photo credit: Joe Shlabotnik

Most of life is routine – dull and grubby, but routine is the momentum that keeps a man going. If you wait for inspiration you’ll be standing on the corner after the parade is a mile down the street.

— Ben Nicholas

In my unending quest to become a great trader (and a darn good looking one, too*), one of the maxims I have learned is that “the trend is your friend” – until it isn’t.  What that means is that when the market, or a particular stock, is moving in a consistent direction, you want to be trading that stock in the direction it is moving.  The key is to figure out when it changes direction.

* When I attended an investing class last year, the instructor would have us start the morning by repeating the affirmation: I am a great trader. I am a great trader. I am a great trader – and a darn good looking one too. My friend Teri and I added for our dogs: I am a pack leader. I am a pack leader. I am a pack leader and a darn good looking one too.

You might think that deciding when a stock has changed direction would be self-evident, but trust me, it’s not – at least not to the inexperienced investor.  The reason that it’s hard to be sure whether a stock has changed direction in the short term is described by another truism – “Nothing goes straight up (or down).”  There are fluctuations which can be price variations or THE BEGINNING OF A NEW TREND!  This is what makes newbies, like me, CRAZY.

Momentum

The reason that working with the trend is helpful is that over time trends build momentum.  And here is where our lives are like the stock market: over time our moods build momentum.  The longer we are feeling gray, the more gray we tend to feel and the darker our mood may become.

In the stock market, lots of what goes on is pure emotion based on the latest rumors or “analysis” being talked about in the Wall Street Journal or on CNBC.  Rumors are like noses, everyone has one.  The better things are going, the more reasons traders find to believe that the economy will continue to grow forever.  The worse things are going, the more reasons traders find that the economy is not doing well.  Crashes are nothing more than people talking themselves into believing that everything is awful, and then traders reacting to the sentiment and selling everything like it’s a going out of business sale.  The “crash” continues until enough people start talking about how “this is just so overdone” and the selling slows and buying begins again.

Our moods are very similar.  To intentionally repeat myself – crashes are nothing more than people talking themselves into believing that everything is awful.  Instead of reading the WSJ or listening to CNBC, we’re listening to our very own personal commentator weighing forth on our lives and why it is we’re still:

• Struggling
• Fat
• Depressed
• Alone
• Unemployed

We’ve gotten so used to listening to other voices that we probably pay way too much attention to our own internal commentator.  Add to that some of the external voices who tell us that we’re “wrong” in one way or another, and we’ve built our own personal momentum to the downside.  As it continues, we get on a roll and instead of irrational exuberance, we experience irrational depression.

It’s Not the Momentum, it’s the Direction

Momentum can be defined as the “strength or force gained by motion or through the development of events.”  The thing is, having momentum is good if things are going well and not so good if things are going poorly. Just as a body at rest tends to stay at rest unless acted upon by an outside force, a body moving in a particular direction will tend to continue in that direction unless acted upon by an outside force.

What all this means is that if you don’t like the direction of your life, change it!  If you can’t figure out how to do it alone, find other people who are looking to make similar changes.  The very act of deciding to change direction slows movement in the direction you’re currently moving and allows you to steer towards your new direction.

Within the speaking/training community, the example often used (overused, if I may be so frank – but it does make the point) is of a jet liner flying from point A to point B.  The only way the plane actually arrives at the destination instead of arriving at point C is that all during the flight, the navigational system adjusts the route to keep it on track.

You can use the same trick to get yourself back on course.  If you’ve been letting things get you down and now you feel as if you’re in a slide, change a small thing.  For me, one of my frustrations is my fitness level and my weight.  I’m a fairly active person and yet I still weight the same I have for the last year or so.  (I suppose the good news is that I don’t weight more.)  So, my little thing to get back on course is to get on the elliptical for at least five minutes 4-5 days/week.

As you already know because I’ve written about it many times, I walk every day for my Wonder Dog.  Unfortunately, while that seems to keep me from getting fatter, it doesn’t really help with get me fitter.  Getting on the elliptical builds my leg muscles and – at least in theory – increases my fitness.  It ain’t Everest, but it’s better than before.

As “They” Say – Just Do It!

So, pick something.  Make a move towards a better life.  Choose something you want, don’t just avoid what you don’t want.  Work towards what you want and, bit-by-bit, you’ll see that your direction is shifting and your momentum is building – to the upside.