Consistent Profitability is a By-Product of Transforming a Driven Mind into a Patient Mind

How many of these success-mind strategies do you employ in your approach to the self-development as a trader?:

  • Seize the day
  • Feel and see the success
  • Get excited about your image of success and stay motivated
  • Get up after a loss and push through it
  • Be persistent in the face of adversity
  • Be a winner – you can do it, just keep trying
  • Learn from your mistakes and never give in
  • Imagine success and be that success
  • Know that you will conquer trading as you have other challenges

These are the mantras of traders I meet every day who feel they are right on the cusp of turning the corner. Unfortunately for them (but fortunately for traders on the other side of their trades), they usually have been at that place for a good while. They know how to trade. And they hold the belief that if they only push hard enough, they will get past the barrier to their success by sheer hard work and determination. Years later, they are still treading water financially and are perplexed about why they have not broken through to the financial success that they know is right around the corner. What is the roadblock that keeps success at arm’s length and out of your grasp? Is it your methodology? You’ve probably tested that backwards and forwards and discovered it works just fine if you were able to manage the pressures of risking capital in the heat of the moment. Is it that if you only had just one more indicator, one more device, that would be the “magic bullet” needed for success? No doubt you have collected plenty of trading “stuff” over time and the promise of the Holy Grail has faded.

Seeing the Destination, But Not the Changes Needed for the Journey

Read that first paragraph again. Notice that, in all of them, “you” are acting on the external environment to create the conditions of success. Even when you make a mistake and correct it, it is about an external mistake OUTSIDE OF THE SELF that you are attempting to change. No one notices the “you” who is projecting beliefs about your success onto the uncontrollable trading environment. “You” see what you want (the destination), but the “you” that you bring to trading is not equipped for the journey to get to the destination.

The evidence is there if you are willing to be honest with yourself. Look no further than the health of your trading account. It is the black and white truth meter that cuts to the core of the problem – if you accept one assumption about “you” and your trading.

The Assumption: You are projecting your beliefs about your capacity to manage uncertainty onto the markets and you are seeing the effectiveness of those beliefs as a by-product in the health of your trading account.

I am not asking you to believe this assumption – I am inviting you to test it in the laboratory of your trading. With this assumption, you are turning your notions of success on their head. The answers to your trading woes (if you already know how to trade and trade well when risk is not a palpable trading variable), then the lack of success in trading is not found externally in more “stuff”. It is internal, where you recognize that the beliefs you bring to trading are the very limitations that you are mistakenly trying to change externally. It is these very beliefs that drive the use of your methodology.

The goal (successful trading) is the destination. The journey is to become the change internally that makes the goal of the destination a strong possibility. Unfortunately, most traders really do not want to look at themselves internally and explore how their psychology is, in effect, shooting them in the foot every time they force their success notions upon the markets. They fear what they may find.

They begin to fear fear itself. And out of the avoidance of that fear, they never look at the beliefs they hold about their capacity to perform in the clutch when the outcome is uncertain. Bravado replaces real internal courage. But the will-power of bravado becomes the vanity that caves in when exposed to the fear of being found out. Meanwhile, internal courage assumes that you are a mess at the level of psychology of belief. And it is this very mess that needs to be re-organized to become a clutch trader.

The fear of the deep dark secrets you are hiding from is simply an expression of the self-deception within everybody. It has to be confronted so that the belief system (that trades) can be re-organized into higher functioning (consistency and patience). It is here where the re-construction of the mind that trades takes place. In the same way, all people discover that (for traders, sooner rather than later) the interior landscape of the mind, initially, is a mess. This is simply human nature. It is the willingness to re-construct this interior landscape that makes all the difference in the performance of trading and the development of consistent profitability.

You discover that, yes, “you” are the problem in your trading – not all the external stuff you have distracted yourself with. And that a re-organized “you” is the solution to the problems in your trading (again assuming that you know how to trade, but have performance issues while trading under pressure). This is the journey into the performance mind needed for consistently profitable trading.

Finding the Self-Beliefs behind Performance in the Clutch

Traders who are really committed to developing their capacity to perform well under pressure analyze what happens psychologically while in the heat of a trade in order to get at the underlying belief structure behind performance. It is not about what you would like to believe about yourself, or what others believe about you, that matters. It is the beliefs that are exposed in these critical moments that matter. It is these moments that you are forced to acknowledge your powerlessness to control outcome.

It is also these beliefs that drive the performance of execution in your trading. And, consequently, the health of your trading account. Most people do not want to change, not matter how compelling the evidence for the need to change is. They want the external world to change. They prefer staying in their comfort zone and forcing the world to change in compliance with their beliefs about their need to control outcome. This attitude has often worked in life before trading They were able to control outcome externally usually by sheer will. So, why should they change? They should be able to maintain the status quo in trading just as before trading. Wrong!

The problem is that any belief that is rooted in control of outcome is going to fail in trading. The trader has to accept that he cannot control outcome. Instead of certainty of prediction, trading requires the management of probabilities where outcome is never certain. Willpower and prediction based on positive attitude simply are non-starters in the world of consistently successful trading. By looking at your trading account, you can ascertain whether you are working from a probability-based mind where uncertainty is accepted and managed or from a mind rooted in self-limiting beliefs attempting to control outcome.

These self-limiting beliefs are recognizable in the performances that lead to failure and loss. When you lose, what do you really say to yourself? Do you beat yourself up? Do you get mad at the trading gods and seek revenge? The self-limiting beliefs lurking behind impoverished performance fall within four categories. This is not rocket science, but it does take courage to acknowledge that they are operating and resulting in your poor performance in critical moments. But without the courage to see the self-limiting beliefs, and thereby remaining blind to it, these traders stay stuck in the comfort zone of current performance.

The Self-Limiting Beliefs behind Diminished Performance in Trading

  1. A sense of inadequacy. Not being good enough. Never enough information to act in the heat of the moment.
  2. A sense of not mattering. Having to prove by deed that you matter by making a lot of money.
  3. A sense of unworthiness. I have to work hard for my money. Easy money is not right. Net worth becomes a reflection of self- worth.
  4. A sense of powerlessness. I talk a great game, but I get overwhelmed when the heat is on.

These beliefs are unavoidable and are simply part of the human condition. Much of the success that many traders experienced before trading were actually adaptations based on these four self-limiting beliefs A perfectionist who feels inadequate if he makes a mistake can make a great accountant or airline pilot, but not a trader. Many a successful business man is driven to prove that he matters and confuses his sense of mattering with his performances, particularly if he makes a lot of money. Many a great salesman who has learned how to please his clients is, at the bottom, trying to prove his worthiness – worth assessed through the opinions of others. And who has not known a control freak who has produced success as a way of demonstrating his power (“I can conquer anything”) – until he started trading.

Unfortunately, for many, the underlying belief structure becomes so common that it is accepted as the truth in the building of success. At least, until they become aspiring traders. Then the small world of their former career collides with the incomprehensible world of the markets. And the very traits that allowed them to become successful in circumstances they could control become the binders to success in the world of trading where outcome cannot be controlled.

From Theory into Your Reality as a Trader

How do you use this information to evaluate your trading performances? First, look at your trading account. Is it healthy and growing? Or is it stagnant or subject to unhealthy drawdowns? This is your baseline. Then look at your ratio of winners to losers – this will reveal the effectiveness of your beliefs about your capacity to manage uncertainty. Winning percentage alone is not a good indicator. You can have a great winning percentage, but not manage trades well and still lose money. One big drawdown can negate many small wins.

Then you look at what happens when you choke under pressure. What thoughts flood to your mind? This is what you should be looking for, rather than attempting to avoid them. You have already seen what happens when you practice avoidance. Now you need to look to define them.

It is not rocket science. It is about self-honesty. Cut to the chase. Is the mental attack you experience in your mind after a loss about adequacy, mattering, worth, or powerlessness? This is what I call your Orphan Nature. It is simply part of our humanness we bring into trading that is seeking healing or transformation. That is all. It is not about you as a human being. It reflects how your brain organized you to survive in the world in which you were born. This is only the historical organization of the self, not “you”. It is only one potential you. And one that was organized before you had a mature brain with which to work.

This is the first step, evaluating the current mind that you are bringing to trading. It will show you where to re-organize the mind that you need to bring to trading. It is a big step. It is the one that most traders avoid until they have depleted their resources. And hopefully, you are ahead of the game and on your way to taking advantage of the other traders who refuse to look at themselves in the mirror and tame the beast that holds them prisoner.

To learn more from Rande, be sure to check out some of his other articles at TradersStateofMind.com.