What Do You Believe?

Step 1. How to deal with losses.

Losing traders believe.

• Losses are a reflection of their self worth. For example if I originally had $10,000 in my trading account and that amount has degraded to $5,000 then as a losing trader I believe that my worth as a person has been halved.
• Losses are permanent and will continue for as long as they trade.
• I must not lose any money ever.

Winning traders believe.

• Losses are part of the business of being a trade. A loss has no personal characteristics. If I am going to be in a business that revolves around the trading of money then sooner or later I will make a loss. All professionals have a bad day.
• Losses are only a temporary state of affairs I know in the long- term I will be profitable.
• I have accepted that I will lose money sooner or later. I understand what the worst case scenario is. As a consequence I am free from the anxiety that unexpected market moves may bring.

Step 2. Money is not that important.

Losing traders believe.

• Money is the sole goal of trading.

Winning traders believe.

• Money is not that important.
• To a winning trader money is not that important, it is more important to trade according to your rules and to make quality trades than it is to focus on the money.
• Focussing on the money alone causes anxiety and a heightened level of stress leading to an increase risk of the trade failing.
• Profitable traders focus on trading well. If they trade well then the money is a side effect of those actions.
• This creates a paradox in that a successful trader believes that if they follow their rules and make a loss then this has been a successful trade because they saw a trading signal and took it. The fact that a loss was made is irrelevant, they followed their rules.

Step 3. The market has limitless possibilities.

Losing traders believe

The market is rigged.

• Only insiders make money.
• The market is random (particularly popular among fund managers)

Winning traders believe.

• The market offers unlimited possibilities for enrichment.
• The market exists purely for their benefit

Step 4. Understanding your motivations for trading.

Losing traders believe.

• Trading is a past time like golf or tennis.
• Trading is a slog like work.
• Trading is easy, anybody can do it.

Winning traders believe.

• Trading is a fun business.
• Only a few who are dedicated will make it

Step 5. Taking responsibility.

Losing traders believe.

• My broker cost me money.
• The market took something from me.
• I have to get back at the market.

Winning traders believe.

• They are responsible for everything that happens to them in the market, all consequences are the result of their actions.
• They are to blame for every loss and every profit.
• Profitable traders understand intuitively that they determine how much they win or take from the market and how much they lose or give to the market.

Step 6. Being in control.

Losing traders believe.

• The market is malevolent.
• The market has a personality.
• The market can be described with emotive terms such as I got killed, It was a bloodbath, There was blood in the streets.

Winning traders believe.

• The market has no characteristic other than those that are a reflection of their own personality.
• Profitable traders know that if they see the market as irrational or ill disciplined then that is merely a reflection of their own irrationality and lack of discipline. The market is a blank canvas onto which you project you personality.
• Traders know that by talking about the market in emotive terms they are shifting control of their trading from the neo cortex where rational creative decision are made to the brain stem and limbic system where many responses are hard wired into us.
• Profitable traders avoid at all costs engaging pre-programmed responses such as the fight or flight mechanism

Step 7. Going a little bit further.

Losing traders believe.

• Trading is easy.
• Losing traders are lazy.

Winning traders believe.

• Trading is not easy, it is no easier than waking up one morning and deciding to be a neurosurgeon.
• Successful traders have all had long apprenticeships where they were unsuccessful. Often these periods lasted for a decade until they were consistently profitable.
• Profitable traders are willing to pay the price.

Step 8. Controlling the voice of doubt.

Losing traders believe.

• The voice of doubt inside them is true and correct in all circumstances.
• The voice tells them that they are a loser/they cannot trade/they will fail/they fail at everything forever.

Winning traders believe.

• The voice inside them is an imposter.
• The voice inside them can be changed to be more positive.
• The language with which profitable traders speak to themselves is different.
• They can trade with confidence in the face of adverse results.

Step 9. Method is everything.

Losing traders believe.

• Reading the newspapers/broker research/investment magazine is sufficient.

Winning traders believe.

• Their method provides them with a mechanism to engage the market.
• Method development takes time and is often a laborious process.
• No method/no profit.