Part of courage is simple consistency.

— Peggy Noonan

Today is a HUGE success – well, for me anyway.  I closed out three trades today, leaving me with an 83% success rate (5 out of 6 trades profitable) and a return of 35% over six weeks of trading.

It may not seem like much, but to me it is a confirmation that I am learning from my mistakes and making better trading decisions.  I’m not making money hand over fist but that’s largely because I’m not risking great sums of money.

When I first started out, the market was relatively “stable” – meaning you didn’t get huge swings on a daily basis.  Now, because people are more fearful, the hint of a whiff of bad news can make the market roll over and drop a couple of hundred points in 15-30 minutes.  It can just as easily reverse itself and run up on the hint of a whiff of good news.  Part of learning to trade stocks successfully is not just learning the “rules” — it is learning emotional self-control (and developing a cast iron stomach).  So I’ve started by trading small amounts of money to desensitize myself to these swings (especially the swings that significantly decrease my account value).  By trading small I seem to have developed enough trading discipline to make my behavior repeatable.  In other words, I have changed.

Key to Success

It seems that the key to success in trading (and probably in many other areas of life) is to develop a process and use it CONSISTENTLY.  Although your goal over time is to create a process that works, the only way to know if your process is working is to use it CONSISTENTLY.  By repeating the steps each time, you can evaluate the results over time, and by knowing why you are taking certain actions you can evaluate whether your reasoning is sound.

For example, if you do your own or your family’s laundry, you have a way that you prefer to have it done.  You sort clothes into appropriate piles, wash the piles with the correct soap plus whatever, you move some clothes into the dryer for a period of time and you hang up the clothes that don’t go into the dryer.  Eventually, you hang up the clothes from the dryer also.  Some people actually iron their clothes.  I do too, about once/year if there’s no way to avoid it.  You probably learned this process from one of your parents and your kids will probably repeat a version of your process when they move out on their own. (God willing!)

With a defined process, you can diagnose and fix laundry problems.  Really wrinkled clothes, someone probably didn’t get them out of the dryer promptly.  Whites made pink, someone washed a red item with the whites (and they’ll never be the same again).

Bo-o-ring

Consistency – it seems so boring.  Yet, it is the cure for much of what ails us.  Always put the car keys in the same spot and you miss the fun and excitement of running around the house at the last minute looking for your keys.  Consistently separate the colors from the whites and you can pretty much count on getting whites out of the washer after the wash cycle if that’s what you put in.  Bo-o-ring!

But boring has its place.  We aren’t designed to constantly have to pay attention to everything that we do.  Over time, we learn how to do some things with a minimum of attention.  After all, how much attention do you really have to pay to sorting the laundry, or cooking something you’ve made a million times before?  Not much – thank heavens because we’d soon be exhausted if we had to treat repeatable tasks as if we were learning them for the first time.  We’d have no bandwidth for adding anything new.

Emotional Consistency

As I wrote earlier, part of learning to trade stocks successfully is learning emotional self-control.  The same is true of coping successfully while raising children, working with difficult people and just driving around on our crazy freeways.  When we establish consistent processes for keeping ourselves under emotional control, we make space for positive results.

I have a friend who every once in a while falls into a funk.  Since we spend a lot of time together, I can easily follow him into the pit.  But recently, I figured out a way to avoid the pit – by deliberately doing something I enjoy when I feel myself tumbling down.  For me, it usually means going to a local book store and browsing for new stuff to read.  Grab a stack of books from the shelves, get a café table, buy a cup of coffee and browse, browse, browse.  Once I have a new list of “must gets” then I’m ready to go back to work.  Although I had never done this before, I realized pretty quickly that it helped me get back to a neutral state of mind or maybe even a positive feeling.  Then, the next time I encounter the funk, I’m starting from a better place and I can respond more intelligently.

This Just In…

We just had another earthquake, the first one since Easter.  It was a JOLT!  (To me jolts are worse because it’s a little like sitting at a stoplight and getting hit when you don’t expect it.  For those of you who don’t know, the alternative is the rolling quake which often can be mistaken for vertigo.)  The adrenaline that shot into my system had me up and out of my chair FAST.  The earthquake didn’t last very long but the adrenaline did.  And so, it was up to me to calm down so that I could get back to writing this post.  Another opportunity to practice emotional control.

As I Was Saying…

How do you establish consistent emotional control?  Develop a few “tricks” for moving from the uncomfortable feeling to a better feeling and then CHOOSE to use them, consistently.  Getting out of the house and over to the book store wasn’t what I wanted to do.  I wanted to stay home and wallow, but I decided to try it – and it worked so well it’s now a permanent part of my repertoire (at least until AMAZON puts all the mortar and bricks bookstores out of business).

The next time you’re feeling “out of sorts” – afraid, angry, hurt, depressed… try one of these approaches:

• Deep breathing
• Go for a walk
• Have a good cry
• Read some “beach reading”
• Sing a song
• Go for a drive
• Scream while you’re driving with the windows closed (stop when you get out of the car)
• Remind yourself, “This isn’t helping.”  (Often as I’m swearing while searching for my car keys YET AGAIN, a little voice will say, “If you’d calm down, you’d find them more easily.”  Usually I just tell the little voice to get stuffed.)
• Write it down, then burn it or shred it or…
• Watch a distracting TV show

We all have things we try sometimes.  Often, we don’t use them because we think we “can’t afford” the time or the money.  Maybe…  but maybe the quickest way to feeling better is through one of these “tricks” which gets you from bad to less bad and maybe to good.

Often, when we’re feeling bad, one of the unexpressed fears we’re having is that we won’t be able to stop the bad feeling – sort of like how when you’re grieving you can be afraid that if you start crying, you won’t be able to stop.  If we have several tricks that we use consistently to change our feeling state, then we learn that WE are in control, not our emotions… and then we can trust that we’ll be OK.

Foolish consistency may be the hobgoblin of small minds, but smart consistency may be the path to a better you.