Why do I trade?
I suppose the easy response would be for the money. But I don't think that's it. I already have a six figure income as a litigator and I've enjoyed the accolades that have come with success. I'm being consistently named among the top in my field and I've won cases that others (including my opponents) have thought were unwinnable. I've argued motions with millions of dollars at stake. I've won millions for my clients at trial.
The skills I have that set me apart is my ability to implement a winning strategy, anticipate my opponents moves, and have a response. I see the chess board. I know what my opponent's move will be before they do and I've already beaten them. They just do not yet know it. Although this is a blessing, knowing what the result will be 6 months ahead of time makes it difficult to wait patiently and go through the motions. A complex lawsuit may take years to complete. The truth is I often become bored with the litigation process.
So I trade.
I trade because the market presents orderly chaos. It does not lie to me, it has no agenda, or rationalization--it just is. It presents an endless stream of opportunities held in check by unlimited opportunities for ruin. I know the face of my adversaries. In litigation, my advisory is opposing counsel. In trading, its me.
I trade because the market gives me instant feedback. If I'm wrong, I will know it quickly. I own my losses. They were not caused by the "shorts," an analyst's unexpected downgrade, a binary risk, or a Jim Cramer bash. They were caused by me. I alone entered the trade. I alone chose how I defined my win or loss, and I alone chose how I exited the position.
I trade because I recognize that "value" is an illusion. It does not exist. Stocks are not the companies they represent. I buy and sell psychological states. A stock is never overbought or oversold. It is never a "Value" play. Rather, as discussed by Mark Douglas' the Disciplined Trader Value = Comfort. Value traders are betting that a stock trade at level where it becomes psychologically comfortable to buy. Perhaps that's based on company's earnings or whatever the in vogue "valuation" is at the moment. In other words, it is an approach that attempts to find a trend in a fundamental measure that becomes comfortable to buy. Although a fundamental investor will never admit it, they are trading psychology. I readily acknowledge it.
I seek to capitalize on identifying the tipping point where a level that as comfortable to sell suddenly becomes uncomfortable. The short sellers rush to cover the buyers rush in afraid of missing the next big thing. I then sell to the late buyers at a handsome profit.
Most of all, I am trading my own psychological state. I've had some of best trading runs after defeat and my worst losses after huge gains The markets were not overbought or oversold--- my mental state was. I've had epic defeats. I refused to take a loss because I could do no wrong. My worst losses all started out as marginal winners, but I had a vision. The market just didn't yet see it yet, so I held. I held to the point where I gave up those gains. I continued to hold to the next support level and then the one after that. I held till I realized I had a problem and then looked at the mirror and I sold and skies cleared and clarity resumed. I then position sized appropriately, I plan my trades, I honored my stops and my equity curve grew. I just had a 14% run, I reached Nirvana during that run, I saw the trade develop and I executed. I sold losing trades early, and I held my winners.
When I plan my trade, and I execute it properly it feels fucking wonderful.
That is why I trade.
