When I was coming up through the ranks and trying to establish myself as an independent trader, I heard a mountain of advice directed to newer traders. Most of it was cataloged away in my mind with a “that sounds logical” footnote, but the problem with getting too much advice when you’re a n00b is that you don’t really have the experience to give it context. 
 
And I would find that all that advice really was correct, if I had stopped to apply it. I suppose some things are better off learned experientially instead of by reading them. 
 
So after all this time, what advice would I want to pass along to others that were coming up through the ranks, as I did? Let me boil it down to the top three: 

1. Markets Are Always Changing - Financial markets will rarely stay in a steady state for very long. Once you identify what’s currently happening and what strategies will work to consistently profit from the current behavior, it’s only a matter of time before the market will change its stripes again and act differently. This is probably the biggest frustration to retail traders out there, since it takes time to learn to adapt and take advantage of the current market character. 
   
2. When Everything’s Going REALLY Well, Beware - This is closely related to number one. When you feel unbeatable, you’re about to be brought back to Earth when the market changes character and the strategy that couldn’t lose, can now barely get out of its own way. Compounding this situation is the fact that you’ve probably gone “all-in” on the working strategy with your capital, and now the losses are quite painful. It takes a lot of discipline and experience to know when to lighten up your asset load when everything’s going really well. Most do the opposite. 
3. Never, Ever Give Up - it’s helpful to have a really clear, strong vision of where you ultimately want to go, otherwise you’ll be tempted to give up along the way when you hit some real roadblocks. And everyone does, on a consistent basis. In fact, the only reason why I’m still doing this after twenty years is because I’ve gotten good at troubleshooting the root cause of any problems, and fixing them, while continuing to move forward. If you lack the vision, if you lack persistence, there are just too many obstacles that can trip you up and send you packing. The good news is that just about anyone can tackle this if you have the determination and drive. As Brett Steenbarger says, “find the rage to master.”
   

Remember, trading is a relatively simple process, but we make it hard on ourselves because we try to rationalize our actions with emotions. The best thing you can to to find this is to choose ONE TRADE and learn to master it. Most of us start by attempting too many things, so we never really find our niche. Believe me, you must learn to specialize in one thing.

I’m sure that I have many more lessons that I’ve yet to encounter, but these are my top three for today! . 

In your corner……..Doc Severson
 
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Recently in our live trading room, I talked about the concept called “The Dip.” When we start out on a new venture, we’re optimistic about how this will change our life going forward, so we put all of ourselves into this new gig. 
 
And that lasts as long as we’re making progress. 
 
The very first moment that we encounter opposition, which in trading could be your first loss on a new strategy…we tend to get discouraged as it triggers off a lifetime of memories where we encountered similar disappointments. The brain says, “Oh no, here we go again.” This is “The Dip.” 
 
As a result, we quit and go back on the hunt for the next “new thing.” And the cycle continues, ultimately leading to future disappointment down the road when THAT new thing fails as well. 
 
Aren’t you tired of it? 
 
If so, perhaps the solution is to stop looking for the shortcut. You actually want the LONGcut. The DIP is where you will forge ahead through your persistence as you begin to learn how to tame a strategy, and come out on the other side far better than if you had quit like everyone else. 
 
So when a strategy stops working, ask yourself “why?” Exactly WHAT changed to prevent the strategy from continuing to work? What changes in price, time decay, or volatility have you observed that would change how the strategy works? 
 
Digging your heels in and finding out the real answers is absolutely the key to you eventually attaining your goal, because then you can fight back with adjustments. You know, there is a reason why a steering wheel was inserted into your car’s dashboard; life was meant to be lived through adjustments and adapting to changing circumstances. The Marines have an expression: “improvise, adapt, and overcome” and this is precisely what we need to do. 
 
Hit a brick wall? Strategy stopped working? Start to dig and find the REAL answers. You’ll look back on that moment years later and realize that it was precisely THEN that your trading began to take a turn for the better.

In your corner……..Doc Severson

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