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Everyone gets what they want from the market, including winnings!
Yesterday I posted the 1st part of a great article by Michael S which you can find below if you missed it: Everyone gets what they want from the market, including losses
Part 2
In Part 1 we saw that just searching for a better system or studying the charts longer isn’t really good enough. Yes, you need a system with a statistical edge; of which this site has several. You also need proven money and risk management strategies; a fact Marc reminds us of almost daily. And then you need the psychological tools to deal with the market.
Tools such as patience, discipline and consistency: again a fact Marc reminds us of on more or less a daily basis. And finally, there’s that last little bit stuck on the end….“u”. Well actually, “u” should be “YOU”, and it can be a HUGE!
The bad news is that you and l can be the core problem itself, in ways as varied and diverse as the human race. The good news for us is that the answer seems to lie nearby, within each of us. So, in this part of the article l want to share some things l personally have found to be useful. These may not be the tools you need but l hope that you can find something of value in them.
Joel Friant, a trading coach, has researched this idea and believes that the problem can lie in our “income thermometers”. He writes,
“We all have an Income Thermometer inside of us that’s set for how much we believe we are worth. If it’s set at $6,000 a month income for example, and then we end up taking a trade or a series of trades (or having another successful business deal) that brings our total monthly income in any one month to $10,000, it’s inevitable that either the next month or soon thereafter you will have losses combined between your trading and/or your other business activities that will cause you to make only $2,000 that month.
Your AVERAGE then will come right back to $6,000 a month. Our actions each day actually play out exactly what is needed to do to be congruent with the level our thermometer is set at. This is why the ONLY way to make more money in life is to raise your income thermometer! Our subconcious keeps our actions in line with the thermometer no matter what we do consciously.
In trading, our conscious minds are powerless against the emotional forces the markets throw our way. It’s virtually impossible to expect to just consciously ‘try harder’ and somehow turn our trading around, yet this is what so many traders who lose continue to do.
Consistent profitable trading has to happen through the subconscious. This is why 95% of active traders do not make money, and it’s also why consistently profitable traders when asked, have a hard time pinpointing some ‘event’ when they suddenly stopped funding accounts, and started seeing their accounts consistently rise!”
To raise your thermometer, he says, is a question of overcoming psychological barriers formed in childhood and earlier life. We have to increase our self-worth and self-esteem and then we can attract positive things in all areas of our lives, including financial rewards.
To achieve this he recommends that we become the best person we can be. We become a positive energy in the universe and the universe rewards us.
“Becoming a consistently profitable trader is the by-product of becoming the best person you can be in ALL areas of your life!”
At this point you may well be being turned off by the “cosmic” tone of this, but perhaps it’s too easy to be dismissive. Go into some of the big banks or hedge funds in London and ask if they take note of astrology, full moons, feng shui or whatever in their trading, and you will find that they do; as long as it makes money they don’t care!
The problem that occurs to me is that becoming the best person you can be is easy to say but much harder to do. If the market is like a mirror and reflects back to us how we are, then how do l become a shiny happy person?
Ruth Barrons Roosevelt has written a little gem of an e-book called “Keeping a Cool Head in a Hot Market” which tackles this issue full on. She writes,
We want to hold positive beliefs that support our trading, but these convictions are very different from the belief that a particular individual trade has to be a winner. Such a belief merely distorts our perception. And in a hot market, we have to keep our perceptions and interpretations clear and clean. We want to believe that through disciplined and effective trading we can and will make money, but not necessarily that we’ll make money in this one particular trade or market.
She agrees with Joel Friant that we all have unconscious conflicts within us which can sabotage our trading and our personal lives alike. We may believe that money is ultimately dirty for example, “filthy lucre”, or that by taking a lot we may be depriving another human being, or that money and happiness are mutually exclusive etc etc.
She then lists the following beliefs which she feels are among those which will support successful trading.
• I’m in control of my own actions trading.
• I’m in control of myself and my future.
• I learn through my mistakes.
• I learn through my successes.
• My past failures have strengthened me.
• Each day I become a more seasoned, more effective trader.
• I get stronger and wiser every day by facing risk and adversity.
• There will be other major opportunities besides this one.
• The market provides me with oceans of opportunity.
• I know why I want to create wealth trading.
• There are no limits to the amount of money I can make.
• I use my money wisely for my own well being and the benefit of others.
• I can handle anything that comes up.
• I can solve any problem.
• Risk is essential to reward.
• I’m willing to give in order to receive.
• I always manage the risk.
• I accept the unknowability of the future.
• I prepare for surprise random events.
• I am committed to being an excellent trader.
• I know my rules, and I follow my rules.
• I value money because it has great power for good.
• Money comes to me easily.
• A part of all I make is mine to keep.
• I want to succeed as a trader.
• I deserve to succeed as a trader.
• I love trading. It is a privilege to trade.
• I am willing to work hard for what I believe in.
• I will do the necessary work and essential play to be a superior trader.
For me this is a great list and l particularly like the fact she has included sayings which suggest we can share and use our money for our own well being and the benefit of others.
Now, at last, the fun bit. Scientific Research. If you have 10 minutes 48 seconds to spare, watch this brilliant video: The surprising Truth About What Motivates Us
We are people it seems, not horses! Scientific research shows that, contrary to popular belief, increased financial reward only leads to better performance when the activities involved are simple and mechanical in nature. If they involve any degree of conceptualisation or creative thinking, as does trading, exactly the opposite is true.
The research shows that when the profit motive becomes unmoored from the purpose motive bad stuff tends to happen….see BP! We humans, it shows, are purpose maximisers not only profit maximisers. Sure, we need enough money for it not to be a real issue, but there are three main factors which really lead to better performance and greater personal satisfaction.
Firstly, we search for “autonomy”, we want to be self-directed and engaged. Put a tick against trading.
Secondly, we want “mastery”, we enjoy just getting better at stuff. Put another tick against trading; isn’t that why we joined Forex Mentor Pro?
Finally, we want what we do to have a “purpose” motive. Didn’t hard working gainfully employed people spend countless numbers of their free hours developing Linux, Apache and Wikipedia, for example, for absolutely no financial reward? Nada!
We go to work happier if we feel our job/company has a purpose beyond profit, just as we live life to the full when we feel the same about our own lives.
So how do we tick the “purpose” box? Obviously, that is for each of us to decide for ourselves. Personally, l found some wonderful free tools at the site below, Words of Peace Global
You may well feel , however, that you already have your own full set of tools; you may well feel that the ones which l have found useful for my journey are not really your cup of tea in the slightest; or you may well feel you don’t really need any such tools at all. Nevertheless, whatever the case may be, l hope you have found my two short contributions worth reading and that, hopefully, they have provided a little food for thought.
Thank you for reading. Happy Trading!
Michael Standen.
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Originally Posted by marc walton
