4 soul-sucking menaces that prey on traders

Lie down on the coach and close your eyes…

Rich’s Psychoanalysis clinic for traders is open for business…

Let’s see if we can get the bottom of some deeper trading performance issues you might be having.

Now I’m sure you’re already aware of the obvious ‘technical’ things you need to pay attention to: your ability to trade a system with discipline, the emotional tug-of-war you sometimes feel as soon as real money becomes part of the equation (good old fear and greed at work!), making sure you’re not overexposing yourself to risk on individual trades…

You know the kind of things I mean, it’s the stuff trading books always cover.

And they are VERY important. I’m not belittling their relevance in any way.

But I think there can also be deeper issues at work too.

There can be a ‘meta-hole’ in your approach you might not spot by thinking purely in trading terms.

So let me tell you the kind of things I mean…

4 Traders and their limiting afflictions

These are all examples of deeper issues I know have affected traders in the past.

They can often be the actual driver behind performance issues and can therefore be the issue that ultimately needs addressing in order to improve.

Let’s take a look at them one-by-one…

Trader A was trying too hard in to prove his friends wrong.

This is a common one. He might have mentioned to his brother-in-law, or the guys down at the golf club, that he’s doing some trading only to be met with smirks and snide comments:

‘Ha-ha, you’ll never make any money doing that!’

It can be easily to slip into an emotional ‘right, I’ll show them!‘ mindset.

So instead of placing his trades because it’s the right thing to do at the time, Trader A is suddenly working to a completely different agenda: he’s trading for bragging rights, so he can prove the doubters wrong.

This can create an unholy amount of pressure to perform and can also create an environment of self-delusion (it’s tough to be honest with yourself about any areas that might need attention and to make progress when you’re feeling harshly judged by other people).

Trader B believed he’d be unstoppable because of his ‘superior’ abilities.

This is a common pitfall for people who have enjoyed great success, or held respected positions in other fields. Especially those which involve working with known outcomes like engineering and medicine.

It can be easy to mistake the efficacy of a preconceived ‘formula’ – the engineer’s time-tested load calculations or the surgeons preset procedures – with some kind of advanced abilities of your own creation.

Now before I received angry emails from engineers and doctors from across the country I mean no offence.

It’s just there’s no diploma Trader B could brandish, no letters after his name he could refer to, that will guarantee success in the markets.

It can be understandably difficult for people who have applied advanced skills to great effect in other fields to revert back to a beginner’s level and accept there is no head-start in the markets because of their other achievements.

But there is simply no substitute for a humble and respectful approach to the markets!

Trader C just liked the adrenaline rush!

You know, deep down some traders aren’t really in it for the money.

They might think they are but it’s the thrill of the chase – the adrenaline rush of the unknown outcome – they are really after.

And this is completely fine. There’s space for everyone in the markets but being honest about the reasons behind his trades could cure Trader C’s frustrations instantly.

If he accepts that he’s not really bothered about making a fortune from trading and it could take the focus right off his performance and let him enjoy it as a hobby instead. If he makes sure he sets aside only the amount of money he’s prepared to lose he could just have some harmless fun!

But be warned, Trader C, you might find you suddenly start making much better trading decisions once your focus is taken away from the profit or loss of each individual trade.

Your surprisingly good longer term results might make you sit up and take things more seriously!

Trader D fancied some fast and easy money (but wasn’t prepared to earn it).

Many people come to the markets because they think it’s easy money – a way to make a fortune without actually doing much.

And you know what? There aren’t many businesses simpler than trading…

There’s always a supplier to buy your wares from, and there’s always a customer ready to pay you for them. All you need to do is press the buy and sell buttons at the right time and in the right order.

But as simple as this seems, there’s still work to do.

Admittedly it’s mostly of a psychological nature. It’s working on your own mental strengths and weaknesses.

But when I receive a tetchy email from Trader D who complains he has placed his first week’s worth of trades but hasn’t yet made his fortunes I can read the underlying problem like a book.

And the unfortunate thing about the ‘Trader D’ type is they are usually unwilling to spend time upgrading their unrealistic outlook even when I offer to help.

They’re usually too busy looking for the next glittering path to overnight riches!

So anyway, there are a few examples of the kind of bigger issues that can be at work, well away from the entry patterns and stop-loss adjustment of day-to-day trading.

If you’re trying to remove a trading blockage it might be worth giving some thought to the big-picture circumstances you find yourself trading from.

You might find your performance enhancing breakthroughs in some surprising places!

Until next time…

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