Declutter Your Trading
Who is Marie Kondo?
She is one of the most powerful people in the world having more impact on day to day life of ordinary people than many of the world’s politicians. Recently she has been voted TIME magazine’s top 100 most influential people in the world. Yet I am sure you probably haven’t heard of her.
Ms. Kondo’s claim to fame?
She is the author of The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing. That book has sold millions of copies and has become a symbol of the growing revulsion in the advanced industrialized world against the never ending onslaught of “stuff” that consumes our life.
I am the first to admit that I am highly biased towards Ms. Kondo’s philosophy. I despise clutter to the point of being OCD about it. I literally become physically ill when I find myself in a messy room. And every month or two I mercilessly purge my closet of anything that I haven’t worn in 6 months or more. I, like so many people in our oversaturated consumer society, have grown to really hate “stuff.”
But Kondo goes a step further. She makes the argument that by decluttering you can improve your judgement and determine which items spark true joy in your life.
The other week I decided to apply her approach to my trading with remarkable results. Like all traders I am an inveterate tinkerer. As soon as I master a strategy I move on, trying to find something new and better. So my account much like yours probably is cluttered with multiple EAs, various tweaks and many trading approaches. The end result is that despite having a very profitable day trading system I found myself bleeding money left and right as my focus wandered and I experimented with many inferior approaches.
So I decided to tidy up. I stopped trading everything but my BT system. Better yet, I combed through all of my trades in the past month and discovered that most of the losses came in the crosses. So out went EUR/GBP, out went EUD/AUD, out went anything that as Ms. Kondo says “doesn’t give me joy”. The net result was that I was left with just 6 majors to trade. (I trade EUR/USD, USD/JPY, GBP/USD, AUD/USD. NZD/USD and USD/CAD). In fact I not only traded these pairs exclusively but didn’t even look at any of the crosses for days. So much so that I was surprised to see where some of them traded in our weekly technical analysis meeting.
Such monomaniacal focus may seem extreme, but it was actually very liberating. I had such purity of purpose that I knew every single event, ever single level, every little optionality cluster on my six pairs. My trading improved markedly. My accuracy level increased by 10% and even when I was stopped out I was able to make the loss back in 2 days or less. Most importantly, I stopped making unforced errors. My stops were well deserved as I avoided dumb trades that cost me so many pips in the past.
For many of us such devotion to simplicity and repetition may seem boring and uncreative -- but it is actually incredibly inspiring because it offers the trader much greater control over the market and makes trading much more profitable and consistent.
I’ll never stop tinkering with new ideas, but now I will always delegate them to a junk account and trade them for a dime a pip for fun and experimentation. When it comes to making real money, Ms. Kondo has convinced me.
Declutter your life, declutter your trading and profits will follow.