Lately, the stock market has been pretty volatile.  Since I’ve reduced the leverage in my forex trading, the daily absolute dollar swings in my 401K account are bigger than the swings in my forex account.  However, I keep noticing that the ups and downs in the stock market have absolutely no effect on my sense of well-being, while minor swings in my forex account can cause me to feel like a great success or a great failure.

For a while, I had been thinking that I just had too much of my ego invested in the success of *my* trading systems…when they win, I’m a winner…when they lose, I’m a loser…after all, they’re *my* systems.  I thought that the solution to this issue could be found by actively detaching my ego from the results, but this seemed difficult and ineffective.

Well, I now realize that there was at least one piece missing from the puzzle.  That piece is called “doing the right thing”.   You see, after years of being immersed in personal finance literature and financial media, I have an underlying sense that I’m investing my retirement money well by investing mostly in index funds, both domestic and international.  So when the market goes down, I can easily think that it’ll come back eventually (at least before I retire) and that I have nothing to worry about.

 BUT, with my trading systems, I have no underlying sense that I’m doing the right thing…it seems that the systems need to be tweaked often or they fall apart completely…a bit like the difference between buying a house and buying a car.  In the case of the house, present downturn notwithstanding, we can expect the value to rise in the long run…with the car, well, we know it’s destined for the junk heap eventually.