Mental Momentum

As a single footstep will not make a path on the earth, so a single thought will not make a pathway in the mind. To make a deep physical path, we walk again and again. To make a deep mental path, we must think over and over the kind of thoughts we wish to dominate our lives.
Henry David Thoreau

When you're under a great deal of pressure, it is easy, even common, to choke. The stress, being on edge, make it extremely difficult to make decisions or to look at your current trading predicament objectively. When you have a drawdown, you can feel a little disappointed, a little stunned. After you've made a series of successful trades, you feel much more powerful, as if you can relax a little bit, and when you feel relaxed, you are more creative in approaching your trading strategies. Everything seems to click and you start trading effortlessly and profitably. It is extremely difficult to feel such empowerment when you are falling behind, or stuck in a rut, not making any headway. There are two types of momentum in trading. There is profit momentum and mental momentum. Mental momentum can be just as important as profit momentum.

We feel mental momentum when we believe we have made our best effort, when we feel that we have done everything we possibly could have done. At these times, we should pat ourselves on the back for a job well done. While trading, we usually forget to give ourselves credit when we have put in a good effort. We become so focused on profits and those efforts that produce profits. In order words, we focus exclusively on performance goals, while completely forgetting about learning goals, which are equally important.

Instead of focusing only on a performance goal, focus, also on other goals that are equally important, but may not always directly produce a profit. There are many modest goals that

can be achieved easily and deserve a reward upon completion. Break down the goal of making a huge profit from a few good trades into specific steps that are doable, and should be rewarded. For example, studying for 10 or 20 hours a week or learning a new trading technique is important and worthy of reward, even if the reward is just a personal sense of accomplishment. The specific goal may not immediately lead to your larger goal but it is easy to achieve, and will lead to personal satisfaction upon completion. In the long run, this alone will contribute to the attainment of your larger longer term goal of becoming a seasoned, profitable trader. The more you complete these modest goals, the more mental momentum you achieve.

Give yourself credit for all the effort you put into trading. It is tempting to feel good about your efforts only when they pay off, but you put in just as much effort putting on a losing trade as a winning trade. Regardless of whether you win or lose, you'll feel better if you reward yourself for all the work you do, regardless of the outcome. The more you reward yourself for all the work you do, the more mental momentum you will feel. This, in turn, will make you feel strong and empowered, allowing you to trade more effortlessly and profitably.

Reprint from PrudentTrader Archives 2005

Whatever Happens, Take Responsibility

You must take personal responsibility. You cannot change the circumstances, the seasons, or the wind, but you can change yourself. That is something you have charge of.
Jim Rohn

An attribute most successful people, as well as successful traders share, is simply, no matter what happens they take personal responsibility. They operate on the belief that they create their world. The phrase you’ll most often hear from these successful people is: “I am responsible, I’ll take care of it.”

Most of you, I am sure at one time or another, have purchased a stock based upon the recommendation of a stockbroker, a friend, or investment newsletter. I am also sure, that like myself, sometimes those ideas do not work out and result in a loss, sometimes a substantial loss. Most stockbroker’s and investment newsletter writers are honest, hardworking individuals, and are telling you what they honestly believe to be an outstanding investment idea or trade, at least at the time.

The one, however, who has the ultimate responsibility is you. You bought into the argument or

concept; you bear the responsibility, regardless of the results. No one held a gun to your head and said buy or sell. The position you are in, you created, if not by your physical actions, maybe by the level and tenor of your thoughts (fear, greed, etc.).

If you don’t believe that you’re creating your world, whether it be successes or failures, then you are at the mercy of circumstances. Things just happen to you. You’re an object, not a subject. If that is what you believe, its time to look for another culture, another world. Why be here if you’re just the product of random outside forces?

Taking responsibility is one of the best measures of a person’s maturity. It’s also an example of beliefs supporting other beliefs, a coherent system of beliefs. If you take responsibility, you are in control, and if you are in control, you will succeed.

 “Those who take responsibility are in power. Those who avoid it are disempowered” – Anthony Robbins.

Dan Rather once said John F. Kennedy became a true leader during the Bay of Pigs incident, when he stood before the American people and said that the Bay of Pigs was an atrocity that should never have happened, and then took full responsibility for it. When he did that, he was transformed from an able young politician, to a real leader.

By retaining responsibility, you retain the power to change the result you produce. The next time you have a bad trade, take personal responsibility for it, and learn from it. Avoid at all costs blame.  It’s not a failure, it’s a learning experience, it’s feedback.

Reprint from PrudentTrader archives