Hi There Traders,
I hope you are having a great week so far! I certainly am, thanks for asking ????
Something came up for me this morning that I wanted to share with you because it is HUGELY important for everyone who trades in any market, anywhere in the world. Given it came up I wanted to reach out right away and share it with you to make sure that it doesn’t ‘bite you in the backside’ in your trading!
By way of background – I have a coach and mentor that I speak with every single month. In fact, I have several coaches for different parts of life because I think it is critical to ALWAYS be growing in all areas of life. As T Harv Eker says:
“If you are not growing, you are dying” – T Harv Eker
But more the value of coaching another time. So the coaching program I am in consists of a group call (5am this morning – and NO, I am not that much of a morning person) and a one on one call each month. I always get huge value from both calls and so despite the ungodly hour of the morning I was really looking forward to it.
So I dialed into the call and some of the other participants were there, but no facilitator!
Very unusual because he is extremely punctual most of the time. Anyway a couple of minutes went by and one of his staff from another city called in to say that there was a city-wide outage for the internet service provider that he used for his business and so he would be dialing in on the phone shortly rather than via video conference.
So he dials into the call, explains the situation and we get started. The call was AMAZING by the way and just like always my mentor really came through with the goods giving us exactly what we needed to hear.
But get this – and this is the critical point…
The ISP had an internet outage of 3-4 hours with no resolution in sight!
Now I though to myself “wow, if it can happen for 3-4 hours, it can certainly happen for longer than that! I wonder how that situation would affect my trading plan?”
So after my call I dug into the scenario to ensure that a long ISP outage would not be a problem for my trading plan. I wanted to confirm that I have sufficient backup plans in place should that (or worse) ever happen to me.
As it turns out I am ok on this one because short of the island of Singapore being totally cut off the internet and telephone, I have written contingencies that cover it.
So here is my question…are you ready for it?
What if you couldn’t get internet access to do your trading today?
Do you have a written plan that covers this sort of event?
I want to break this down for you into two components:
- ‘Do you have a written plan…’
- ‘…that covers this sort of event’
1. ‘Do you have a written plan…’
The need for a written plan is far more critical than you might first think.
The reason is that when things start to go wrong and our stress levels rise, our ability to make good (profitable) trading decisions falls dramatically because of the human fight or flight response that we all have.
Trading stress causes your ability make good decisions to fall leading to costly mistakes and losses.
Here is how it works: As stress goes up, the brain releases adrenaline which gets our muscles ready for action – to run, or fight for survival. This is a great response when faced with a man-eating animal like our ancestors 50,000 years ago, but not so great in the financial markets because it stops us from thinking clearly.
The reason a written plan is so critical is that by writing your plan you are pre-deciding what you will do. This takes the emotion out of a stressful situation and allows you to do the right things (and profit!).
2. ‘…that covers this sort of event’
The second part of the statement ‘…that covers this sort of event” is even more important. This example was about an ISP that had an extended outage, but it could have been any number of other things.
The point here is that we don’t know what is going to happen, but if we brain storm a whole range of scenarios that could go wrong and plan for them we will be much better off than if we did nothing at all.
So while my coach had his business disrupted for an afternoon, if it were YOU and YOUR trading was disrupted at a critical moment by something unexpected:
- How would you have responded?
- Do you have a plan that you could have followed clinically to ensure you took the best action?
- Do you have redundancy for all of the critical parts of your trading business (ISP, phone, computer, data feed, electricity etc)?
- Would a disruption have the potential to harm you financially if you couldn’t do what you needed to do in the market because of this?
If you haven’t done this work yet then I would strongly encourage you to spend some time on it.
The perverse thing is that it seems like a waste of time when things are going well, and a waste of money when you never need it, but let me tell you – you will be glad you did if something goes wrong.
Let me illustrate with a far more personal (non-trading) example…
My 6-year-old daughter has severe food allergies to nuts, eggs and shellfish. So we spend hundreds of dollars a year to buy Epipens (adrenaline auto-injector pens that you use to stop a severe allergic reaction).
We have never had to use one, so we have probably spend several thousand dollars buying these things and throwing them away when they expire 12 months later.
But one day a few weeks ago I was baking cookies with my daughter, and we were using Sunflower seeds. Never thought about sunflower seeds as a problem and never knew you could be allergic to them…but guess what? She is HIGHLY allergic to them and we never knew!
Sunflower seeds unexpectedly caused a medical emergency…lucky we had a plan that covered it!
So the long and the short of it is she tried some of the cookie mixture and the next minute she is vomiting, face swelling up, throat closing over and she starts having trouble breathing. If any of you have kids with allergies you will know that this is life threatening.
Lucky we had ‘wasted’ so much money on these Epipens so we had one on hand, jabbed her with it and called the ambulance. If you can believe it the ambulance took almost 15 minutes to get here – she would have been dead if we didn’t have the Epipen!
But the reaction went down within a few minutes of the injection – THANK GOD!
So here is the thing…if calling the ambulance was my plan in case of an allergic reaction for my daughter then she would have died. No question about it! These things happen so quickly there really wasn’t much else we could do about it
But my family’s plan is ALWAYS ALWAYS ALWAYS carry an Epipen…again lucky it is, because I would not be in much of a state to do anything now if something had happened to her at the time (this was just a few weeks ago).
Let me tell you, now Epipens seem CHEAP. I would pay 100 times the price for the certainty that my daughter would be ok if something unexpected happened again.
How does this relate to your trading?
Well that’s the easy part – you must plan for things that could go wrong, and you need to brainstorm lots of different scenarios to ensure you plan for as many scenarios as possible…it just might save you from financial disaster!
So if you haven’t already written your trading plan then get started and get it done. I know it feels like a bit of a drag, but you will sleep better and trade better as a result…and that means you will make more money, more consistently too!
If you don’t know where to start then click this link to learn more and pick up my trading plan workbook that will step you through the whole process.
I guarantee that when something big goes wrong (notice I said WHEN, not IF) you will be pleased you did.
If you already have a trading plan and you want some help to see how it can be improved then hit reply now and let me know and I am sure I will be able to help you out.
For traders, just like boy scouts…we need to be prepared. Your trading plan will help you with exactly that, so click here to get started with your trading plan immediately, before something catches you by surprise in the markets.
Trade well – may your Internet connection be stable and your food remain allergy free!
I look forward to hearing from you soon.
(Founder – Trading System Life)
PS. Contact me directly if you have a trading plan that you want to discuss how to improve it, or if you are interested in learning more about how I use coaching / mentoring and the value it could bring to your trading. I would love to have a chat about it with you.
PPS. Don’t forget to click here to learn more about trading plans and pick up your trading plan workbook.