Beyond Fear: Developing Your Inner Trader
Despite their knowledge of trading, the vast majority of traders experience fear on a level that compromises their capacity to trade effectively. This problem eventually comes to a boiling point somewhere in the evolution of a trader. At this turning point they either leave trading, continue to suffer losses, or begin to take a closer look at themselves. They recognize that the Holy Grail is not “out there” in their system or methodology. The trouble lies within them. And the culprit is fear. The solution also lies within them.
So much energy is then focused on mastering fear in trading (rightfully so) that another question is never raised. What then? The battle has never “been out there” in the markets. When you learn how to manage fear, do you suddenly become a consistently winning trader? The answer is rarely. Mastering fear is the start of a journey. As jarring as this realization may be to a trader battling his fears, this is only the first, and foundational, step into the transformation of the self required to become a successful trader.
Learning to deal effectively with fear opens the door to re-training the mind for peak performance trading. Ultimately, a trader perceives and acts based on his deepest beliefs about the self. This is where potential lies. Fear blocks development of potential beyond the trader’s self limiting beliefs about self. But what are the tools and skills a trader needs to harness to develop his potential as a trader? Mindfulness: Developing Awareness of Your Potential
Until the spell of fear is broken, getting to the potential that lives within remains closed to you. Even when the trader learns to regulate fear so that it does not sweep him away and he can establish a calm mind, how does he locate the discipline, patience, courage, and impartiality to which he is blind? The answer to this question is crucial in order to move from mediocrity to successful trading - the answer is that he develops awareness through the skill of mindfulness.
For all the talk about mindfulness, people remain vague about what qualities constitute mindfulness. Simply put, mindfulness is the capacity to be aware of (observe) your thoughts, your biases, and your beliefs – not as who you are, but as what your sense of identity has become fused to. Further, in mindfulness you become witness to your thoughts, beliefs, and biases. And a startling discovery is made: you and your thoughts, biases, and beliefs are not the same. They are simply one possible organization of the self.
You were born into a history of thoughts, biases, and beliefs that your brain, through adaptation, embedded into neural circuits that became your beliefs. You do not have beliefs – they have you. Your beliefs are firmly rooted into the assessment and pattern-making machine called your brain long before you can think or reflect back on what you believe. This is called your historical internal dialog. When you experience fear or impulse in trading, it is this self limiting internal dialog that has trapped you. You can easily recognize its presence and the resulting unfiltered opinions and judgements by walking down a crowded street and “people watching”. Notice that automatic assessments fly into your perception as you watch people. Before you know it, entire stories are made up that “explain” circumstances as you simply watch people passing by. There is no proof for your automatic assessments – they simply show up as your thoughts. And, even if there is no proof to support your thoughts, biases, and beliefs, you (without thinking) are still influenced to believe these seemingly random thoughts. In trading, traders actually act on their ungrounded assessments all the time. This form of mindlessness is dangerous.