I’ve been getting a lot of email requests to blog more and share things that I see working for my clients.
Rob, one of my coaching clients, is an independent self-directed trader, and he’s recently made the turn. Rob crossed a major milestone when his account grew enough that he wired trading profits out of his trading account and into his bank account. The first time he ever did that!
Rob has been trading for several years and like many traders his account would go up and down like a yoyo. Does this sound familiar? Make money and then lose it. Rinse and repeat.
It wasn’t easy for Rob to reach this point, and I’m going to share a few things he’s done that made the difference. Some of these things may be a surprise to you.
One thing Rob did was change his idea of what trading is all about, and then internalized that idea.
Previous to our work, like most traders, Rob was most consumed with predicting where price might go. Having worked with many traders, some very successful and some not, one of the key differentiators is how one sees their job as a trader.
Of course we develop hypotheses and look at price levels on charts, but the problem is that this kind of focus will lure the trader into becoming a prognosticator. Yes, price does sometimes seem to do what we thought, but how about all the times it doesn’t?
Rob learned how he manages risk is more important than predicting where price might go. Moreover, Rob learned that the job of a trader is to simultaneously identify opportunity and manage risk.
Previous to making the turn, Rob would go through phases where he was either too focused on opportunity, with all it’s attendant behaviors (impulse trades, over-trading, over-sizing, etc.) or too focused on risk (freezing and not entering, grabbing tiny profits and getting out much too early, etc.).
How did Rob internalize the ability to simultaneously identify opportunity and manage risk?
Of course we all ‘know’ not every set-up works, and key levels don’t always hold. Previous to our work Rob went from strategy to strategy, chat room to chat room, trying a lot of things with only temporary success at best.
Rob learned that to ‘trust’ a set-up or level is an exercise in futility. And as a result of deep psychological work Rob developed self-trust, a type of trust that is of immeasurable value and unfortunately quite elusive for many traders.
How did Rob develop self-trust? First, I’ll tell you how it didn’t happen, because that will hopefully save some of you from further frustration and heartache.
Reviewing, re-doing, re-hashing his ‘rules’ and his goals did not result in more self-trust or sustained behavior change.
Evaluating his trading with stats, daily report cards, and journals did not result in more self-trust or sustained behavior change.
Being part of a trading group and then having a trading buddy for support and accountability did not result in more self-trust or sustained behavior change.
The above things are fine, I’m not opposed to them at all, but take a moment and be honest with yourself, have these things resulted in sustained behavioral change for you?
Re-doing the rules and/or creating new goals, lots of daily evaluation, group support and accountability are all good things, but unfortunately for the vast majority it is does not lead to significant and sustained behavior change.
So, what did Rob do that helped him develop the necessary self-trust to make the turn to profitable trader?
Part of what he did was to truly internalize the job of a trader – to simultaneously identify opportunity and be a risk manager operating in an environment (the market) where anything can happen at any time.
Rob has stopped the cycle of making money and then giving it all back. When we first began working together Rob said:
“Don’t hold back, do whatever you think you need to do or say, I give you permission to make me uncomfortable if that’s what’s needed”.
In the beginning Rob told me about his intentions for becoming a profitable trader, he wanted to stop doing impulse trades, he wanted to be able to take a loss, and he wanted to be able to stay in good trades longer. Those were his conscious intentions.
The impulse trade makes us (temporarily) feel better by making something happen. Avoiding a loss makes us (temporarily) feel better because we’ve put off the reckoning for a ‘chance’. Getting out early makes us (temporarily) feel better because we at least have a few dollars more than we had before.
As the coaching went on Rob learned that he had some subconscious intentions that were not in alignment with his conscious intentions let alone his trading plan.
And this is true of other clients that have made the turn; it’s the subconscious intentions that keep you locked into behaviors that are not good for your long-term success. Subconscious intentions can be very tricky or difficult to identify and then change.
Uncovering his subconscious intentions was not easy, but if you ask Rob he’ll tell you it was very much worth it.
What’s really cool is that this unique work Rob has done has paved the way for him to do other things that contributed to his profitability: Position sizing, recognizing changing market conditions, taking better care of his body (sleep, exercise, nutrition) creating and savoring more positive experiences (my clients know this as a Gratitude Practice, something very different than positive thinking) to counter-balance the inevitable frustration and discomfort involved in trading.
With limited capacity to take on new clients I’m only accepting traders who are absolutely committed and a good fit. If you think you’re one, email me first, if you’re still serious, we will have a phone/Skype chat to see if it makes sense to work together. I prefer to choose my clients as much as they choose me. You’ll know why once we talk. My self-paced course is another option.
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