Do You What It Takes to Succeed? The Mindset of a Winner?

 

You did the hard work last week; today, you begin to reap the rewards!

Let’s start with a quick recap:

  1. To be a successful trader, you know that the mind you need to trading is not the mind you bring to the commercial world. Why? Because……
  2. Trading is a probability game and on a trade-by-trade process produces a random result. You can do everything right and lose money on the next trade; you can do everything wrong and make a squillion dollars on the next trade. I call this the ‘the nature of markets’.
  3. The nature of markets goes against our brain’s hard wiring. It seeks certainty and control of outcomes.

Today, we’ll look at how our the brain’s responses plonk us into the losing 10%; next week, we’ll consider what we can do to solve the problem.

The key to understanding our brain’s response is to be aware that it’s designed to serve us by moving towards pleasure and away from pain.  Also, it tends to view losses as painful and profits as pleasure.

So when it’s unable to control a random process, it’s first responses are denial and suppression.

We take a loss. Rather than look at the circumstances giving rise to the loss, we deny it even took place. This fact was brought home to me when a coachee said:

I know I ought to keep a journal! Hey, it’s easy when I’m making money. The journals make me feel fantastic! But, who wants to feel even lousier by recording and analysing losses.?

But, denial and suppression have an even more insidious effect. Research has now shown that if you deny and suppress negative emotions long enough, they’ll eventually rear up and ‘bite you in the bum’! For traders, this usually means an exceptionally large loss.

The other subconscious way our brain ‘protects’ us is to ‘pretend we are profitable traders’. As Rande Howell says:

“…traders want to project a sense of I’m looking good rather than learning to be good”.

You don’t believe me? It’s easy to show…..just drop into any chat room and listen to all ‘fabulous’ trades. Whenever I’ve done this, I’ve counted the winning and losing comments – the former outnumber the latter by over 92%!!! And yet, the reality is losers outnumber winners by that margin.

The effect of the brain’s protection is to substitute an illusion for reality. The problem is in so doing, we effectively give up on our dreams. Today that may not be a problem for you. But, it will be in the twilight of your years. The biggest single human regret is this:

I wish I’d had the courage to live a life true to myself…” (5 Things People Regret on Their Deathbed)

And, I believe, that this regret acts under the radar to lure us into taking trades we otherwise would not.

Don’t miss next week! We’ll be examining a process that allows us to make an ally of our brain in our quest for success.

No One Reason

BarroMetrics Views: No One Reason

Let me start by saying l was dead wrong about the BOE decision. We should see a spate of choppy action till the FOMC decision announcement at 2:00 PM EST on July 27.

Today, I want to turn my attention to what I am learning about passing on a trading education.

The Ultimate III program is now into its practical phase. The attendees have written their trading rules (well, all except two – not sure if they won’t drop out), and most have placed their first trades.

When I first started lecturing, I assumed that all traders would follow the path I took:

  • Find the methods that fit our personality.
  • Take action to make the methods our own until we attained our trading objectives.

With more experience, I found that most attendees failed. And, it was not a question of the course cost – whether $500 or $5000 – the resulting failure rate was relatively uniform.

Ultimate has thrown light on the ’causes’.  I say ’causes’ because there is no ‘one size fits all’. In short, there is ‘no one reason’ for the high failure rate.

Take the current registrants – the webinars these past two weeks have shown interesting patterns:

  • Some discretionary traders need practice at effectively combining the elements of their trading tools. Interestingly, the discretionary group is showing a greater willingness to apply the course material.
  • Some mechanical traders had issues of time. To me, the ‘time’ reason was more an excuse; the real barrier to action was a fear of having to move out of their comfort zone. I sought to solve their problem with fear as the foundation, Let’s see if they have been able to start trading.
  • Other traders, because of their lack of experience, had genuine problems in the understanding and application of the material. Their problems were relatively easy to solve.

We’re taking a month off because the mechanical system we use produces consistently poor results in August. I am keen to see the results at the end of September. The great thing about trading is the equity and psych journals lay bare whether or not long-term success is on the cards for each trader.