“A losing trader can do little to transform himself into a winning trader. A losing trader is not going to want to transform himself. That’s the kind of thing winning traders do.” – Ed Seykota
A trader friend of mine (thanks Pater!), brought up the topic of “identity” recently.
Firstly, a warning. This article is not for everyone. Quite possibly a lot of resistance is going to come up to the ideas in here from some people. All I will say is pay close attention to that resistance, because it could well be what is holding you back.
The market is essentially an unlimited environment. There are no rules that guide your behaviour.
You are free to choose when, where and how much you trade. Mark Douglas, in his book Trading in the Zone, suggests that it is this desire for freedom that attracts so many traders to the market. There are no parents telling us what to do, or corporate floozies who have the “pay-check given” right to make us jump yea-high.
But the challenge with the lack of guidelines and structure is that most of us don’t come to the market with the right beliefs to win.
When you first approach the markets you are a butcher, baker or corporate candlestick maker. Not a trader.
So your belief structures about “how to be successful” come from a field unrelated to trading. And many of the skills for successful trading are counter-intuitive to other fields.
So, as soon as you start trading, it is critical that you adopt the identity of a trader.
This can be done with some specificity. I say “I am a macro currency trader”, because having this identity keeps me true to my purpose. For others it might be “I am a mechanical trend follower” or “I am a Forex and commodities trader”.
But saying this is not enough. You need to adopt the beliefs of your new identity… and not just any beliefs, but those of a top performer in your new identity.
(By the way, this is why the first two lessons of the Advanced Forex traders are on: 1. Recognizing your beliefs 2. Immediately choosing to adopt the beliefs of top traders.)
Small traders have small trading problems
Adopting a new identity and belief structure requires thinking differently.
Essentially, you want your thoughts to be modeled on a very successful trader (as opposed to someone who is very successful in the field of business or teaching etc.).
One of the challenges is that unsuccessful or new traders tend to think like new or unsuccessful traders. They are pre-occupied with thoughts and beliefs that top traders don’t have.
Worried about losing $100? Can’t do your position sizing with micro-lots? Don’t have a winning strategy? Wondering if you should sell on this bad news?
These are not things that top traders concern themselves with. You have got to push yourself to think BIG even if you are small.
Instead of worrying about whatever you are right now, think; what would you need to do/know/have if you were managing a 100-million-dollar account? What are the questions you would ask yourself and how would you act?
- What support systems, people and resources do I need?
- How do I improve my perception of what is going on?
- How do I manage risk?
- What decision making tools do I require?
- How can I make myself as relaxed and happy as I can be?
- How can you diversify your income streams?
- How do you crash test your trading system so you are prepared if the market does X, Y or Z?
- What position size should your trade be, based on your conviction in the trade and your risk management plan?
- What is you objective; and
- What will you do if you are wrong?
As the saying goes. Fake it until you make it. Truly put yourself in the shoes of a top trader and purge all other beliefs and thoughts.
Who dares wins
The SAS* motto is “who dares wins”.
The wisdom in this idea is that you need the courage to go for it, if you are going to win. If you don’t dare, you’ll never generate winning conditions. If you stay within your shell, then you are operating out of fear, and you’ll lose.
Have the courage to think big and act big. Take the plunge and let go of your small time concerns.
*Special Air Service. The SAS are the special forces soldiers from Britain, Australia, and New Zealand.
The element of creation
There is an element of creation in this idea.
If you act like (and believe) you are a $100 million trader, then you start to actualize it.
If you can truly adopt the identity of a top trader, you will win. There is no question.
About the Author
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders (get free access). He is the owner of www.fxrenew.com a provider of Forex signals from ex-bank and hedge fund traders (get a free trial). If you like Sam’s writing you can subscribe to his newsletter.
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