Module 12 Innerworth — Mind over markets

Chapter 230

Creative, Winning Trading Plans

There are times when your success depends on thinking outside the box. In a strong bull market, where the masses are ready to invest, it’s easy to ride the wave and take advantage of the trend. But when the average investor stays out of the markets, a little more skill and ingenuity is needed. It is vital that you think creatively, and that means putting in extra effort and going with your gut and intuition.

Trading isn’t exactly rocket science. It isn’t like figuring out how to fly to the moon or a way to orbit Mars. You don’t need to be a mathematical genius to be a brilliant trader. Indeed, you’re probably better off if you don’t make it all so complicated. It may be counterintuitive, but when trading in the short-term, it’s better to look at trading in simple terms. Complex linear regression equations don’t seem to work. If they did, scientists and mathematicians would be making millions trading the markets. They aren’t. A winning trading strategy requires that you look at a variety of possibilities, consider each one, and in the end, make an educated guess as to what is likely to happen.

You can’t expect the kind of certainty a rocket scientist expects and trusts. It doesn’t exist in the markets. There are too many unknown and immeasurable factors to consider. In addition, it’s impossible to know which factors will come into play at a particular moment in time and account for all of them. For example, world events are difficult to anticipate with any kind of certainty. No one has a crystal ball. In addition, market action is ultimately the result of people making decisions, and when the discretion of people are involved, it’s impossible to anticipate precisely what will happen, especially during those times when the masses don’t hold a strong prevailing opinion about the markets.

Trading is not easy money. You must be innovative and creative. The creative trader is the winning trader. The more you know about your creative processes, the better you’ll be at trusting your intuitions.  The first prerequisite for developing a creative idea, ironically, is to avoid trying to be creative. If you push yourself, you won’t be relaxed. Creative ideas are most likely to surface when you are calm and allow your thoughts to flow freely. It’s much like being in a meditative state, where you are thinking about the markets, but not forcing yourself to come up with a brilliant idea. A second prerequisite is to have a great deal of information to sift through. For example, if you are planning to trade a particular company, it’s vital that you read about the company and other companies in that industry sector.

Again, don’t force yourself to discover a brilliant idea, just read the information in order to get your creative juices flowing. Study the information. Memorize it. Let it churn over and over. Think about how various factors interact, relate, and may impact each other. Soon, when you least expect it, you’ll develop a few good creative ideas. It may be as you take a shower in the morning or while you are picking up the kids from school in the afternoon. As long as you allow your mind to actively, yet leisurely, consider a variety of issues, you’ll eventually think, “Eureka, I’ve got it.”

That said, you’ll never know if you have a completely foolproof idea. You won’t know until you execute a trade and see what happens. Again, it’s impossible to know if your idea is right. There are just too many factors in the markets that are unknowns. Market participants may not react in ways that one would expect. They may not see what you see, even if you are right.

A market analyst may report news that sways them in ways you didn’t expect. Just because you didn’t anticipate these factors doesn’t mean that you didn’t have a creative idea. It just means that there is uncertainty in trading that no one can fully anticipate. All you can do is keep trying. The search for creative trading ideas is endless, but if you can continue to search, you’ll greatly increase your odds of achieving enduring financial success.

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