The Chinese exchange crashed. Well, here is the news- while the crowds were selling their stocks for pocket money, someone was buying those stocks.
Then, the Covid Pandemic spread around the world. The worlds exchanges crashed. Surprisingly, AGAIN, someone was buying.
While the people cashed out anything possible they owned, in order to buy toilet paper, someone was buying cheap stocks, features, CFDs, and is already much, much richer.
No, I haven’t forgotten that this is a FX blog. The FX industry did not remain aside from the New Normal.
FX Traders, Investors, at least some of you, pulled out their assets around the globe, frightened by uncertainty of what might happen, and still are. Did the FX Market cease or stale at minimum? No, it surely didn’t.
Did we witness outstanding volatility? Oh, yes, we did.
Did traders and managers used that volatility to make unbelieving profits? Yes, they did.
And I thank God I witnessed that, as THAT will be the amazing story to tell to my grandchildren, not the story about the lady wrapping up with her scarf.
Forex has never been normal, my friend. Every day at Forex is a new NEW NORMAL , and that has been the reason why I , and most probably the majority of you out there, fell in love with it.
In few months, a year, in few years, the world will be back in normal, I will be able to sneeze freely at the street, or maybe not, maybe nothing will be normal anymore. Maybe the NEW NORMAL is here to stay for good. I don’t know, I’m out of politics very long time.
Many businesses will pay the price; many people will lose their jobs. But also, many people will come out richer, because the adage “BUY fear, SELL greed” is as old as the money. While someone is freaked out by fear, wrapping them up with a “Scarf” in case the world ends tomorrow, someone is buying and investing.
They will come out of this insanity much richer. They, and the toilet paper factories, of coarse. You decide for your self on which side of the street you want to be.
I plan things down to the smallest detail. Even before smartphones and Google calendars, I had my day planned down to the second, back in the day my Franklin Planner was so full of notations you needed a Ph.D. just to figure out where my next appointment was. I just like to plan ahead; it’s one of my quirks.
Have you ever missed a plane? A train? A bus? You know that feeling that rushes over you when you realize your entire day has been ruined? I don’t… I’m ALWAYS perfectly organized. So naturally, when my better half and I were thinking about planning a dream weekend getaway, I took it upon myself to make sure it was nothing less than ‘Perfectly Planned.’ After all, NO one likes to wait, but for me, I ABHORE waiting. And when I plan anything I do so with the express intent of not having to wait… ever.
So the weekend of the ‘expertly planned’ trip arrived, and I was eager to show off my AWESOME time-saving skills, the same skills I had been bragging about for years. The problem is, while I and my skills were clearing well-defined and near perfect, someone forgot to inform the pilots, as they decided to take off 15 minutes late. On top of that, the memo of my sheer awesomeness had also not made it to the customs agents at our destination, who had us waiting over an hour, clearly against my perfectly planned itinerary.
Needless to say, I was not a happy camper. It was everyone’s fault BUT my own… obviously. I had planned everything out with the exactness of a skilled neurosurgeon. And these morons just couldn’t keep up.
The story continues as you have probably guessed; we got to our connecting flight late, went to the bus station, but all the buses already departed, went to the train station, but the staff had already gone home for the night. So here we are stranded at ten in the evening with the next available mode of transportation not available until eight the next morning.
I was still determined to stay the course. I decided to hike it over the closest hotel, get a room, and regroup. I ended up spending a small fortune on a ‘room,’ and when I say room I mean so only in the strictest academic sense of the word, as it had four walls, a floor, and a ceiling, but in reality, it could best be described as a hovel. As I lay on the ‘bed’ staring at the ‘ceiling’ trying to count the number of brown stains that were staring back at me… it finally hit me:
The only person to blame here is me. Not the pilots, not the train engineers, or the customs officials, or bus drivers… just me. I simply couldn’t wait. Patience is a virtue, and unfortunately not having it is a problem. For the first time in my life, I understood the power of waiting.
Jesse Livermore said: “After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made big money for me. It was always my sitting. Got that? My sitting tight!”
You have probably read that quote, I know I did, millions of times, and thought, yeah, you got that right … But did I apply that knowledge to my own life? Of course not. Why would I do that?
The next morning at the bus station, when I made my way to the information desk to ask about the day’s schedules, I was greeted by a ‘Take a Number’ sign. No problem I thought, I like order, order is a great thing. So I pulled a number, glanced down, saw it was 1622. Not a bad number. I was calm. I then turned my glance to the small screen showing the current number that was being attended. 945. So I need to wait until it snows in the desert to ask a simple question. Nice. Before the thought even fully entered my mind I was halfway out the door. Fortunately, my better half pulled me back to my seat and calmed me down. Within a few minutes, we are at the front of the line and on our way.
The moral of the story? The next time you feel the NEED to get into the market NOW, as your trigger finger sits hell bent on clicking on something, ANYTHING, just remember that famous quote from our friend Mr. Livermore. It may just save you from yourself.
‘Oh man, one of THOSE guys…’
You know the type, Mr. I Know Everything About Anything and My Goal in Life is to Make sure you Know that I know… Everyone knows one these ‘charmers,’ and unfortunately, I ran into one of them the other day on an unannounced visit to my brother’s house.
As soon I walked through the door I happened to catch the end of one of, what may be, the creme de la creme of all nonsense statements, “… Money is NOT a Problem.” Apart from thinking to myself, ‘MAN, I should have called first,’ my immediate reaction to this was a mix of jealousy, respect, sheer awe, and a shit ton of sarcasm. I mean, how nice right? With 99.9% of the world suffering from what is directly or indirectly a ‘Money Problem,’ this genius (did I mention anything about the sarcasm?) has somehow figured out the solution to this age-old enigma. And more awesome yet he is willing to freely share it with anyone who will listen, or pretend to listen, which is what most people do in these situations.
… I, however, am not MOST people. So without even a hint of hesitation, I attempt to mask the OVERWHELMING condescending tone of my voice, and ask, ‘REALLY? Is money NOT a Problem for you? How exactly is that?’
I had no idea what to expect when I asked the question… well I expected a free flowing tide of bullshit, but I mean regarding the specifics of his idea… I was clueless, but I must say, that even I was a bit inspired by the outright ridiculousness of his answer…
I am not going to quote him verbatim here, as let’s just say his vernacular is… well… his own, but here is my feeble attempt at capturing this ‘gem.’ He essentially tells me that he just purchased a ‘professional’ metal detector, and he was planning an ‘expedition’ to search for gold that was buried during WWII and as far back as the Ottoman Empire. He went on to claim there was tons of it, worth hundreds of millions of Euros, all just sitting there, waiting for him and his ‘professional’ metal detector to come along and unearth it.
Well, golly, how stupid have I been? Me and every other person on the planet who have been working toward a better future, putting in long hours, day after day, year after year, trying to reach our goals… when all I, when all we needed, was a 1500 Euro metal detector and a weekend touring the European countryside.
Sounds utterly and absolutely moronic, does it not? A shew in for the Darwin Award for Stupidity… Though it does remind me of something… You have seen the ads; “100% win rate, GUARANTEED, Trade like the Pros, Set it and Forget it, all this, all your dreams coming true, for just $99.99.”
Like our friend and his ‘professional’ metal detector, anyone who believes someone has spent the time and money to concur the forex market only to sell you his creation for some ‘pocket change,’ is, well… naive and looking to be fleeced.
In the real world, if it quacks like a duck and walks like a duck, it’s probably a duck, however when it comes to forex even smart people can fall prey to morons. If I came to your door and tried to sell you a stick in a box, telling you it will do all your household chores without you lifting a finger, all for $99.99. Would you bite? Nope, you would slam your door in my face before I even was able to show you my crooked smile…
And thank heavens it’s not that easy… if it was, life as we know it would cease to exist. Why would anyone do anything else? There would be no butchers, no bakers, no candlestick makers… and most definitely no farmers. It would be like being the richest man on the moon. Not much to do up there, but at least you have a vast amount of pips. You know so that you can make pip dumplings, pip casserole, pips in a blanket, pip soup, pip steak, pips on the barbie…..
So, like most days, I find myself here, staring at price grids waiting anxiously for a trigger to get into the market, and from some distant place, I faintly hear someone saying… no, yelling… ‘It’s GREEN moron.’ I suddenly come to the realization that I am not sitting at my desk, looking at a sea of charts and indicators, but standing on the sidewalk, staring down at the crosswalk huddled amidst the mid-morning rush hour… simply waiting for the light to turn.
What’s the name of this blog series? Oh yeah, OBSESSED. I think it fits nicely.
Seriously, you absolutely KNOW you need help when EVERY mundane aspect of your day literally BECOMES ‘forex’ed’. I am so far gone I even hear a repeating jingle in my head, reminiscent of the old tootsie roll song;
“Whatever it is I think I see… becomes a forex indy to me”
Certifiable… I know… However, once that ‘Forex Switch’ gets turned on, it’s hard to turn off. Mostly, on the face of it, life seems quite structured compared to FX. There are rules, and if you follow them, for the most part, it’s pretty easy sailing. If you’re crossing the street, you press a button, wait for a signal, and trot across those zebra lines without even a second thought. Heck, most people are so busy updating their status, so the rest of the world knows they are crossing the street, that they don’t even look up to see if it truly is clear to pass. BUT… they still make it across.
The question then becomes WHY is it we cannot apply these same ideas to the market to make it as easy to be a profitable trader as it is to cross the street? I mean ‘smart’ guys have already invented a ton of ‘signals,’ everything from indicators to Japanese Candles to recognizable chart patterns, so what is the problem? Is it me, it is us? What then?
Here I remain, glaring intently at the street light, glancing back at the street, anxiously awaiting it to turn… KNOWING it is going to turn… looking again at the light… noticing there is no traffic in sight. I guess I can just go NOW, right? I mean, after all, I KNOW it is going to turn, and I can’t see any cars coming.
The old, ‘the market is going to turn at any moment, I am SURE of it, so no need to wait for the actual trigger. I KNOW I am right, and it is EVIDENT the market will agree with me…. any minute now.
Okay, yeah, got it, don’t break the rules, stick to plan, etc. understood. How come then, even when I play by the rules, following them to a ‘t’, the trade I take, the trade I waited ALL day to take, the one that had me stressing out for HOURS, STILL doesn’t turn out as expected.
This my friends is an important lesson… The market does what the market wants to do, it has no boss, and there is no market police force to give it a ticket when it decides to jaywalk right over your cute little trading plan.
The point to this story? I have never in my life heard of a person being hit by a street light while crossing a street. Even when it’s green, make sure you ALWAYS mind the cars and not the streetlights.
A friend of mine, well in all actuality, a friend of a friend of mine, recently got married, had a baby and quickly picked up the habit of going around and continuously professing his unbridled love for his wife. And that is, well, great. Something that all couples dream of…
Except for the fact that he is walking with his eyes closed.
His “lovely bride,” almost from day one, showed a complete lack of interest in him and gave more respect to the garbage man than she gave her doting husband. She also seemed to be spending A LOT of time with her husband’s cousin…
Well, he is family, right? At least that’s the lame excuse that her husband would tell all his friends or anyone else that brought it up (it was THAT obvious).
Soon the wife and the cousin started going out together, you know, for ‘coffee’ or ‘a chance meeting as I was out running errands,’ … and both of them were coming home later and later… anything for family… right???
After a few months of textbook denial, the husband finally caught them in the act. Literally.
Does this wife jump up and apologize and promise him that she only loves him and that this ‘meaningless’ fling with his cousin is said and done? Nope. She just packs her bags and leaves, just like that, leaving her soon to be ex-husband and her newborn baby to fend for themselves.
Okay, so it’s just another sordid adultery laden story, one that unfortunately happens quite often in this crazy world we live in, so what?
The ‘what’ here is what our scorn and betrayed protagonist does next…
There he is, crying for this ‘lovely lady,’ hoping that she will return. I mean he even baked her a cake and called her to come over on her birthday, gosh…
And how does this relate to forex you ask? In this industry you need to know how to win… but you also need to know how to lose…
We make a trade, and we go all in… but as we are singing the praises of our near perfect entry, the trade starts to go against us, showing us that it has no respect what-so-ever for our ‘system.’ And just like that; we fail to be objective, and instead we close our eyes and believe that just because we want this trade to win, it will, and we reject all signals of the market that show us just how wrong we truly are.
Then, so to add insult to injury, Kuroda, or May, or Trump (or whoever happens to be the lying and cheating ‘woman’) starts talking, flirting a bit the commodity markets… but it’s no big deal because our trade is the right one.
Here comes phase two, justification; we look for ANY reason to justify the fact that our trade is the right long term choice, but just a ‘tad underwater.’ The next thing we know is we are deep in the red, and… as you guessed it, instead of accepting the loss, most traders double-down, which leads us to phase three…. DENIAL, and it’s the most fatal of the three phases. We refuse to accept the loss; ‘it was a good trade, it IS a good trade,’ and ‘I totally believe that I’m right’…
Try telling that to the market that is wiping out your account, apparently, it doesn’t know…
But ‘she’ will come back, right??? What am I saying, of COARSE ‘she’ will… time to bake that cake.