I think many traders, on a surface level, understand they need to let go of outcomes in trading, but I think few actually understand it deeply and find a way to actually do it. This article is here to help with that.
What is Letting Go?
Letting go is really about accepting the things that are simply out of our control.
Most things in fact are out of our control when it comes to trading. It's easier to write out a short list of the things we can control:
- •If I've put in the work before this moment to have 1) a Risk Plan, and 2)an actual trading method/process with edge, and understand what I'm looking for to put risk on.
- •If the market right now is offering me one of those defined opportunities.
- •How much risk my plan calls for me to put on - in order to find out if this single trade will be a winner or a loser.
- •How I will manage the trade if it goes against me and stop out, or how I will manage the trade if it goes in my favor.
That's it. That's the list of things we can control. The rest we must must must let go of.
How we get this wrong, naturally
Let's start with what it doesn't look like, since we as natural humans with any trading experiences at all will identify quickly with these:
- •Not letting go is often about a need to know what will happen next.
- •Not letting go looks like tension in your body, and your posture, signaling to you that you are not at ease. Why are you not at ease? Can the market 'hurt you'? The only time the market can 'hurt you' financially is if you aren't trading with solid risk management.
- •You might also not let go because you haven't yet built the right belief systems about markets and trading. Symptoms of this are strong attachment to outcomes, even going as far as connecting your sense of self-worth to those outcomes.
How to get Letting Go correct
Add a belief system and a truth: If you're experiencing these the key belief system to work on instilling is- the markets have a tremendous amount of randomness to them. There is no magic indicator or formula or algorithm inside the machine. Even your very best backtested setups will fail at times where you think it "should" produce a winner due to the strength or confluence of the setup. Doesn't matter. Large participants can show up for any reason at any time and change the dynamic of the market. News can break. Large algorithims can turn on or turn off. We can never really know what will happen next. Believe this to your core.
The truth to pair with this new belief system about randomness is that our job as a trader is not to make money on the next trade, but to simply put the proper amount of risk on where appropriate for the system, and that the edge/alpha/profits we ultimately extract from markets (if your methodology actually has real edge) comes over larger sample size. As Mark Douglas taught us - there is no way of knowing whether the next trade will be one of many winners I'll have over the next 100 trades, or one of the many losses I'll take. So there's an element of letting go that comes naturally with that belief system + truth that let's us sit back in the chair a bit more, it lets us realize that it's actually quite silly and quite counter-productive to staying objective (which by the way is the single key to any form of trading psychoogy - attempting to maintain quality objectivity).
Practical work
As awesome as it would be, we do not change belief systems, even if we entirely nod our heads and admit a truth, with the snap of a finger (or with the reading of this article). It actually takes sustained effort, sustained energy applied to the problem, over time. Like most things in trading and life, right? So what kind of work can you put in to improve your ability to let go?
- •Have some portion of your pre-market preparation (I recommend all pre-market preps have some form of Self_Prep in them) be dedicated to just touching on the belief and the truth. The randomness of markets, and what your job really is as a trader. Just touch on it. Perhaps write down some meaningful (literally write or type it) affirmation of them.
- •Then, during the session, and set a loop timer if you really need help refocusing, take a moment to repeat the affirmation or two throughout the session. Rather than on timed intervals, you could also do it at every certain moment of a trade cycle, such as right after you get in a trade and have your stop set- this is a great time to affirm the belief and the truth for yourself. This gives you quality reps that are a part of putting in the work to re-shape your beliefs and thinking.
- •Touch on how well you did on this type of work as a part of your end of day review process. Not only how well you did the work, but how things are going on the day to day / week to week / month to month progress. If you are doing the work, you should begin to notice a shift in your ability to let go. It will get easier, and become less of a forced conscious thing. That's when you know you are starting to make progress, with the new belief system starting to be a little more energized and active than the old beliefs you naturally showed up to trading with. Don't force the progress, or feel bad if it's not there quickly (it won't be), just observe.
I genuinely hope this helps you.
In closing, note this: Most all traders fail. We know this to be true. We also know that most traders only want to put in the work on the sexy stuff, the fun stuff - the trading, the charting, the analysis or backtesting, etc. Very few are actually willing to put in the type of work on self that we are encouraging here in this article. Few. Be few.