Freedom to Trade

This is a guest post about flow written by Eric Gong. Follow me on Twitter and StockTwits.

If you’ve never jumped off a cliff, I highly recommend that you try it.

Don't take me seriously, of course. What I mean is cliff diving into the ocean—giving yourself completely to gravity. I want to share this experience with you as it relates to success in trading. I got married in Hawaii in September 2009, which was six months after I began my trading career. So both literally and figuratively, I was jumping off many cliffs, giving myself to whatever was to come.

The experience of jumping off a cliff and into the ocean gave me a sense of freedom that I had never felt in my life before. Only when your pinky toe leaves the rock do you truly realize what you have gotten yourself into. Gravity will take your little body and slam it against the water. The air will slap you across the face every single millisecond of the way down, and there's nothing you can do about it.

That's the beauty of the experience.

As traders, we are always planning and controlling how to manage entries and exits to maximize profits. When positions go against us, we get mad and blame the markets. We blame high frequency programs, the specialists, the government, or the trader next to us who has this annoying habit of tapping the desk when we're in a losing trade. So much about the markets is uncontrollable, and we spend so much time trying to rationalize and control it. What if we gave in to the markets? What if we leapt off the proverbial cliff and let the market take us over? What if we spent more time in that moment when our pinky toe leaves the rock?

I experienced that exact feeling once again trading the stock market last week, and it changed my trading forever. I sat at my trading desk with flow that I have not felt in years—a feeling I have only encountered once while jumping off those cliffs in Hawaii. The thing that changed for me was that I finally accepted the market for what it is: a continuous series of uncontrollable interactions between buyers and sellers. During that trading day, as my proverbial pinky toe left that rock, I felt freedom—freedom that only acceptance can bring. As I bought stock, I gave in to the fact that it could go anywhere and that the only thing I could control was my risk. As my profit and loss monitor fluctuated back and forth from red to green, I accepted it as the nature of trading. As I was maxing out my buying power, I accepted the fact that although these trades were the perfect execution of my plan, anything could happen at any given time. I realized that this was the gravity of trading, and I would not spend my days trying to manipulate it; instead, I would accept it.

If my positions went in my direction, I stayed patient until the charts let me know when to release. If my positions were stale, I'd reduce or remove my risk. At the end of that trading day, I felt as if my body hit the water. The experience giving in to the market was the best experience I ever had trading. As I stared at the results from my day trading and swing trading accounts, it became the high watermark of my entire trading career.

Freedom is why I got into the business of trading, and the flow that I am feeling lately is like diving off a cliff in Maui.