Four Habits of Psychologically Fit Traders [March Newsletter]

Things are staying hot, hot, hot in the markets.

Are you grabbing a piece of it?

Keep reading this month's Trading Game Newsletter to find out the four habits of psychologically fit traders so you can join the small, yet sparkling group of elite traders earning the most.

You'll also find out who came first in our 'Trading Plan Evaluation’ competition, as well as a system to help you ditch the sensation of 'work-dread'!

Being psychologically fit is a key in the markets.

Some of these habits might not come naturally. You’ll have to train yourself.

There are some key habits that all top-performing traders have developed:

1. They’ve have become comfortable with being uncomfortable

Top traders aren’t ego-driven. They know they don’t know it all.

Even when they feel uncomfortable, they persist anyway.

Get used to being a questioner. Question your trading method.

If it’s not producing the results you desire, seek out the answers. Question your beliefs about m$oney.

If you’ve got one foot on the brake and the other on the accelerator, it will be a bumpy ride forward.

Question your association. Not getting the support you need?

Seek out like-minded people or be washed down the drain with all the others with their 'stinking thinking'.

The person who believes they know everything, knows nothing.

2. They build in strategic pauses

When successful traders experience a setback in the markets, they pause… they don't immobilise. They also build in a pause between the stimulus and their response, so they act with control, clarity, and decisiveness.

They use their powers of introspection and really think before knee-jerking into a new position. Top traders don’t usually burn out.

They’ve built in micro and macro breaks to revive and refresh themselves. They know that work comes before their pause, and after their pause, they are energised and more determined than ever to run towards their goals.

With trading, you get to be in control. You can trade as frequently or as little as you’d like.

It’s a bit different to your usual day job where your manager is there to pressure you into full productivity at all times.

3. They kick themselves THEN forgive themselves

There’s a popular idea floating around these days about being all gentle and forgiving yourself, right? But hold up a second!

What if I told you that giving yourself a little kick for what you've done wrong could actually be the key to learning those essential lessons?

It's not about labelling yourself as a failure, but rather recognising that your actions weren't exactly productive.

If you don't take a moment to reflect and take responsibility for your mistakes, guess what?

You're going to keep making them! So make sure you take that introspective step and identify the behaviours you need to change.

Then, forgive yourself for the time you didn’t push forward.

Forgive yourself for putting your trust in the wrong person. You did the best you could, and they betrayed you.

Forgive yourself for being scared. The things that can make us feel the most alive are behind a curtain of fear.

We say, "I am afraid", as if the fear is us, forever.

We don't say, "I am a fever" or "I am a sore foot." No, in those cases, we acknowledge that it's a temporary condition, something we have, at least currently, but not forever.

The majority of exceptional traders have felt fear as they’ve traded at least once. Forgive yourself for not being good enough, clever enough, strong enough. Forgive yourself for not following your trading system, and vow to do better next time.

4. They persist

Trading involves mastering your emotions and getting through the boredom of repetition. Make improving your psychological fitness a long-term goal, and it’s likely to impact not just your trading.

Some of the habits as a trader that you’ll want to cultivate might include:

• Having a set time/day to review your charts
• Revising your trading plan at least every 6 months
• Keeping up to date with the paperwork required for tax time
• Tracking your trading results regularly

Well done to Henry Allwright from Tasmania for coming first in my 'Trading Plan Evaluation' competition!

Henry will get a Trading Plan Evaluation where I will assess his trading plan. I'll shine a light into Henry's trading blindspots by analysing his trading plan and I'll give him specific feedback.

Get ready Henry :)

Every successful trader has written an effective Trading Plan.

Every trader's plan is unique and specific to his or her own trading goals.

Sometimes it is difficult to see some of the flaws in your own trading plan, or to identify areas that need refinement.

This is where I can help. Henry - I'm so happy.

(Usually this is $995 in value)

I can tell you one thing for sure.

Effective traders don’t blame others when things start to go wrong.

You can hang onto your tendency to play the victim, or the martyr… but if you want to achieve in trading, you have to be prepared to take responsibility.

People assign reasons to outcomes, whether based on internal or external factors.

When traders face losses, it's common for them to blame bad luck, poor advice, or other external factors, rather than reflecting on their own personal attributes like arrogance, fear, or greed.

This is a challenging lesson to grasp in your trading journey, but one that holds immense value.

This is called attribution theory. Taking responsibility for your actions is the key to improving your trading skills. Pause and ask yourself - What role did I play in my financial decisions?

After all, you were the one who listened to that source, and decided to act on that trade based on the rumour. Attributing results solely to external circumstances is what is known as having an ‘external locus of control’.

It's a concept coined by psychologist Julian Rotter in 1954. A trader with an external locus of control might say, "I made a profit because the markets are currently favourable."

Instead, strive to develop an "internal locus of control" and take ownership of your actions.

Assume that all trading results are within your realm of responsibility and actively seek ways to improve your own behaviour.

This is the fastest route to enhancing your trading abilities. A trader with an internal locus of control might proudly state, "My equity curve is rising because I am a disciplined trader who faithfully follows my trading plan."

The average person spends roughly 90,000 hours from birth to death... working.

Imagine waking up each day with that sinking feeling of not looking forward to work.

You know that sensation - it's what we casually define as "work dread." It's that uncomfortable knot in your stomach as you start your workday, the feeling of unease, or the simple reluctance that tags along with you as you gear up for your daily tasks.

But just how can you ease this and how can trading help?

This is how:

1. M$oney Matters: Trading can help you make more or even develop financial serenity. Less financial stress means less overall stress.
2. F$reedom Flex: Forget the 9-to-5 grind! Trading lets you choose when and where you work. Imagine trading in your PJs or from your favorite coffee shop (although, that's a bit weird).
3. Passion Play: If you're into finance and markets, trading is like turning your hobby into a job. It's exciting and might just make you jump out of bed in the morning!
4. You're in Charge: In the trading world, you're the leader. No office politics, no annoying managers.
5. Always Keep Learning: Trading is a constant learning experience. It keeps your brain buzzing with new challenges and successes.

But hey, let's not sugarcoat it – trading isn't a sure-fire way to happiness. It has its own ups and downs. It's not for everyone, and it can be stressful too. So, before you jump in, do your homework, learn the ropes, and consider your own tolerance for risk.

So until next month... happy trading.

Louise

P.S. I remember a wise acquaintance said to me many years ago, "Casual effort equals casual reward". If you put in the effort to learn how to write an excellent trading plan, and then execute that plan consistently over the long-term, your chances of achieving exactly what you want go way up.

Photo by Maria Lupan on Unsplash

Photo by Micheal Ogungbe on Unsplash

Photo by Adi Goldstein on Unsplash