Psychology The Hidden Agenda that Rules Your Trading Performance

Dale grew up in a hard working farm family in Arkansas. His parents, while growing up during the Great Depression, had nearly lost their farm. That experience really changed them. They hoarded what little money they had and came to believe bad things can happen if you can’t be certain about the future. And Dale was born into this legacy.

Leaving the farm for greater opportunity, Dale became a banker in a trust department of a bank where he protected the value of assets placed under his care. He was a natural at his job of maintaining certainty in the face of threats to his clients' capital. As time went on, the bank was gobbled up and Dale was fed up. In a career change, he moved into day trading. He learned a proven methodology to control risk well and was prepared to trade. What he was not prepared for over the next several years was the hesitation and anxiety he experienced, and could not overcome, when he risked capital.


The brain, memory, pattern, and the unconscious mind make unlikely partners to your trading methodology. Like Dale in the case study above, after investing a number of years learning and tweaking a methodology that should provide an edge, traders often discover that something is still missing that limits their success. It’s not their methodology, they conclude – it’s them. Though they strive for success, they keep falling into the same self-limiting patterns over and over again. No matter what they try, who they train with, or who they listen to – they stay stuck and they do not know why.

If they want to make money and are willing to invest the time and energy into learning, you would think that they would achieve their goal, even only by perseverance. It is as if something seizes control of their mind and their capacity to dispassionately trade their plan is hijacked. After the smoke clears, and they come to their right mind, most traders feel as if their bodies and minds were kidnapped by unseen forces. If you have ever thought this – you are not alone.

What Really Drives Your Perception of Money

In a capitalistic culture such as ours, our sense of personal worth, adequacy, meaning, and power get woven into our perception of money. As an example, a trader (who has not been successful for several years) is at a cocktail party. He strikes up a general conversation with an unfamiliar man. And the man asks, “What do you do?” Right there, the trader’s identity is tied to trading. The next question is, “Can you really make money at trading?” Though the trader has yet to be able to support his family on his earnings from trading, he answers, “Yes.” Then the trader proceeds to create a fiction that paints a rosy picture of his life as a trader.

Actually the trader feels shame erupt and he feels “less than”, so he lies to cover up his embarrassment. The trader’s notion of being a successful human being and his sense of mattering in the world is so tied up to how much money he should be making that he finds himself lying. His worth, his importance, and his social standing are tied up in his relationship to money. Money has become the yardstick by which he measures his value as a human being.

And as long as his perception of money is the measuring unit by which he gauges his worth, he will continue to struggle with finding success in trading. External validation by performance in trading becomes the judge of his character. His ability to make money in trading moves from competency of performance in a certain domain (where mistakes point out where he needs to learn in order to become better) to judgment of his worth as a human being. Where does this come from?

We Are Born Into a Money Script

Go back to the case study of Dale. Dale is born into a certain history and his brain adapts him to the conditions of that environment. His parents had been devastated financially by the Great Depression. Life had become very uncertain for his family’s financial survival. They were scared that they would not have enough money to put food on the table and a roof over their heads. Money was scarce, and they could not afford to lose anymore. This was the mantra by which they lived. Like many of their generation, they became savers and avoided risk at almost all costs. They were risk-averse and had developed a way of seeing the world as a dangerous place where things that could go wrong - and did, in fact, go wrong. This became their mindset. And it governed the way they saw life.

Their mindset for managing the uncertainty of life was that of a victim of circumstance beyond their control. And into this mindset their son Dale arrived. He was born into this perceptual amalgam of risk, money, inadequacy, powerlessness, and possibility. His brain adapted him to this circumstance. No one noticed that this way of seeing the world had taken over their perception. It was like water to a fish. It was a set of assumptions that had become so familiar, so true, that they were never questioned. And these assumptions of risk, capital, power, and worth became woven into the neuro-circuitry of Dale’s brain and mind – and became his beliefs. This is the money narrative.

The Money Narrative All Grown Up

Like many people who eventually become traders, Dale grew up and came to trading as a second career. He, like other traders, physically left home and never realized that he was taking the money narrative rooted in this history with him into his adulthood (think about the first career he drifted into). And into his trading.

Most traders, just like our friend Dale, have never questioned their beliefs about money – the money narrative. Understand, you do not have a money narrative – rather, a money narrative has you. It is not yours – you belong to it. In particular, traders rarely ask themselves, “What is money to me? What does money mean to me? And where do these beliefs about money come from?” Money will form a certain symbolic representation that connects your sense of power/powerlessness, your sense of adequacy/inadequacy, your sense of mattering/not mattering, and your sense of personal worth/worthlessness into your personal money narrative. And all at the pulling of the trigger where capital is put at risk.

In Dale’s example money was connected to his sense of power/powerlessness and to his sense of adequacy/inadequacy. He had avoided confronting these carefully hidden self-limiting beliefs about himself until he started trading. He came face to face with this money narrative (what money and risk means) every time he attempted to pull the trigger on a trade. His money conversation of losing everything and being powerless (that he was born into and adapted to without his knowledge or consent) came rushing into the forefront of his awareness like a ton of bricks every time he attempted to pull the trigger.

By becoming aware of this hidden money narrative, he began to alter it. The biggest problem with traders is when they resist acknowledging the presence of the power of their personal money narrative. Most traders are not so fortunate as to be born into a thriving money narrative that balances capital with risk management. Most grow up in families that attempt to avoid uncertainty and risk by not making mistakes. Yet, a money narrative that incorporates management of the risk of uncertainty is vital to successful trading.

Finding the Hidden Money Narrative

What’s your historical money narrative? One of the most effective ways of discovering the assumptions that have become self limiting beliefs that drive your trading is to ask two simple questions:

First - what personal assessments, criticisms, and judgments do you have when you beat yourself up after a loss? This will tell you how your worth, mattering, power, and sense of adequacy is connected to money.

Second - observe your personal assessments of yourself when you are on the winning end of a trade. Notice how your performance becomes a yardstick to measure your worth, your sense of value as a human being, or your personal sense of power. Money has become a symbolic representation of who you are. (Confusing net worth with self worth.) The problem is that this narrative has you, you belong to it – and you are its captive.

Enormous freedom becomes possible as you learn to be mindful of your financial narrative. It no longer has to control the way you connect money, performance, value, and adequacy as you begin to de-construct the narrative to which you were born. The most powerful part is that at this moment, you can begin constructing a much more empowering narrative about money, worth, meaning, power, and possibility. And your trading just becomes a performance to assess and improve, rather than a judgment of your being.

Rande Howell can be contacted at TradersStateofMind
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