Do You Let Profits Define
To date (February 27, 2009), in almost six years
of running this website, I have kept the content strictly to my own. Over time,
but more so lately than ever before, I am being asked almost constantly about
various mental aspects of trading. If my pen wasn't hung up, I would write a
book on this topic before any other topics that come to mind. As I read Joe's
comments not only in this newsletter but in others he posted around this time,
I felt they were well worth passing on to my readers. I encourage everyone to
follow up and read some of Joe's other posts on the mental aspects of trading
from his other newsletters (start around Volume 235, and go up to around 247,
the last issue as this was posted, and beyond if he keeps writing on this
following article is reproduced with gracious permission from Joe Ross, Trading Educators, Inc, from his
Chart Scan Newsletter Volume 240, January 9, 2009, Joe's Trading Tidbits
section, entitled Do You Let Profits Define Your Self-Worth?:
For you to truly
start winning as a trader, you must have feelings of self-worth. It doesn't
matter how poorly you do in the markets, you must have the feeling that your
life has value; the fact that you exist should make you feel fulfilled and
valuable. For many of us, however, this is easier said than done.
lives, we wrongly acquire the understanding that our personal value depends on
what we do, and usually on how well we do it.
Our parents may have implied by
their words and actions that they would not fully love us unless we did what
they wanted. Only when we were "good" did our parents appear to love us fully.
Our teachers may have told us that if we didn't follow the rules, we weren't
"good students." Eventually, we concluded that we were only as good as what we
accomplished in life. Nothing could be further from the truth. Our experience
at Trading Educators has clearly shown us that most traders are suffering from
an identity crisis.
Our job, the amount of money we make, the car we drive, the house
we own, and the neighborhood we live in are all society's indicators of
"success," but that doesn't make it true. We tend to believe that others are
the ultimate measure of our worth, and that if we were to "make it," we would
gain the respect of our friends and loved ones.
Did you go to your high school
reunion? Many people dread going because of the inevitable comparisons between
our old friends and classmates. You may want to see your old friends, but at
the same time, you may also want to "show them" how well you've done. Right or
wrong, it's natural to seek status and financial success. We tend to think that
the more of it we have, the more socially secure we'll be. I don't know where
those ideas come from, but they are wrong.
However, there comes a point in time when it
is critical that you do not let a desire for status or wealth go too far. Don't
allow your accomplishments to define your self-worth. And when it comes to
trading, don't allow your profits to define your value as a trader, or as a
conducting private training, I have discovered that many winning traders wanted
to succeed at an early age. Many traders say that when they were young they
were willing to do whatever it took to achieve success. As children, many
successful traders felt a sense of inadequacy and uncertainty. In order to
compensate for this sense of inferiority, they decided to achieve a sense of
mastery and superiority. The need for mastery can be a very powerful motivator,
but at the same time it can be a curse. Since at the core of the drive for
success there is a need to overcome a sense of inadequacy, a sense of
inferiority may very well continue to lie at the back of the mind.
Most of the time it doesn't matter,
but at times when things are going either extremely well or extremely badly,
feelings of inferiority can creep in.
There's another strange thing I
have observed: when things are going well, a trader may start feeling that
something is wrong, and unconsciously may secretly want to make a big mistake
in order to put things "right." Of course, we may not be aware of such
When things are going especially poorly, you may feel a sense of
inadequacy. It is useful to realize that even a trader who seems to have a
strong ego may secretly have feelings of inadequacy. I have witnessed this many
times. Those feelings can impact your success when you least expect it.
Acknowledging the feelings, and realizing that they may undermine your efforts,
can help you to neutralize them. The best way to neutralize them is to not let
your self-worth be contingent on your accomplishments. It doesn't matter what
you do. It doesn't matter how much profit you make or don't make. You are still
a valuable person.
It is also important to realize that trading is just one area of
your life. You have other roles; you wear other hats. You may be a parent, a
friend, a spouse, an employer, an employee, a member of society. These roles
also give your life meaning. You can be rich in terms of self-worth even if you
are flat broke.
It may seem ironic, but it is essential that you isolate
your feelings of worth as a person from your performance as a trader. If you
put your self-esteem on the line with your money, you'll choke in the end. If
you can separate your self-worth from your net-worth, you'll be a better person
and a better trader.
© by Joe Ross
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