Limiting Beliefs

Trading can often be very difficult to manage as a business, when you are doing it all by yourself. Every single day you have to get up in the morning and repeat the same tasks over and over again. It can quickly become frustrating, especially in the beginning, when you are not really seeing any outcome of your hard work.

If you have to motivate yourself every day to get started, there is a problem already present. You are not a trader just yet, because you have to overcome the resistance that is constantly present in the background. Think about some other areas of your life, your hobbies, what really interests you? Do you have to struggle to get started in these areas?

Unless we learn to do all the tasks related to trading with enjoyment, we are not traders. We are simple trying to force ourselves into becoming what we are not. The only way to solve this problem is to work with our beliefs.

Try asking yourself, what is it that generates resistance to trading work in your mind? What beliefs do you hold that constantly come up and often do not allow you to work for 8 hours straight with ease and joy?

Here is a sample list:

  1. Trading is boring
  2. It is not “right” to speculate (due to your religious, political or any other beliefs – examine those)
  3. Trading is too difficult
  4. I need someone to tell me what to do in order to do it right
  5. I don’t like working alone
  6. I can’t work from home
  7. I don’t want to spend so much time at the computer every day
  8. My family/friends do not believe in me succeeding and so I can’t take my trading seriously
  9. I am too disorganized
  10. I am lazy
  11. I am not smart enough to trade
  12. I cannot concentrate well enough
  13. I don’t like getting up so early
  14. I don’t like going to sleep so late
  15. I am not lucky (examine your beliefs related to trading being “just luck”)

I could easily continue the list on and on, but the whole point is for each of us to discover our own limiting beliefs.

Let’s examine the first belief, “Trading is boring” in more detail.

  1. I could care less where the Market will go (great, you already have one of the most important components of a successful trader!)
  2. I don’t understand the Market (do you have to?)
  3. I don’t enjoy analyzing the Market (the better you get at something, the more you enjoy it – I did not enjoy practicing guitar the first couple months too)
  4. It is too difficult to keep all the information in my head (make notes, take screenshots, write a blog!)
  5. I am too tired and I am falling asleep as I watch the Market (review your sleeping schedule and eating habits, make sure you drink water ALL THE TIME, review your alcohol/smoking/caffeine addiction)

Once again, this is just an example of how we must take each of our beliefs and break them down into aspects in order to discover what is really limiting our full potential.

Unless you are ready to become self aware and look inside yourself – trading is not for you. Stop wasting your time, your family’s money and go find something you can be truly good at.

Relax

The Market can do nothing to hurt you, nothing can cause any damage to your reality, so why is it that we find it hard to just relax? How much easier our job would be if we would follow the Market, instead of following our thoughts about the Market?

The reality of the Market can never do anything that would cause you stress. Only your interpretation of the Market – your thoughts about it – cause emotions and prevent you from being detached.

Yes, it is important to have a trading system – a framework inside of which you view the Market. A trading system will cause you to interpret Market’s actions, so it must be constructed in a way that avoids all inner conflict. However, if you are unaware of your thinking, even the best trading system will fail because you will not be able to follow it precisely. You will never notice when faulty thinking enters your mind and causes you to choose incorrect interpretation of the information Market puts in front of you.

Until we learn to just relax and listen to what’s going on inside, there is no point to try building a trading system. The conflict our unconscious mind tries to hide will be projected into our trading and ensure our failure.

Feeling stuck

Trading is probably one of the most difficult endeavors one can choose in life. The amount of knowledge to learn is overwhelming, the amount of information to read, process and understand in real time is pushing our limits as human beings. It can be really draining emotionally, exhausting physically. You do not get any reward from doing what you do other than monetary – and it can take much time before these monetary rewards are starting to come your way.

There is no one to support you either when you are trading privately. There is no value that you are generating for the society, unless you do so with the money you earn on the market.

Given all that, it is only normal that on many occasions you will be stuck. You will feel like quitting, depressed and frustrated. What do you do in these situations to help you move on?

First let’s see why these black stripes happen in our trading career. Interestingly enough, they are not necessarily caused by big losses that one might experience. I think we are most vulnerable to such emotional drawdowns during our learning phase. It can take years of regular trading education, including practicing the concepts on a demo or a small real account before the trader starts seeing the light in the end of the tunnel. During this time there are many challenges that we must deal with.

  1. Income generation. The chances are that any starting traders will not be able to make money consistently for more than a year – and that is a very optimistic estimate, given that there is right learning information available. It is very difficult to work another job while studying and practicing the markets.
  2. The overwhelming amount of information. Depending on your goals, you might want to implement a simple trading system and do it consistently every single day, not bothering to learn much more about the markets. This approach never worked for me, and was actually preventing me from moving forward with my trading, as I was hoping to “make it” with very simple methods, refusing to learn more.
  3. Operating under complete uncertainty.
  4. Having to do the same steps every day consistently that can be difficult physically (our brain is just like a muscle, and will get tired from too much mental work).
  5. Not having a clear work process. This is a huge one. Even if you are ready to put in all the hours required, ready to show up consistently every single day to analyze the market and find the entries according to your trading system, you will be frustrated more often than not unless you have a clear Daily plan, Journaling method, Analysis and Entry rules.

My own approach to all these issues changed greatly over the years, and only very recently I was able to work positively with them.

Five years ago I would get excited about some new trading idea, work for a week or two like crazy on it, fail to get immediate results and proceed to become extremely frustrated, abandoning all trading for many weeks. It is obvious that such attitude was preventing me from reaching any consistent success.

Two years ago I would start trading a small live account or a demo daily. I would do all the necessary analysis, put on the trades and do some notes in the journal. I would not have a systematic approach in doing it however. More often then not I would finish 2-4 weeks period with reasonable profits, but would burn out completely in the process. The result was abandoning the trading again.

Just recently I started trading consistently, analyzing the market every single day, researching different trading opportunities and putting the trades on. Despite all the technical knowledge that I accumulated over the years I am still making many mistakes and moving forward only by analyzing and working through these mistakes. I record and analyze every single trade that I place, writing a journal entry when opening the trade and another one when closing it.

Only by working through one mistake after another, one failed trade after another, I am building a consistent trading system.

The main factor that gives me confidence moving on every single day, placing the trade, not quitting, is market psychology that I’ve been learning over the past two years. My technical understanding of the markets did not change much, but my attitude has changed dramatically. Every time I see a stop loss being hit I am completely calm and accepting. Every loss I get is just another lesson. Thanks to building a very rigid money management system I am completely comfortable with the price I am paying for these daily lessons. This is when real trading education happens – after all the theory and analyzing the markets on the history.