Trading Mindset – Your Purpose for Trading Affects Your Results
Our purpose for trading affects our trading mindset, our performance, and likely has a lot to do with our outlook on life overall. The lure of trading one’s own money, working from home for a few hours a day, and making lots of money attracts all types of people…after all, this is an alluring prospect!
Yet many begin to trade as a way to get rich quick, with the thinking that “If I could just make a million dollars, then I can finally relax, sit on a beach somewhere….” While trading can provide the resources and time to do things you enjoy, approaching any endeavor with the expectation that it will allow you to “stop” or “quit” is unlikely to produce fruitful results. If your real goal is to make some money and then stop, do you think you are really motivated to put in the work (A LOT of work) to become successful in the first place?
In The Way of the Superior Man, David Deida opens with a powerful chapter, meant to cut through the bullshit that we often feed ourselves about life. While the book is not aimed at traders, trading the financial markets is a condensed version of life; tendencies, personality traits, and biases are brought sharply into focus. Those who realize this, and are able to adjust their behavior, are likely to succeed.
Stop Hoping for a Completion of Anything in Life
Most men make the error of thinking that one day it will be done. They think “If I can work enough, then one day I can rest.”…Or, “I’m only doing this now so that one day I can do what I really want with my life.” The masculine error is to think that eventually things will be different in some fundamental way. They won’t. It never ends…. [New traders often think this; that somehow after a few months or even years of study, trading will become “easy”. Wrong! The market will relentlessly test you, poke at your insecurities and weaknesses, and find new ways to challenge you. It doesn’t end; you choose to love the challenge, or you eventually quit out of frustration. That’s it.]
…Don’t believe the myth of “one day everything will different.” Do what you love to do, what you are waiting to do….
Spend at least one hour a day doing whatever you simply love to do…in spite of the daily duties that seem to constrain you. However, be forewarned: you may discover that you don’t, or can’t, do it; that in fact, your fantasy of your future life is simply a fantasy.
Most postponements are excuses for a lack of creative discipline. Limited money and family obligations have never stopped a man who really wanted to do something, although they provide excuses for the man who is not really up to the creative challenge in the first place.
~David Deida, The Way of the Superior Man
This is not to say we can’t change our personal circumstances. We can. But the mindset we assume when we set out to change our circumstances will usually determine whether we succeed, as well as how much we enjoy the journey (which is what really matters).
The application to the trading mindset is that if you come to the markets solely to make money, you’re cheating yourself. Every successful trader I know loves to trade, or at least loves the processes and challenge of trading. It gets them up in the morning with excitement for what the day may bring. They, and I, spent months and years practicing and studying the markets because we wanted to do it…with no financial reward at the beginning for an extended period of time. The financial rewards came later, as a byproduct of dedicating ourselves to a craft.
I do know a few people who don’t love trading, but they love something else enough (maybe traveling, writing, painting, etc) that they are willing to see trading as a career that provides the freedom for them to pursue those other interests as well, and therefore they dedicate themselves to market study wholeheartedly. This passion fuels them to spend hours honing their skill, finding flaws in their methods, and exposing hidden internal biases.
I love trading, but I also love that I can golf every afternoon, or sit on a patio during the afternoon when the markets are quiet (I only day trade in the morning, and then typically look for swing trades in the evening). While my passion for trading is strong, all those other things are motivators that also keep me pressing forward. The market is relentless, so I need to be relentless, continually looking for better ways of doing things.
Your starting goal may be money, but if it never evolves to more than that, what you came to the markets searching for is likely to elude you. Most traders will tell you that you can’t think about the money when trading; you have to think about your strategy. If you think about money while trading, you’ll likely make poor decisions. Focus instead on implementing your trading plan meticulously. Focus on the process of trading your plan and favorable results are more likely.
Focusing on money is one of the many traps new traders fall into. To read about others, and how to manage them, see 9 Ways To Improve Results Through Trading Psychology.
Have other passions and goals, but if you decide to trade, dedicate the time that it requires. Don’t try to get rich quick, just so you can stop; such an approach will result in only wasting more of the time you could have spent perusing something that really interests you.
The trading mindset isn’t just about trading, it is a mindset for life.
By Cory Mitchell, CMT
If you are interested in learning how to trade the stock market, check out Cory’s Stock Market Swing Trading Course. It includes 17 videos and more than 12 hours of instruction on how to swing trade stocks effectively and efficiently whether prices are rising or falling.