The question “who’s responsible for this?” is usually enough to trigger deep-rooted archaic flight responses for those fearing an episode of the blame game. And for those with experience in retail or customer support, its well known that “I want to speak to the manager” will come shortly afterwards.
By Philipp Pfitzenmaier
But where did being responsible get its bad reputation from? The question of responsibility usually pops up if things aren’t going as planned and life dares to differ from our plans. Then the search for somebody to blame starts - after all somebody has to be in charge of sorting out the mess.
The reality for we traders though, is that there is no-one to blame but ourselves. So next time you are unhappy with your trading results, instead of searching for someone to blame (the market! The brokerage! Janet Yellen! Mario Draghi! Those damn Non-Farm Payroll numbers…!), accept full responsibility for your trade and the outcome. After all, it was you who decided to raise that order in the first place. You were the one who did the due diligence and thought it was a good trade.
Which raises an important question, what can we actually control as traders? Are we not all subject to the ever random markets?
I don’t believe we are. I think that for many of the components of trading, we are in full control. Accepting responsibility isn’t just a passive fate we have to endure, but rather comes with some active perks - namely management and power. Because if we can manage a situation, then we have the power to affect its outcome. Which means that being responsible for our actions is not only not a bad thing, but a rather desirable state, because once we accept that we are responsible, then we have the power to change things and improve the situation. We can take control of our actions and the corresponding results.
Let’s start with your trading strategy - the decision on how you will trade. Nobody forces your hand in placing a trade. You have full control over the setup that you are looking for, and the strategy that you intend to trade. Having a strategy and following it to the letter is, in our opinion, crucial to long-term trading success. This is your decision.
How much risk do you want to take on? How big a percentage of your account do you intend to trade and what is the percentage you are willing to risk? Again, this is completely up to you.
Then, depending on your style of trading, you would need to figure out a proper position size for your trade. For our strategies, the position size is the result of a simple calculation based on the setup and the risk you choose. There is no guesswork here, and again it is your decision, whether you choose to follow the rules you have set for yourself, or break them.
When it comes to Stop Loss Levels and Profit Targets, once again your established strategy should take the guesswork out of these decisions. We take them from the chart with our setups. And if you decide to tweak them or decide not to use stop loss orders - then that is your decision and responsibility.
Ultimately the market will decide whether or not a trade will be a winner or a loser. But if it is a losing trade, we can at least be assured that we did our very best to ensure that the losses would be in line with our chosen risk parameters. And with our trading strategy in place, we have made sure that over a large sample set of trades, the winners should outnumber the losers and that the winners should also be larger.
So remember that we are not totally at the mercy of the market when it comes to trading. You manage your own account. You are the skipper of your trading vessel on the sometimes wild oceans of the market. So step up to the wheel and enjoy taking responsibility for your course.
“I am the master of my fate: I am the captain of my soul.” - William Ernest Henley (from the poem Invictus)