Consistency

I was looking at some comments inside Trader’s Lounge Facebook Group one time and I saw one comment that catched my attention.

The comment was something like

buti pa sila kumikita, ako di talaga ako consistent

It catched my attention dahil magkaiba kami understanding ng consistency. I started searching for their definition of consistency and nagulat ako kasi most think na being consistent is the same as lagi kang kumikita.

If that is true then I am so inconsistent kasi I win some and I also lose some.

Come to think of it. No one is consistent.

Just this week even Warren Buffett sold some of his shares sa Delta at Northwest Airlines.

That “buy when there is blood on the street” does not work in some cases after all.

Lets talk about consistency.

Paano ka mgkakaroon ng consistent na kita kapag lahat ng traders mapa retailer man or insti ay nagbebenta? You don’t. You can ride yung mga bounce here and there but to expect the same consistency sa result ng trade mo right now compared last year is nuts.

So what really is consistency?

Sa trading, consistency is measured sa process not sa result.

What do I mean by that?

Process is something that we do and that is something which is in our control, but result is something that is based on numerous factors and is beyond our control.

If boxer ka. You can train daily. You can exercise 10 hours per day. You can be consistent sa pagprepare but that wont guarantee you a win when your actual fight comes.

May control ka sa pag exercise mo. Kelan ka gigising. Gaano katagal ka eensayo. Lahat yan may control ka pero sa result ng laban mo wala kang control. Marami kasi pwedeng maka apekto dun. Lakas ng kalaban mo. Strategy nila. If you remember Mike Tyson, whom my father really like, he was so strong noong nasa prime years pa siya. He was feared.

Then, Evander studied him. They found out that kahit anong lakas ni Mike kapag hindi siya tatama ay wala din. Most kalaban ni Mike ay na knockout niya during the first 5 rounds.

They made a gameplan na hindi patamain si Mike at pagurin which frustrated Mike and the rest was history. (Kayo na mgresearch what happened).

Most people think that, to get the results you want, you need to focus on those results. But here’s the paradox, being outcome-focused actually reduces the chances of your achieving the results you want.

Here’s why.

• First, when does the outcome of a competition occur? At the end, of course. If you’re focused on the outcome, you aren’t focused on the process, namely, what you need to do to perform your best from the start to the finish of the competition.

• Second, what makes you nervous before a competition, the process or the outcome? The chances are it’s the outcome, more specifically, a bad outcome such as not winning or achieving your goals.

The bottom line is that when you focus on the outcome, you are far less likely to get the outcome you want. It’s more like process vs outcome.

Let’s bring the idea closer sa trading.

Lets say you are using TITA Set up. You scan stocks daily. You practice the set up. You found one stock na pasok sa set up then you went on and bought it. The next day the stock price went down at na hit sell signal mo so you sold.

Was that a good or a bad trade?

That was a good trade. Why? Kasi you followed your system. Consistency is not about always winning. Its not about the result. Hindi lang ikaw ang trader sa mundo. Hindi mo control decision-making ng mga yon.

Maraming pwedeng maka apekto sa result but you can be consistent sa process or in this case sa strategy mo.

Let me give you one scenario.

There were two girls si Melanie at si Pia. They were both traders. They don’ know each other. Melanie bought stock A sa 1 peso. Pia also bought stock A sa 1 Peso. Both of them have 5 Million shares each.

The next day bumagsak ang price ni stock A sa 0.99 pesos.That day Pia recieved a phone call na na aksidente ang nanay niya at need operahan. They will need money. So walang sabi sabi biglang binenta ni Pia ang shares niya sa stock A. Since wala masyadong buyer need niya e benta sa kahit anong presyo na lang. Pia sold heavy hanggang umabot sa 0.75 pesos. Dahil malaki ang bagsak nagbentahan din ang iba at nagclose si stock A sa 0.70 pesos.

Melanie can’t believe it. “Who the f**k would sell their stock at a f*cking loss?” Pasigaw na sabi ni Melanie bago ihampas ang laptop niya sa sahig.

Melanie searched and searched for any bad news pero wala siyang makita. She looked at the chart and all were bullish. Hindi niya alam what happened. (If Melanie was using strategies natin sa TL for sure kahit di niya alam nangyayare pag nahit sell signal ay eexit siya ky stock A)

Few months passed. Gumaling mom ni Pia at balik trading na siya ulit.

Bumili si Melanie nh stock B at 1 peso. Umakyat ito for a few days. At 1.7 pesos Pia decided to buy stock B.The next day Melanie was happy na sa gain niya so she decided to exit her position or to sell stock B.The next day Melanie was happy na sa gain niya so she decided to exit her position or to sell stock B.Muka 1.7 L, Melanie sold down to 1.5 pesos. Melanie was happy with her gain. Nagclose ang stock B at 1.45 pesos that day.

Pia was shocked. She can’t believe it. “Who the fuck would sell a stock below 1.6 when it was trading at 1.7 kahapon?What kind of a twisted jerk would do such thing?”

This story will tell you na wala kang control sa mga pwedeng umapekto sa result ng trade mo. (trick and tactics is another story though)

Has this ever happened to you?

In the course of a conversation, you learn about an acquaintance or colleague who made an unusually successful investment. For whatever reason, they put capital at risk into XYZ and the returns were extraordinary — far more than what is typical for your investment returns.

In that situation, which of the following comes closest to your immediate thoughts?

(1) I wish my port was filled with XYZ !

(2) If only I had his access to his inside information.

(3) How much time and effort goes into his research?

(4) What does his win/loss ratio look like? Gains vs. losses over time?

(5) Sounds like he got really lucky.

If your thoughts were along the lines of answers 1 or 2, you are, like most investors, outcome-focused. If your thoughts were along the lines of answers 3 or 4, you are in the minority, and are process-focused. Answer 5 can fall into both camps, but the significance of each depends on the context.

Outcome is simply the final score: Who won the game; what numbers came up in a roll of the dice; how high did a stock go. Outcome is the result, regardless of the method used to achieve it. It is not controllable. You can blow on the dice all you want, but whether they come up “seven” is still a function of random luck.

Process, on the other hand, is a specific methodology. It is a repeatable approach to any challenge or endeavor, be it construction or medicine or investing. And you can control a process.

What kind of people are outcome-oriented? Gamblers, many (but not all) sports fans and, of course, speculators.

What about the process-oriented people? They include airline pilots, professional sports coaches and, of course, long-term investors.

Sa trading you need to be consistent sa process. You need to respect your exits. If cut eh di cut.

If you use mama sa isang trade and it produced profits eh di good for you. If you use mama sa isang trade and it produced loss. Its still good. Its not about wins or loss. Its about following the strategy. Respecting the sell signal.

Sa GUT, I dont really judge them sa result ng trades nila. I jusdge them kung sino ang sumunod at hindi sumunod sa strategy. I dont care if malaki o maliit ang wins or loss. I care if sinunod nila ang strategy. I care if EOD ba sila bumili. After benta di na ba sila sumilip sa market. I care more sa ganun.

You see, we are in a bad market condition ngayon but when things turn around you will see most of this GUT will benefit sa pagsunod sa strategy at sa disiplina.

If you find yourself getting stressed na puro loss ka right now I am telling you na don’t pay too much attention sa loss mo (if you follow strategies sa TL hindi naman malaki loss mo) focus ka sa process kasi pag umayos na ang market you will enjoy results ng trade mo.

Trading is about being consistent sa pagsunod sa strategy no matter the result.

If you pay more attention to the results, you are likely to be worried, frustrated and dissatisfied.

If you, however, pay attention to the process, you can always be satisfied and happy with every result.