Trading is a Journey in Self-Discovery

I know a trader, let's call him Leon. He day trades Futures. He has been actively trading for several years. His profits are erratic and undependable, often going dramatically up and down in the same session. When Leon is making money, his confidence soars and he feels like he is a power trader. On the other hand, when he loses money, which is more times than he cares to admit, he feels like a failure, a loser and stupid. For quite some time, Leon has wondered why he can't be consistently successful, and why his drawdowns tend to be much larger than his profits. He wonders this even though he has no Business Trade Plan, doesn't consistently document his trades and despite having numerous rules, tends to violate them regularly. Leon doesn't have a clue and wonders why he can't get different results even though he continues with this pattern of behavior. Leon is out-of-control and unless he changes, he is headed for a financial ice-cold shower. Are you Leon?

If you want to change your behavior, you must first change your thinking and since much of your thinking is driven by your unconscious, you must become aware of your underlying self-sabotaging beliefs that drive thinking, emotions and behavior. Trading is arguably the most difficult business venture on the planet; why? Because we are talking about money, and with every tick while in a trade, you are either gaining or losing money. But, it goes beyond that.

Money is not only the cornerstone of our society, it is tied up in your identity. If you are winning it, you often feel powerful, competent, intelligent or "good looking;" if you are losing it, you feel impotent, incompetent, stupid or "ugly." The fact of the matter is that when you go to the market, you invariably are expressing yourself; whether you want to, try to or feel a need to, it doesn't matter, you are and will express yourself. And when expressing yourself, your behavior is tied much of the time to unconscious beliefs. Actually, when you are in the markets, every blemish, weakness and character flaw in your personality will be challenged, called out and tested. Now, that doesn't mean that the markets are doing that to you. On the contrary, the markets have no intention for you – even though you may have often wondered how the markets knew that you just placed a long trade and how they chose that exact moment to reverse! Also, there are no rewards, punishments, pain or risk in the markets, only consequences. You provide all the rest. And, with changing yourself, you must provide all the ingredients for that as well.

You can't change what you can't face and you can't face what you don't know. Awareness is key. The more aware you are of your underlying self-sabotaging beliefs, the more you can position yourself to begin to address these issues – one at a time. Now, you might be asking, how do I do that? How do I become more aware if these limiting beliefs are unconscious? Good question! You become aware by simply asking questions of yourself, and by introspection and more importantly by personal observation as you are going through market observation. By checking yourself and checking the market, you'll begin to gain an awareness of why you have no Business Trade Plan or failing to follow the one you have. Why you have no Trade Journal, or failing to document in it. Why you are continuing to do things that you say you must stop doing; and why you are failing to do those very things that you say you must do. Once you identify the underlying self-sabotaging data, you can begin to deal with them...one issue at a time.

So, trading is a journey in self-discovery, and you must begin to pull back the layers of your unconscious onion, one at a time, to begin to realize and recognize what is motivating you to behavior that is producing results that you don't want. There are essentially two kinds of data with respect to trading. Many traders miss this fact and, therefore, miss a very important set of variables that impact heavily upon their trading. One type of data is mechanical data, which are everything that have to do with the markets; that being, news, technical analysis, instruments, indicators, etc. This data is external to you. The next type of data is internal data, which are everything that have to do with your thoughts, emotions and behavior; in other words, the T+E+B=R equation which impacts upon every outcome that you get. You must manage this equation in order to manage your results.

Trading is a 100% mental and emotional game.