TRADING PSYCHOLOGY

YOUR KEY TO PLUMPING UP YOUR BANK ACCOUNT

Get any group of traders together and you will notice that the novices tend to talk about indicators and charting patterns, whilst the professionals discuss trading psychology and money management. Your level of self-development will rarely exceed your bank balance, so it makes good sense to work as hard on your own psychology as you do on your trading plans.

You probably know that I’m Louise Bedford, best-selling author of 4 books on the sharemarket. What you may not know is that I have a degree in Psychology, and trading psychology is a major focus for me.

As traders we seek the goal of unwavering self-control in the execution of our trading plan. Increasing our levels of self-awareness is the first step towards attaining this goal. If you are relatively happy with your entry and exit techniques, but have a sneaking suspicion that something is standing in between you and incredible profits, then you owe it to yourself to read on.

What’s Your Financial Thermostat?

I believe each of us has a personal financial thermostat set at a particular level and it is that setting that determines our financial success. My property friend, Michael Yardney owner of Metropole Buyers Agents Melbourne, is also of exactly the same mindset and we’ve discussed these ideas together at length.

You can be the best at your job or know all the theory about trading, but if your financial thermostat isn’t preset to a higher level, you will never amass a large amount of money. And if you do, you are likely to lose it.

I’m sure you have heard of this phenomenon with lottery winners, who’s thermostat isn’t set for the money they are given. And after a few years they have squandered it all.

Most Australians have their thermostat set low. Really low. This is mainly because we were taught about money by people with issues about money and fears of money and over time these issues and fears become ours. Some people have their thermostats set for millions of dollars, while others settle for thousands.

Most of us don’t know why we make the choices we make about money and wealth because they are subconscious choices. They are the result of programs we run in our mind automatically.

While we don’t understand why we make the choices we do, we see the end result of these choices – our money, our wealth. And often we don’t like what we see.

Most rich people think along similar lines, and that they think vastly different thoughts to the poor or middle class. However, most traders have an attitude toward money and a general mindset that simply won’t allow them to reach the next level of investing. The way they think is the greatest roadblock on their journey to financial freedom.

This would suggest that if you re-program your inner dialogue to reflect the way rich people think, you will be moving in the right direction to achieving your own financial success.

Your mindset determines your success. It’s that simple – but that profound.

So for you to change your life, you must change your way of thinking. However, it’s also true that you can create new beliefs at any point that support and actually accelerate your success.

Just stop and consider this for a moment – it’s probably true that much of what you have been taught about money and wealth creation has come from people who do not possess real wealth themselves.

What About the Experts?

Additionally, much of what you have read from so-called “experts” is probably the words of people who didn’t have substantial wealth either. And it’s likely that many of the people you associate with; your work colleagues, friends and peers who give you opinions on “money” – are not truly wealthy.

What this means is that your present belief systems about money and wealth creation are based entirely on what you have learnt from “un-wealthy” sources. Wealthy people take their advice from other wealthy people. The poor take their advice from their friends and family.

We are all programmed by our parents, teachers, culture, religion and peer group, who in general were not wealthy. Because people’s beliefs and feelings about money are strong, they taught us well. We developed strong inner laws. But even though these laws are strong, they can also be changed.

Break Those Childhood Patterns

The patterns we learn as a child are not broken until we become aware of them, decide to change them, and then with intent, make whatever effort is necessary to create a new pattern of behaviour.

Our current beliefs were created in three ways: by the things we heard, by what we saw and by the specific incidentswe experienced as a child.

What did you hear from your parents about money and rich people?

Were your parents fond of using expressions like: “Money doesn’t grow on trees,” or, “Money is the root of all evil”? Maybe they told you that rich people are greedy and selfish or that money won’t make you happy or it’s just not that important anyway. Sound at all familiar?

The well-meaning adults who said these things to us were our “wealth” educators… but it’s worth noting that they were not wealthy educators with a wealthy mindset. If they were, they certainly wouldn’t have spoken about money that way!

We also learn a lot about how to behave in all areas of our lives by modelling our parents’ behaviour. So how did your parents behave when it came to money? Did they argue about it? Did one struggle to save while the other liked to spend freely? Were they effective at managing money or was one or both of them far more adept at shopping?

It’s interesting how many of us end up becoming so much like one or both of our parents in the arena of money. Then there are others who tend to rebel and become the opposite of our parents (like I did), often because they spent their childhood struggling with feelings of anger and frustration.

The Role of the Subconscious

What this means is that for most of us, the subconscious programming we received as a child was, and continues to be, disempowering. Limiting wealth beliefs were instilled in us by what we saw, heard and experienced, and at the time they seemed very true, but these beliefs are no longer relevant to us today.

Your conscious behaviour is everything within your control and the things of which you are fully aware. Your unconscious covers all of the motivations and processes that lurk below your conscious level, but still have an effect on your behaviour, even though you are quite unaware of the origins of your thought patterns. An example of how our unconscious thought patterns could affect our lives is the drive that some people have towards self-sabotage. Even though these people say they want to be successful, their unconscious mind seeks out opportunities that are likely to cause them damage.

The markets act as a stage play where traders are the scriptwriters. Often it can seem as if the market is alive and is out to ‘get you’. A share won’t drop from a great height because it knows that you bought it the day before. Even though the markets are dynamic and can seem to be self-aware from time to time, let me assure you that the market doesn’t know you exist. Your own hand has perpetrated any damage that you have experienced as a result of being a player in the sharemarket. The enemy lies within. Luckily, so do the seeds of your own greatness.

Self-Destruction is the Consequence

Many people have an inbuilt drive towards self-destruction. We all know the type of guy who consistently chooses the wrong job, crashes his car or gets burgled because he left his front door open. When the unconscious becomes conscious, it will loosen its grip on your behaviour patterns. All of these symptoms could be an outward display of a deeper issue. As Ed Seykota, one of the world’s most successful traders says, “Some people seem to like to lose, so they win by losing money”. Sort out your own mind-set or the market will manifest your darkest thoughts.

Although sometimes painful, the process of making your thoughts explicit is necessary in order to be fully aware and unaffected by any unconscious under-currents.

The more self-aware you can become, the less likely your trading results will be damaged by your unconscious. Our goal as traders is to carry out the flawless execution of our trading plans. Sometimes we need to delve into the core of our individual psychology to be able to achieve this goal.

Are you annoyed that your bank balance never seems to rise beyond a certain number? Does your investment income or your business seem to hit a wall or plateau cyclically? Are you not putting money aside to invest, even though you know you should?

Non-supportive beliefs about money can create unconscious responses, negative emotions and self-sabotaging behaviours around wealth building. Psychologists would say that ‘perception is projection’ – your experience is a direct reflection of your consciousness.

But you can choose to think differently and you can make that choice right now. Distractions will make your mind snap, your fingers falter… and you’ll end up buying 5000 BHP instead of 50. You owe it to yourself to master your own psychology, or you’ll suffer the consequences.

Careful Who You Hang Out With

You are the average of your top 5 friends. You are the average of their weight, their income, their dress sense. Successful people hang around successful people. Wealthy people take advice from people who are wealthier than they are. Average people take advice from their friends and family.

There are people in your life that you’ll continue to love – but they may not be the ones you need to hang around to drive you on to the next level. You truly want to work with someone who’s walking the walk.

Not everyone will support your success. Your success is like a mirror. Some people will be inspired by you. But for some people… your success will make some people look closely at themselves, and if there are parts of themselves that they don’t like, they’ll look at you and see what they don’t have, and why they think they cannot do what you’ve done. Be vigilant.

The only taste of success some people have is when they take a bite out of you. But if you hold yourself back, they won’t even notice…. the only person you’ll be hurting is you.

Yes, it will be a stretch. It will require you to step up and grow. Yes, it will be uncomfortable. But remember – You can’t cling to who you are if you want to embrace the new you.

It’s Time To Make a Change

To change your results, you don’t have to just change what you’re doing. You have to change who you’re being.

You can only grow as far as your greatest fear. If you can’t grow any further, you can’t go any further. And here’s the thing, often your biggest fear is the one that turns up disguised as the next big opportunity that you’re presented with. If you want to walk through that door of opportunity and step into your greatness – then you need to move through your fear and take a leap. That is the big uncomfortable secret.

The fear isn’t real. It’s just uncomfortable. You, growing, shining, being the best you that you can be – that is the truth. When you decide, with every core of your being, that this is the person you want to become… then your fear will fade away.

Have you decided you want to be a trader? The latin root of the word ‘decide’ means to cut away – to cut off all other possibilities. You’ll need to cut away some parts of you that you can’t afford to indulge any more, as soon as you’ve worked out that trading is for you. Sure you might have to cut away some television time, so you can study. You might have to cut away some self doubt, so you can get the guts to continue when things seem confusing.

But, when you decide… when your awareness has shifted and you’ve made that decision, then opportunities will start to line up.

More information

Now that you realise the importance of psychology on your trading results, I know you’re going to want to take action. This is a valuable resource to help you reprogram your mind for success.

The Trading Psychology Master Class

If you’re finally willing to treat trading as a business, not a hobby, then you need to invest in this year-long online course. A hobby is something you can put down and leave for long amounts of time. A business is something you’re committed to with all of your heart, your mind and your actions. The Trading Psychology Master Class will totally revolutionise your thinking about your own capabilities.