Look in a mirror and one thing's sure. What we see is not who we are... Richard Bach
One of the first words children hear is “No!” “You shouldn’t do, say or think that. It’s not nice. You have been a bad boy/girl. Go stand in the corner or wash your mouth out with soap.”Little wonder that so many of you grow up thinking you are not good enough and maybe never will be. You learn that if you do “bad” things, you are a bad person and something is wrong with you. As you grow into adulthood, you keep these memories and hear these words: “You are not good enough and never will be.”
As traders, we often define ourselves in terms of trading results--our actions, inactions, gains and losses. As a result, it’s easy to merge yourself with a decision that resulted in unexpected negative consequences. Simply said, you become your decision. The disappointment and shame you feel when you make a mistake grows and festers until it becomes a dominant part of your identity. You rationalize your "poor" decisions by labeling yourself incompetent or, in the trading vernacular, “an idiot.” Imagine walking around all day telling everyone that you are an idiot? Why are you doing that? What gain are you getting from that, and what message are you giving to those around you?
As a youth, I hated myself for not being good enough. All my inadequacies and failure, not being kind enough or generous or understanding enough would assail me at night. It became a habit to be guilty and self-castigating, not liking myself because I was unworthy. I really tortured myself... Mira Sorvino (Academy Award Winning Actress)
Your true identity cannot be defined entirely by your choices. Your essence—what makes you a unique human being--exists independently of your decision-making process. This is one reason you are able to love someone (and, ideally, yourself) without condition. You love who they are as a person, and understand that people do not always make choices that are in their best interest or the best interest of others. Yet, you continue to love them.
Trading is not about being right or wrong. It is about making money. It's about making more than you lose.
All trades contribute to your development and are an integral part of your evolution to trading mastery; yet, they are separate from you as a person. A trade that does not result in its intended outcome (making money) is in no way a reflection of who you really are. Nonetheless, a trade gone bad (losing money or not cutting your losses short) can have dire effects on your ability to trust yourself. Your self-esteem suffers, and this spills over into every aspect of your life.
You can avoid becoming your trades by affirming that a "bad trade" was just an experience, and the markets will always give you another chance. Every trade is an opportunity to learn, grow and make yourself a better trader. If you are not learning and growing, your trading ability will stagnate. You will not progress through the four critical phases necessary to achieve trading competence.
What is a weed? A plant whose virtues have not yet been discovered... Ralph Waldo Emerson
You are not your trade, but you are responsible for your trade. If it doesn't work, get out, regroup yourself and wait for the next signal. It is fine to analyze after the fact what you did and why you did it. In fact, it is essential to trading success to keep a rigorously honest journal of all your trades.
If you want to beat yourself up over something, then do it and be quick about it. Try to analyze, back test and reflect on the consequences of your decision from a rational rather than an emotional viewpoint. Allow your primitive rat brain to send emotional signals quickly into the new, rational brain for processing and integration. Accept your rat brain and feel the feelings, but get out of that part of the brain and into the higher learning centers. Strive to understand why you made the choice you did, forgive yourself, and then move forward. In other words, get over yourself as quickly as possible.
A perceived mistake becomes a valuable learning experience and is, in essence, a gift from which to learn and grow. You are not a bad person and you are not your trading decisions. Keep going, keep trying, learn from your great trades and your not-so-great ones, and never ever give up!
I have not failed 700 times. I have not failed once. I have succeeded in proving that those 700 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work...Thomas Edison.
Dr. Janice Dorn is the only Ph.D. (Brain Anatomist) and M.D. (Board-Certified Psychiatrist and Addiction Psychiatrist) in the world who actively trades, writes commentary on the financial markets and manages a subscription-based website. Dr. Dorn has been trading the gold futures markets full time since 1993. She has written over 1000 articles on trader and investor psychology, and mentored over 600 traders and investors.She writes on all aspects of trading psychology and provides a real-time trading service on her website: TheTradingDoctor.com.