I enjoy cooking food. For me, it’s not just enjoying the food I get to eat or share with others. I like the process and the science of cooking. To me, it is like magic. Transforming a collection of ingredients into something delicious. I also like watching cooking shows, and I like to observe really good chefs.
There are chefs that achieve some of the highest honors: three Michelin stars, James Beard Awards, being listed on the top 50 best restaurants list, cooking for the most important people in the world, etc. When we see them, we think of the food that they put on the table. Some are creative masterpieces, some are dishes prepared with innovative cooking techniques, and some are just perfect versions of simple dishes. When I see these chefs, I notice something in common about most of them. They are control freaks!
It reminds of the film Jiro Dreams of Sushi. I loved this documentary film. If you haven’t seen it, then basically it follows what went into a small sushi-only restaurant in Tokyo, Japan that received three Michelin stars. The owner, Jiro Ono, was a sushi master. He didn’t do the fancy rolls that we sometimes consider sushi. He appeared focused on just regular sushi, which comes down to fish, rice, and usually some basic seasonings like vinegar, sugar, salt, wasabi, and soy sauce.
One thing was clear about this man, and other chefs that received such success through cooking: He was a control freak with his food. He wanted to control everything that he could control. The fish he used that was selected every morning at the fish market, the source of his rice, the temperature of his food, the amount of soy sauce used on the fish, how his wasabi was grated, the pacing at which diners ate. He wanted to control everything from the moment he gets the ingredients to where the food touches the plate. That quality made him obsessive with the highest sushi experience and many considered him to have achieved it.
There was plenty he could not control though. He couldn’t control the fish that was available today compared to yesterday. That is determined by the fisherman’s bounty and the ocean. He couldn’t control whether the diner had a good day or a bad day going into the restaurant, which may impact whether the diner enjoys the meal or not. He couldn’t control each diner’s taste buds and their like of the individual ingredients used in the day’s tasting menu. But he probably never tried to control these things. It had nothing to do with what he put on the plate.
What does this have to do with trading? It reminds me that we should be obsessed with the things we can control. Our entries and exits, when we choose not to trade, how much we’re willing to risk, what our daily loss limit is, our profit target, whether we take another trade or stop trading.
We can’t control the market, or whether the large order above us is real or is a spoof. We can’t control what the major news release will say. We can’t control whether the trade we just entered is a winning trade or a losing trade (which by the way is NOT how we should grade our trades). We can’t control a lot when it comes to trading. And maybe we shouldn’t care about that. We should be obsessed with everything we CAN control.
Example of things we can control that maybe we should obsessed more on:
- What market do I trade? Do I focus on one or many?
- What should my position size be?
- Do I focus on one session or multiple?
- Is there a time of day I trade best?Do I have a daily loss limit?
- Do I have a daily profit target?
- Is there a point I decide to stop trading for the week?
- What are my entry criteria?
- Where do I place my stop?
- Where do I use a take profit (if any)?
- What are my exit criteria?
- When should I stay out of the market?
- Should I ever move my stop?
- When do I move my stop?
- Which firm do I trade with if using a prop firm?
- Which brokerage do I trade with if I want to use my own capital?
- What tools do I use to observe and trade the markets?
I think if we have a healthy obsession with the above and spend more time focusing on things we control, we can become better traders. We can’t control the outcome of each trade, win or lose. We can only control the inputs, and it may bring us one step closer to becoming masters of our own craft.
