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August 11, 2012 / redman59

Military and the Markets

As I am sitting here bored on Friday night I decided to look through some YouTube videos.  If you have read my bio you know that I was enlisted in the Marine Corps (2000-20004) and I am still proud to say that to this day.  I loved everything about the Marines, from the disciplined regimen to the friends that I made and the goofy shit that we have done.  If anyone has been in the military regardless of branch I am willing to bet that some of the best memories of your life can be traced back to those times in the military.

Anyway I was bored and was looking through some old videos from recruit training to drill to silent drill and I came across one that will forever be in-bedded to my brain.  It goes back to when you arrive at the depot, Paris Island or San Diego, and when you first meet your drill instructors after your 1-2 week reception.  Anyway you are sitting there as a platoon wondering what is coming next and then these guys come through that look extremely sharp and are not wiling to play any games with you.

From what I remember the introduction to your Drill Instructors for the next 13 weeks has not changed much.   They come through as some of the most disciplined men you have ever seen and continue that stature throughout your time at the recruit depot.  The video below displays a good example of when you receive your Drill Instructors that will will be assigned to you until you graduate as a Marine.  The beginning offers an introduction, but to skip to some yelling fast forward to the 4:00min mark.

So why do I share this video?  I believe a lot of this pertains to traders.  Like these Marines, you have to want to be there.  I personally have found trading to be the hardest challenge to success that I have encountered.  Just when you have encountered multiple losses you have to have that willingness to come back, study failures, and attack.  Trading is purely a mental game in my opinion and you have to find a way to overcome that psychological aspect of taking a loss and studying it and learning.

I always told other people that Marine Corps  boot camp was not so much physically demanding as often portrayed, but it is mentally demanding.  I hated getting dressed while the Drill Instructor is counting down only to find out that someone didn’t make the time limit.  Then we get all undressed and redressed again by the numbers…it was a fucking game.  But then I realized that this was just a test to see if you could keep your head in the game.  Personally it paid as I believed the Marine Corps made me the person that I am today.  I have that mental fortitude to bounce back after a devastation and we as traders need that.  I personally have blown out 3 accounts before becoming consistently profitable, despite some hiccups.  But my advice is to stay in the game, learn from mistakes, and keep going forward despite what is demanded of you.  Never forget your goals or your motivation despite a heavy loss.

***Also if you plan on commenting about the Marines or any branch of service with an aggravated response be advised I don’t play those lure games and your time is wasted as I won’t respond and I believe you to be an idiotic internet troll and nothing else.***

4 Comments

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  1. JR / Aug 12 2012 2:43 pm

    Just what I needed to read — my trading account is razor thin for round number three here and fear has a tendency to creep-in. But there is something about this business that keeps me motivated despite the losses.
    The discipline to face the reality of heavy losses with a somewhat elevated and enlightened state-of-mind is something I find encouraging.
    Your military analogy is bang-on. Mental fortitude has allowed me to assess some very poor moves and acknowledge the perfect results of those moves — it’s nothing personal, it’s simply results of a poorly executed plan.
    But, damn, this is unlike any business on the planet — you certainly get to know yourself stripped of all pretence. It’s a great opportunity to fine-tune some unwanted character traits and prosper at the same time.
    I figure I have one last trade to make — and then it’s off to another path to generate funds to replenish the account. But I’ll be back.

    • redman59 / Aug 12 2012 11:37 pm

      JR, thanks for the comment and sharing your recent tribulations. Studying your recent trades is definitely the thing to do in order to correct problem trades as it may require changing your strategy overall. You are right, it definitely is like no other business and probably one of the reasons that it has the highest failure rate. Trading is so easy to start and get into but you are also going against some of the smartest people on the planet. There’s a reason I failed several times: not having adequate capital, not being organized, not truly understanding risk, etc. But I have corrected some of my problems and I am on that successful path…unfortunately it took several blown accounts.

      But thanks for sharing and keep your drive and motivation and remember why you started trading. I truly believe this is one occupation that if you don’t have the passion then you will likely not be successful because it takes that passion after a loss to come back even stronger. I wish you well in future trades.

  2. Carlo / Aug 13 2012 10:17 am

    I first found your website when Joe (optionshawk) posted your PCLN trade and I was instantly hooked. Based off of your response above I am curious what you did to “truly understand risk”. I believe that is one of my biggest pitfalls in my trading and I want to improve as much as possible.

    • redman59 / Aug 13 2012 11:14 am

      Thanks Carlo for the comment. I have learned a lot from Joe just from observation, he knows his stuff and I could honestly say he provides the best all-around content from research, options flow, etc…a must follow for anyone.

      As for truly understanding risk. When I first started I concentrated most on the profit and my profit potential and didn’t look as much at the loss, psychologically makes sense as no one likes to take a loss. My results really changed when I adjusted two things:

      1) I accepted the fact that I would be wrong more often than first assumed and when going into the trade I would have predetermined exits and look at my downside risk, not so much my upside gain. If my risk was too big on where my stop on the chart was then I bypassed the trade. Example if my stop was -1pt below Fridays low in AAPL (618.70, so 617.70) and I were to trade a single call. If that stop were hit and it represented -5% loss in my account, that is too big and I would skip the trade or wait until we got closer to that low. Example, if it dipped to 619 and now the position would represent a 0.5% loss on your portfolio its a go. Hypothetically you could get stopped 10x now and it would represent the same loss as if you took the trade when it was higher. So you would have to be wrong 10x vs. the 1x. It is then you can be wrong often and still stay in the game. Easy to understand & preached by many but not easy to put into practice accepting those losses.

      2) Became more capitalized. Before I was trying to do too much with too little. Example its been said by some if you can’t trade a 5K account what makes you think you can trade a 30K account. I think its easier to trade a bigger account as you have the chance to be wrong more often as long as you control that risk as stated above. Also for example in that earnings trade in PCLN you could put it on accepting the 100% loss as long as the overall risk (ie, 2% loss on total account, etc.) to your portfolio was not too big.

      Easy concepts to understand really and it really changed for me when I implemented those 2 things. Its hard to accept that you’re wrong but you have to cut those losses and it will keep you in the game. Also understand overall portfolio risk too when taking on a position, much like the AAPL trade example.

      Hope this helped some.

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