Embracing the Chaos


Date: 9/1/2022
Author: Chris Hood



I know many retail traders have just given up on the market.

They’ve placed trades, taken losses, and decided that trading is too difficult for them.

Or worse, they’ve sized a few losing positions too large and have wiped out their accounts.

I understand these sentiments because I’ve gone through these trials as well. Let’s just say that during my 20+ years as a trader, the market saw some severe troubles.

I’ve come close to quitting on more than one occasion.

The Dot Com bubble pop in the late 1990s and the 2008 subprime lending crisis are just a couple of times that stand out.

Markets like the one we’re in now aren’t easy to trade…but they provide the best education in trading you can get.

Adversity has always been the best instructor.

It’s a bit of perennial wisdom that even ancient Greeks such as Thucydides knew well:

We should remember that one man is much the same as another, and that he is best who is trained in the severest school.

In consistently bullish markets, such as we saw before and after the Coronavirus crash, it’s easy to make money.

However, it also breeds laziness and complacency in trading.

When money comes easily, despite using poor set-ups and inconsistent rule-following. It may make you feel good to see a massive bump in your P/L, but you’ll build bad habits in the long term.

As we’ve seen since January, sloppy trading means you can easily give it all back with interest.

MAKING money isn’t difficult; KEEPING it is the hard part.

I’ve been beaten up by the market many times, so I maintain a calm but defensive attitude year in and year out.

The moment you assume the market is your friend, it can stab you in the back.

Let’s examine two key lessons that our current market is teaching.

First is patience.

Waiting for the appropriate signals to enter and exit positions often takes some time. So it’s much better to sit on your hands and look for a strong set-up than try to force trades that aren’t there.

Regardless of what others say, only trade when the conditions are right for you.

When you’re in a hurry to make money, it leads to poor decisions. Never forget the old saying, “Slow is smooth, and smooth is fast.”

The second lesson is perseverance.

Complex markets, such as the current choppy bearish decline, mean you’re more likely to weather a storm of losses.

It’s as if the market is laughing at you, yelling that you should just give up.

If you listen to it, that’s the end of the road for you, and you’ll never learn to be consistently profitable – just another washout.

But if you stick through the hard times, you’ll be amazed at how much profit you can make when the conditions are more hospitable.

So consider it a gift that the market is difficult.

The skills you’re learning now will stay with you for a lifetime. You’ll gain experience that can’t be learned from any book or video.

It’s my mission to help you get there.

Chris Hood

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