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Every trader’s goal is to achieve greater success. They want more consistency, more profits and more time to enjoy life. These goals are very worthy, but few traders achieve them. Do you relate to this?
Every day, week, month or year, you set profit goals (I’ll earn “x” amount of profits), you set rules (I’ll follow my trading strategy to a tee), and you set desires (I won’t let emotions cloud my judgment), yet somehow you never seem to achieve these objectives. Even with the best of intentions and the best trading strategy, somewhere down the line, you find a way to lose your stability of mind, and your plan goes out of the window. It’s like living in the movie Groundhog Day — you relive the same stuff over and over again.
Why is that?
Well, the reason that happens is that “we can’t solve problems by using the same kind of thinking we used when we created them.” You’ve probably heard this quote before — it’s from the great Albert Einstein. Another variant of it is: “What got you here won’t get you there.” And that makes complete sense if you think about it. How can you possibly expect to be successful in trading if you remain the same person that’s generating the results you’re currently getting? I’m not suggesting that you need to become a completely different person, but at the very least, some things have got to change — your trading psychology!
The next level in your trading will come with the next level in your mindset. What do I mean by this? Well, you’ll need to introspect and search within yourself to investigate the beliefs, stories and patterns that make you the person you are today, but which don’t serve you well in trading.
I’m talking about things like:
The stubborn clinging to certainty: The reality of trading is that it doesn’t give you the kind of security that you get with a time-clock-punching job. The market doesn’t hand timely paychecks, it delivers rewards and bonuses to those who are proficient at strategic risk-taking.
The fear of failure: Failure is a critically important part of any successful life because it’s how you grow. And so, when you fear to fail, you fail to reach your full potential.
The inability to see one’s own biases: As a trader, you need a greater ability and readiness to see through your own illusions and delusions and self-correct immediately.
Ask yourself these questions
There are other systems of beliefs and behavioral inclinations to discover about yourself, but those are the main ones, I’d say. Here are some questions you can ask yourself to uncover what’s holding you back:
What are my biggest fears and doubts when it comes to trading and investing?
Am I being too conservative or too risky in my approach to trading? Why?
What are my strengths and weaknesses as a trader, but more broadly, as a human being?
What limiting beliefs do I have about myself, the market or trading in general that might be holding me back?
What external factors, such as market conditions or economic events, am I using as an excuse for not achieving my trading goals?
What is in my control to change? What isn’t?
What steps can I take to improve my trading psychology and technical skills?
Am I setting realistic and achievable trading goals?
What is it about losses that upset me so much? Why? What would happen if I wasn’t so afraid of losses?
Am I being consistent in my trading approach, or am I constantly changing strategies?
What personal or life factors are affecting my ability to focus on trading and make sound decisions?
Reflecting on these questions and being honest with yourself is key. Your answers will help you identify beliefs, excuses, patterns and stories that aren’t conducive to market success. And reflecting on those answers will kickstart real change in your trading psychology.
From there, I invite you to contemplate these next series of questions:
What do I want to achieve in trading starting right now?
What belief do I want to internalize as of today?
What will I no longer tolerate in my trading?
What are three objective and measurable action steps that I can take every day or week or month that will keep me moving in the direction of my trading goals?
How can I stick with those steps through thick and thin?
Look within yourself
As of today, reject mediocrity; reject the mindless path! Most traders are living on autopilot, acting out their pre-conditioned beliefs and patterns in the market. Once again, the next level in your trading will come with the next level of in your mindset. I’m asking you to reject what doesn’t work and focus all your attention, energy and time on developing the beliefs, habits and behaviors that do work. If you’re serious about trading, you must do that — you must look within yourself and take control of your own life because the status quo won’t cut it! It doesn’t work!
Now, I understand: Looking within can be a difficult process because not everything we discover about ourselves is beautiful, shiny and polished. There are a lot of unskillful aspects to our being; there is also a lot of pain that resides in our minds and hearts because life isn’t exactly fair. And facing all of that requires a lot of courage because it’s uncomfortable. However, it is ultimately a rewarding journey, as it allows us to overcome the internal obstacles that are hindering our success in trading and in life. “Face your fear and the death of fear is assured.” Ever heard this saying? That’s exactly what I’m trying to express here.
Let me give you a concrete example to make things more vivid. I’ve worked with a trader, a high net worth individual, who trades U.S. stocks, basically the first hour of the NY opening. He has a very rudimentary trading strategy — he identifies the long-term trend (weekly), zooms in on the 5-minute and places his trade in the direction of the long-term trend with a tight stop right under the first hour low.
As you can imagine, given how tight his stop is, he spends his time reaping losses, day after day after day. When he’s wrong, he’s wrong fast, but when he’s right, he can stay in that trade for months and ride that sucker to Valhalla.
But this trader was constantly plagued by the fear of giving back his open profits, which often led him to exit his positions prematurely. With such a low win percentage, small profits just don’t cut it — he needs those occasional monster profits to nullify those many small losses.
So, our work together consisted of identifying his limiting beliefs and emotional triggers. And through a series of coaching sessions, I helped him reframe his mindset, de-energize some unproductive beliefs he had about the market and develop a more positive and carefree approach to trade outcomes. I introduced specific techniques to help him manage his emotions and reduce stress, and now he’s much more confident and disciplined amidst the uncertainty.
If he had continued to trade with the same kind of behavior and mindset that were getting him the results he got, he would have still been stuck at the same level year after year. So, this isn’t platitude — the next level in your trading will come with the next level in your mindset!
What beliefs, stories, and patterns are you consciously or unconsciously holding onto? Ponder this question and the above ones. Take some time to reflect and write down your answers. Take charge today because so much more is possible, and so much more awaits you in terms of growth and trading success.