How often do you tweak your trading system? Do you find it compulsive to tweak it more often?

I always say that the trading system is like a recipe of a dish. Say for example the recipe of a Traditional Hyderabadi Dum Biryani. The recipe for this dish is an age old one, may be more than 200 years plus years old. Long ago some great person came up with the Biryani for the first time and ever since, it has undergone the test of many generations and its still is surviving. May be there are some very minor changes to how it was cooked and served the first time ever.

If today, anybody wants to eat Biryani, we go out looking for the authentic and traditional one and do not go for a fancy new age Biryani. Why do we seek for the authentic one?

Well the answer is simple, its gone through many years of existence, got testing many time through various seasons and ingredients. Its now gotten to a state where its simple perfect in its authentic state and does not really need any change. As a foodie, either you love it the way it is or you have a different preference. You do not change the Authentic Biryani to suit your preference, then its no longer Authentic Biryani but something else.

Now, the trading system is just like the authentic and traditional biryani recipe. Once you build or learn a system, it has to go through the rigor of back testing for at least ten years if not more. Once the testing is done, it has to go through finer calibration or curve fitting to overcome all the roughness in between for the best and optimal outcome. After that, its fully set and ready to be deployed. Once this is done in a logical and mathematical way, one does not have to keep tweaking the system in short timelines with every adverse situation in the market in short term. The system has the ability to withstand those short term noise and sustain to come out with the desired results given its already tested and calibrated.

Normally traders get into tweaking the system every now and then say with every contra trade or every whipsaw in the market. Doing this will disturb the entire flow of the system to provide what it was originally designed for, like what happens if you keep changing the ingredients of the biryani every week – will it taste authentic?

The system really does not need a tweak!!. So, what should be tweaked instead? It’s the trading mindset which need tweaking and calibration. A professional trader has to constantly nurture and watch her / his mind and the thoughts going on while in the trade or not in the trade. Figure out which system suits your mind set and once you pick a system, simply stick to it. Adapt and adjust your mindset to suit the system and the markets. You have control more on your mind than the markets. Trying to control the market through one’s mind is a futile exercise as per my seventeen years of experience in stock markets.

The other question which I often get from many fellow traders and our students is “How to control our mind and our thoughts?”. Do you have the same question?

Do NOT control your mind. Let the mind do what it is designed to do. Like our all other organs (Brain, Stomach, Liver, Kidneys, Heart etc.,) mind is also an important organ, we do not want to control or stop the work of any of our other organs, so why would you want to stop your mind’s most important function of thinking? Instead learn to be aware of your mind and thoughts. As a professional stock market trader, this one quality of being aware of my thoughts has been my biggest virtue which enables me to hold my trades if I have to and cut my trades if I have to. I simply follow the system and have learnt to adapt my mind to it and not otherwise.

Some of the ways of being able to let the mind do what it does and not interfere in your trading are:

  • Learn a trading system – Trading without a system is like jumping into the deep ocean without knowing swimming. Once you learn a system and are ready to deploy, your mind is at rest with respect to this and will not be an hindrance
  • Back-test the system – Test the system to your hearts content. Once you do it, you will know if it works across multiple years. See the outcome for your own self. Do not rely on someone else’s testing. As you do your own testing, you are in the process feeding your mind to adapt to the system and your mind will learn to stay away from tweaking it
  • Find your passion – if you say stock market is your passion, I urge to dig deeper. All of us have a passion and if you can find that out, then your mind will be focused on living  your passion and not bother you much in your trading
  • Spend quality time with self – As a professional trader, I have realized that I need time off from my own self. Take time off once a week, do not do anything related to markets or trading on that day. Give it 100% to your own self doing something which will rejuvenate your from inside out
  • Have a mentor / coach –Do not waste time figuring things out yourself, seek help from people who have already achieved it. Invest in yourself first. 

Tweak your Mindset to Tweak your Success!!