Today's Quote: “While we are free to choose our actions, we are not free to choose the consequences of our actions.” Stephen Covey

There are several good books out there about trading that should be on every trader’s must read list. If you were forced to choose one and only one, the only possible pick would be “Tools and Tactics for the Master Day Trader”. We are going to run a series of excerpts from the best selling book for the next series of lessons. Now in the words of the master trader himself, Oliver L. Velez…

YOU MUST BECOME INHUMAN TO TRADE SUCCESSFULLY…

After very profitable winning streaks, there is a natural tendency for traders to become complacent, to get lulled to sleep by an accommodating market. As individuals who do battle in the markets everyday, we have learned that comfort is the archenemy of the trader. Why? Because proper trading is one of the most unnatural activities an individual can undertake. If something is psychologically pleasing, in most cases it is wrong! On the other hand, if a particular strategy or approach is psychologically and emotionally difficult to pull off, the odds of it being right are very great. This is why the feeling of complacency or contentedness is usually a sign that you are doing something wrong. The right thing to do is not always the easy thing to do, and that which is wrong is often accompanied by an enticing sense of ease. Needless to say, it is this paradox that makes the art of trading so difficult to master. Unfortunately for us, it is the one great disadvantage of being human, of having human emotions. However, for the enduring trader, this condition, this war between what is right and what is easy, does not remain in place forever. Through vigilance and the constant effort to do what is right in the face of what is wrong and easy, traders will find themselves slowly becoming inhuman. Myriad experiences of pain and joy, triumph and failure, will begin to train their internal systems to feel as if they are in reverse. Through experience, new neurological paths will be established, which will set up new thought processes, new responses, and new feelings. After making decent progress, what is right will also start to feel right. Once this transformation has occurred, the wrong action, even the wrong thoughts, will send a message of pain and discomfort to the central nervous system, acting as an automatic internal alarm system. In other words, traders, through a process of continual growth, begin to change their entire network of psychological and emotional responses. Ever so slowly, they move from being Pavlovian models who salivate at the tinkering of a bell to conscious thinking individuals who find that the easy thing to do is also the right thing to do. In short, traders who have reached a certain level of achievement reverse the natural process to become almost inhuman.