12/14/2025 - Courage is not something we hear a lot about in discussions of trading psychology.  To find new and different opportunity and pursue what others don't see and discuss, requires considerable courage.  To refine your strategies and use your losses to persevere and improve what you do:  that, too, takes courage.  True entrepreneurs are courageous:  they invest in their vision and accept the risks of failure.  No one has ever achieved distinctive success in a "me too" mode.

Indeed, what gives us the courage to take risk and harvest reward is the presence of a vision:  something that grabs us with its uniqueness.  When an idea feels special to us, we commit ourselves to seeing it through.  A positive psychology comes from vision, not from self-control exercises.

We've seen some amazingly rotational environments in the recent stock market.  What might look "choppy" when we view the broad market indexes suddenly becomes clearer when we examine price and volume action sector by sector, subsector by subsector.  A trend is a directional movement of an asset.  Rotation is the different directional movements of related assets.  Rates traders understand this well:  there are environments where central banks are in play and interest rate instruments trend, and there are environments where central banks are sitting on their hands but individual instruments will move relative to one another.  A key to success for a rates portfolio manager is knowing when to trade trends and when to trade relative value.

Many, many times large institutional participants are not broadly buying stocks or selling them, but are moving money from certain parts of the market to others, from certain countries to others.  Seeing the relative movement and finding opportunity in trading it requires a willingness to do something different from the crowd.  It requires a unique way of structuring trades.  It requires courage. 

More By This Author: