Saturday, July 12, 2014

Negative self beliefs

Negative self beliefs work to create negative actions, which work to build a glass ceiling to your performance as a trader. The longer they are in place, the harder they can become to break.

If left unchecked, negative self beliefs start to create a self-fulfilling environment - self-sabotage kicks in. When you keep making the same mistakes over and over you end up saying to yourself  things like "You idiot! Why have I done that again? You know what you should do, so why can't you?"

Talking to yourself in such a forceful, negative manner only serves to reinforce those limiting self beliefs, what ever they may be. But what causes these beliefs?

Some may have been influenced by friends or family: "Trading? It's a mug's game, everyone ends up losing. Don't waste your time or money." - even a brief conversation along those lines can plant a negative belief in your mind which can grow.

Even family circumstances or your upbringing can create a negative belief - you may feel you don't deserve to make big money from trading. This might be as a result of your parents' working lives. They worked long hours for not a lot of money, basically to survive. Making big money might mean leaving behind life long friends, moving into a different financial level or environment.

There are people out there who would say that all this is poppycock - the system is everything. To me, there are talking purely from a theoretical viewpoint, not the practical, and is doubtful whether they have successfully traded themselves. There is a world of difference between theory and practice, and those people fail to appreciate how the mind can react and affect performance when trading.

To break the cycle, those beliefs which limit you need to be identified and then overridden, with a new set of beliefs. The new beliefs need to be positive and motivational, and work towards building up your self-belief. From there, positive actions are bred, which ultimately lead to an improvement in performance.

In other words, to change your performance, you have to change your beliefs first.

Part of this is to accept personal responsibility for your actions and results as a trader. You cannot blame anyone else for a lack of performance - not your broker, your trading platform, the markets, Cramer, etc. It all comes back to you.  At the end of the day, it is you who determines the risk management parameters, it is you who decide what to buy or sell, and at what price. No-one else.

You and you alone determine what you choose to believe. Beliefs can be changed. In my experience, working on these aspects can make a much bigger difference to your ultimate performance as a trader, than say continually fussing around with minor system parameter changes.

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