Traders often suffer from "Grass Is Always Greener
Syndrome."
Jack Schwager interviewed dozens of the world’s most successful traders for
his famous
Market Wizards series of books. In
The New Market Wizards, Schwager summed up
THE critical element that separates good traders from bad traders:
“When asked to explain what was important to success, the market wizards
never talked about indicators or techniques, but rather such things as
discipline, emotional control, patience, and mental attitude toward losing. The
message is clear: the key to winning in the markets is internal, not
external.”
Few successful traders would argue with Schwager’s point.
Those who have survived the trading wars year after year will tell you how
important the emotional elements are. They’ll tell you how hard it is to
persevere during a brutal drawdown, how they learned the importance of staying
humble during a winning streak, how the real money is made by having the
discipline to wait for just the right moment, etc.
Even beginning traders learn quickly how brutal the emotional side of trading
really is.
Not surprisingly, the demand for help with these internal factors has created
a large industry of books and services focused on helping traders master their
emotions.
These books and services have benefited many traders, myself included.
But through the years, I’ve found one common and devastating psychological
issue consistently ignored. It’s what I call the “GIAG Syndrome.” That is,
“the Grass Is Always Greener Syndrome.”
This GIAG Syndrome is actually an “effect” of all the internal “causes”
traders struggle with. It’s a
RESULT of worry, stress, fear, lack of
discipline, and anxiousness.
It works like this. A trader hits a losing streak, suffers a drawdown, or
just gets plain bored with his recent trading. So, he goes searching for an
answer to his “problem.” This answer, the trader believes, lies in finding a
new system, guru, or overall trading philosophy.
Instead of trying to solve the internal issues that are creating this urge,
the trader erroneously thinks that the problem is the system. The day trader
becomes a swing trader, the technical trader becomes a value trader, the stock
trader becomes a Forex trader, and so on. Whatever the trader was doing before
is no longer working and the new system or guru that has caught his attention
would be a much better fit, so he thinks.
This is a losing battle because the trader is trying to solve an internal
problem with an external solution.
Ironically, a lot of the well-intentioned books and services that aim to help
traders with their internal game actually end up
ENCOURAGING the trader
to go down this “grass is always greener” external path. They tell traders to
go out searching for the system that is just right for them. They tell traders,
“There’s one strategy out there that you are meant to trade and once you find
this perfect fit, you’ll be effortlessly in-sync with your internal bliss.”
Unfortunately, this causes traders to embark on a never-ending search for the
system that fits just right; their own little “Holy Grail” of trading. And
thanks to all the financial news and aggressive Wall Street marketing, there
will always be an endless supply of trading systems with greener-looking grass
just around the corner.
But isn’t there some validity to this advice? Isn’t it extremely important
for the trader to find the right system that fits their lifestyle and their
personality?
Absolutely. But chances are, you’ve already found it.
Sure, you don’t want to blindly jump into some unproven and over-hyped
trading strategy that you stumbled upon when surfing the Internet or browsing a
magazine. A little common sense and a lot of thorough research is a must before
committing yourself to a trading system.
However, if you’ve been seriously following the markets for any longer than a
year or so, chances are high that you’ve looked into a few different strategies
and found the one you’re most comfortable with. At the very least, you’ve found
the overall trading
philosophy that is most appealing to you.
You won’t hear many “gurus” tell you what I’m telling you, which is to stop
trying new systems.
The reason you don’t hear this is obvious. Like many other traders, I offer
a newsletter that adheres to a specific system (the “
Darvas System,” in my case). If you’ve stumbled onto this
article, you may in fact be open to trying a new trading system. Yet, here I am
telling you that trying a new system – even if it’s
MY system – is
highly unlikely to solve the trading problems you’re dealing with!
Regardless of this fact, I think it’s hugely important to acknowledge this
problem among traders.
To sum it up:
If you’re not getting the trading results you want, the
system you’re already trading is more than likely NOT the problem. The problem
is much more likely to be internal, which can’t be solved by changing your
external strategy.
Sure, you want to be certain you’re trading a strategy that has been proven
to work and not something being sold right next to the snake oil ads. But once
you’ve found a strategy you like and you know it works, stick with it.
Don’t blame the system when you should be blaming yourself.
