Over the Edge

I had long held the belief that once my psychological issues were resolved, I would finally become a consistently profitable trader. Instead, it was actually realizing just how wrong that belief was that pushed me through to the other side.

For years, I focused my attention on figuring out the "inner game" of trading. On the surface, I seemed capable of generating sizable returns over a short period of time -- figuring out the markets themselves didn't seem to be the issue at hand. The problem was the sharp collapse which would inevitably follow each parabolic rise; a chart of my account equity over this period in time would closely resemble a series of market "bubbles" strung together. This boom and bust happened with such regularity that I convinced myself the problem was somehow psychological in nature. There were a number of theories which sounded appealing at the time: subconscious sabotoge, fear of success, repressed traumas, the list goes on. I grappled with the hidden source of my angst for months on end, trying to decipher how a childhood humiliation could lead to me constantly pulling my stops at the last second or committing maximum buying power to the aussie right before an employment report. Was there really some connection there that could provide the answer? I searched to no avail.

Fast foward to my previous post, where things suddenly seemed to fall into place from out of nowhere. What was different this time around? Did the accumulation of all my past self-analyses finally breakthrough without my knowing it? I thought long and hard over this mysterious turning point, and when I finally hit upon the answer, that became the true "gestalt moment" for me. It all starts with the edge. I had the whole thing backwards all along. The moment I was capable of defining my edge was the moment I realized I'd been trading without one for so long, and that lack of edge was the real source of nearly all those mental issues that plagued me. With the clarity of that realization, a vision of progress crystallized hard and clear, and confidence returned anew. I think this subject is worth a few more entries, so bear with me if the posts seem to flow like molasses -- my muse be a fickle one.