In recent traders virtual roundtables discussion, a group of experience traders were considering the factors that lead to trading success, and came up with the eight”P’s”: persistence, preparation, participation, practice, performance, perception, position-sizing, preservation. They concluded that your trading results would be a function of which one of these eight you were weakest in. This essay will discuss the ideas about participation.
The market is full of uncertainty and many times it seems like the more you analyze in the more you think about it the harder it is to actually pull the trigger. It is an inescapable fact that you cannot make money on the sidelines.
There are moments when the market is in sideways conditions and there’s no apparent directional bias that makes sense. Clearly, there are other times when the market is trending either up or down and it becomes clear which side of the market you want to be on. Our nerves and apprehensions can lead us to way too long to get into the market and we miss significant portions of the trend. That’s the case were lack of participation harms your trading results. It’s a clear case also of trading certainty for performance.
If you have to be in the market to make money, then you have to find a way to accommodate your uncertainty and fear in order to participate. That means having an appreciation for probability and statistical distributions of returns based on market conditions. Participating in the market means that sometimes you’re going to get burned and other times you’re going to be wildly successful. But the bottom line is that you have to play if you want to win.
Our trading mastermind strongly recommends that you participate in group discussions and research and dialogue as a way to sharpen your skills, gain new perspectives, use each other for a sounding board,and then provide each other the emotional support that is necessary for people to deal with the constant drumbeat of pressure. In this sense, participation means cooperation and good citizenship.