The successful traders/investors I have met in my travels all share these three qualities: Integrity, honesty, responsibility. In this blog, I’ll first explain what I mean by the terms and then proceed to give examples on how their lack stops us from achieving our dreams.
- Integrity: I see three levels of integrity. The first is keeping promises to others; the second is living our lives in alignment with our professed values and beliefs (we ‘walk our talk’); and the third is keeping promises to ourselves. (Landmark Forum)
- Honesty: The refusal to pretend that facts are other than as they are (Ayn Rand: the refusal to fake reality)
- Responsibility: The ability to personally respond (Fritz Perls). We are accountable for the responses we have to life’s situations. For example: we are not responsible for an accident caused by the negligence of another party but we are responsible for the way we respond to the consequences of the accident.
In my role as mentor, I see a wide diversity of personalities. Yet despite variances in human nature, those who succeeded all evidenced the three traits. Those who ultimately fail – those that surrender without completing the course – are the ones who never acquire one or all of them.
For example: I have one student who has the ability to be making money now. Yet, he is merely breaking even. Given the time and effort put in, the breakeven result would be, for another, an excellent result. But in his case, given his talent and feel for the market, the results could be much better.
When we examine the metrics, the reason for the mediocre results is clear: he takes profits much smaller than his losses. The cause for this is not hard to find: he trades two timeframes – FX for swing trades, ES for day trades. Whenever the market moves rapidly in his favour in the swing trade, he grabs the money rationalizing that he may as well put some money in his pocket. He figures that should the market correct, he can reinstate the position.
You can imagine the result. The very best trades do not retrace and as a result the profits he took and what he ought to have taken are wide apart.
To deny the facts, he focuses on the occasions that the early grab gave a better result. What he ought to be doing is focusing on the whole spectrum of trades. He chooses not to on the basis that ‘things are different now’.
Because, because ……we can rationalize away just about anything.
Actually in his case, I am optimistic that he’ll see the light. He is bright, intelligent and has a great feel for the market. I think it is only a question of time before the penny drops. The fact that he is breaking even rather than losing is testimony to his ability.
Another student may not share the same result. In this case, the program has always been a struggle. The student has been seeking success for over 5 years after leaving his job as a bank dealer. Having him change his ways has been a hard- fought victory, won inch by inch. We are now at the stage where he has to write out his trading plan.
Normally writing out the trading rules, takes no more than a month; some do it in a week. In his case, we have been at it for 3 months and there is still no plan in sight. I understand the source of the barrier. As long as the plan is not written down, failure to achieve his goals can be laid at the feet of ‘something out there’: it’s the market’s fault, I am having girl-friend problems, it’s Ray’s fault, he ……
Once the plan is down in black and white, then he perceives that long-term success rests squarely on his shoulders. And right now, he is playing the avoidance game.
How do we tell if we lack integrity, honesty and responsibility? It’s a question of self-awareness of the consequences of our actions. Dr. George Lianos once said to me: “If you repeat a behaviour, then no matter how valid the reasons for each individual occurrence, focus on the fact that you are repeating the behaviour – that is the reality”. Once we identify the behaviour, then we act to change it.