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Dear traders,
We continue from yesterday , ( the first vice was - PERFECTIONISM )
Vice Number Two: EGO
Everyone likes to win in the markets. It’s only natural to feel good when you’ve done your homework and end the day with a profit to reward your efforts. Ego involvement in trading, however, goes further than this. When the ego is involved, we write the market a blank check for our self-esteem. If trading is green, we feel good about ourselves; if we go into the red, we feel diminished. That places tremendous pressure on our trading over time. Not only do we have the burden and challenge of reading complex market patterns; now we also have a psychological gun pointed to our head ready to go off any time our pattern recognition fails us.
Most traders are aware of the dangers of trading with too much leverage. A trader accustomed to trading 2 lots, where each tick in the ES is worth $25, would feel overwhelmed jumping to 100 lots, where each tick now moves the account $1250. With the stakes raised to such a degree, the same trade would now no longer feel the same. It would be hard to let a position go against you by a point ($5000, instead of $100), and it would be difficult to let a profit run. When traders invest their feelings about themselves in their trading, they are operating with maximum emotional leverage. In the currency of self-esteem, they trade 100 lots. So much of their emotional account rides on each trade, that it inevitably affects decisions about cutting losses, letting profits run, and entering and exiting in a timely fashion. The successful trader wants their trades to work out; the ego-involved trader needs them to be profitable.
We know that ego threatens our trading when we find ourselves needing to trade just to win back some recently lost dollars; when we feel a desire to advertise our positions; and when we find ourselves riding an emotional roller coaster as profits wax and wane. Just as we can recognize traders’ perfectionism from anger/frustration, we recognize ego-involved traders from euphoria/depression. If trading has us truly depressed, we know that it’s not just our trading account that’s hurting. The antidote to ego-involved trading is to place our self-esteem eggs in many baskets: recreational interests; other work involvements; relationships; and our spiritual lives. Many times we pour our self-esteem into trading because those other facets of our lives are not properly developed. A balanced life makes for balanced trading. We can take some of the ego out of trading by learning from others, by becoming a candle that lights other candles, and by using a portion of market profits to help others make a wish that will come true. If your good feelings in life come from good relationships and worthy achievements, you won’t need the markets for your happiness. Market success can be the frosting on the cake of your successful life, rarely can it substitute to the cake itself. ( source/thanks - brettsteenbarger.com )
HAPPY TRADING, KUTTY
We continue from yesterday , ( the first vice was - PERFECTIONISM )
Vice Number Two: EGO
Everyone likes to win in the markets. It’s only natural to feel good when you’ve done your homework and end the day with a profit to reward your efforts. Ego involvement in trading, however, goes further than this. When the ego is involved, we write the market a blank check for our self-esteem. If trading is green, we feel good about ourselves; if we go into the red, we feel diminished. That places tremendous pressure on our trading over time. Not only do we have the burden and challenge of reading complex market patterns; now we also have a psychological gun pointed to our head ready to go off any time our pattern recognition fails us.
Most traders are aware of the dangers of trading with too much leverage. A trader accustomed to trading 2 lots, where each tick in the ES is worth $25, would feel overwhelmed jumping to 100 lots, where each tick now moves the account $1250. With the stakes raised to such a degree, the same trade would now no longer feel the same. It would be hard to let a position go against you by a point ($5000, instead of $100), and it would be difficult to let a profit run. When traders invest their feelings about themselves in their trading, they are operating with maximum emotional leverage. In the currency of self-esteem, they trade 100 lots. So much of their emotional account rides on each trade, that it inevitably affects decisions about cutting losses, letting profits run, and entering and exiting in a timely fashion. The successful trader wants their trades to work out; the ego-involved trader needs them to be profitable.
We know that ego threatens our trading when we find ourselves needing to trade just to win back some recently lost dollars; when we feel a desire to advertise our positions; and when we find ourselves riding an emotional roller coaster as profits wax and wane. Just as we can recognize traders’ perfectionism from anger/frustration, we recognize ego-involved traders from euphoria/depression. If trading has us truly depressed, we know that it’s not just our trading account that’s hurting. The antidote to ego-involved trading is to place our self-esteem eggs in many baskets: recreational interests; other work involvements; relationships; and our spiritual lives. Many times we pour our self-esteem into trading because those other facets of our lives are not properly developed. A balanced life makes for balanced trading. We can take some of the ego out of trading by learning from others, by becoming a candle that lights other candles, and by using a portion of market profits to help others make a wish that will come true. If your good feelings in life come from good relationships and worthy achievements, you won’t need the markets for your happiness. Market success can be the frosting on the cake of your successful life, rarely can it substitute to the cake itself. ( source/thanks - brettsteenbarger.com )
HAPPY TRADING, KUTTY
