Driven to Master the Markets
Published On: Monday, July 23, 2007 | Author: Michael S. Shopshire, Ph.D.
Trader Insight
Jim, a regular reader, wanted to share how he achieves his mental edge while trading: "In all my trading and after reading psychology books, newsletters and other trading material, I have come up with a single conclusion that works for me: ACCEPTANCE! Acceptance that the market is in control. Acceptance helps me avoid fear and greed. If one can get to the point of simply accepting that no one has control over the market, but only control of themselves, all other issues would be resolved. It has taken me years to get to this point. Now that I have arrived, I can concentrate on the 'best' trading setups and wait for the market to do its thing. All I get are outcomes. I am the only one that can assign a 'good' or 'bad' label. Only I know if I made a profit or not. From this perspective, I have almost eliminated ALL my stress with my trading! All I can do is set some exit points that will protect my investment if things don't go the way I forecasted them, in short, use my trading plan." Many traders are obsessed with control. It's natural to want to protect your capital, but in the end, the markets are in control, and you have to learn to accept this fact, just as Jim has.
Feature Column
Do you have what it takes to master the markets? Many successful traders were attracted to the markets for the excitement and profits, but there came a point where they made the transition from recreational trading to professional trading. It’s much like playing sports on the weekend or playing with a garage band. Many people may enjoy playing sports or playing an instrument, but those who reach the top, practice and rehearse over and over again. At some point, pastimes that once seemed enjoyable become work. People who become masters have a strong desire to overcome obstacles to achieve high levels of performance. They try to push themselves to the limits and are continuously trying to develop their skills. As a result of these efforts, they develop high levels of self-esteem and confidence.
Psychologists have studied ambitious people who excel for decades. Ambitious people work long hours, initiate new ventures and work tirelessly to make them a success. Research studies have examined how ambitious individuals achieve success. They are a little different than other people. When it comes to completing tasks, for example, they tend to pass quickly over easy tasks to complete more difficult ones. This may entail prioritizing the importance of tasks and devoting the bulk of their efforts to the tasks that really matter, while ignoring tasks that may have relatively little importance. When it comes to feedback about their performance, they prefer feedback that is as specific and as concrete as possible. They would rather have honest, accurate feedback that addresses their shortcomings in great detail than sugarcoated feedback, which initially makes people feel better about their performance, but masks their shortcomings. Interestingly, ambitious individuals are competitive with others, yet while they are competing, they don't compare themselves to others. They work independently without continuously trying to judge their performance based on how well they are doing compared to others.
Do you have driving ambition?
To what extent do you agree with each of the following items? If you strongly disagree with an item, give yourself a score of 1 for the item. If you disagree, give yourself a score of 2. If you agree, give yourself a score of 3 for the item, and if you strongly agree, give yourself a score of 4. Answer each of the following items, and see what score you get:
1. Making an important contribution to society is important to me.
2. While I was growing up, I often dreamed of becoming successful.
3. I hate being distracted when I'm trying to get something done.
4. I never compare myself to others when I'm working towards a goal.
5. I am wiling to do whatever it takes to be successful.
6. I've always set high standards for myself.
7. I feel guilty when I don't live up to my expectations.
8. I try to do more than what is expected of me.
9. When I'm presented with a difficult problem, I stick with it until it is resolved.
10. I've always been interested in developing new skills in a variety of areas.
11. I have often been described as a hard and steady worker.
12. I'm not afraid to take risks, but I don't take unnecessary risks.
13. I prefer to receive specific and concrete feedback.
14. I work best when I can take full responsibility for achieving my goals.
15. I like to push myself until I reach my full potential.
16. I don't give up easily.
17. I like to be in charge of my own destiny.
What score did you get? If you received a score between 17 and 52, you scored in the lower quartile, which means that less than 25% of the traders who took this test obtained a score as low as yours. In contrast, if your score was 60 or above, you scored in the upper quartile, which means that 75% of the traders who took this test obtained a lower score than yours. In general, traders are ambitious people who tended to agree with all the items of the questionnaire.
Trading is a difficult field to master. Many people enjoy trading, but few achieve lasting success. In order to achieve success, you must be willing to make a strong commitment to honing your skills. That means getting the best training possible, and seeking out honest, accurate feedback. Most people cannot make such a commitment. They are not willing to work hard enough and would rather have feedback that builds up their ego, and makes them feel good, rather than feedback that tears them down but helps them excel. If you want to excel as a trader, you must be willing to push yourself to the limits and work hard until you achieve your goals. Are you up for the challenge?
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