Look in a mirror, and one thing's sure. What we see is not who we are... Richard Bach

The way we perceive our actions or the consequences of our actions is, often, entwined closely with the way we identify who we are. We traders often define ourselves in terms of our trading...our actions and inactions, our triumphs, our gains and our losses. As a result, it is easy to merge so strongly with a decision that has resulted in unexpected negative consequences that we actually become that decision. The disappointment and shame we feel when we make what we perceive is an error, grows until it becomes a dominant part of our identity. We rationalize our "poor" decisions by labeling ourselves incompetent decision makers, or, in the trading vernacular "idiots." Imagine walking around all day telling everyone that you are an idiot? Why are you doing that? What gain are you getting from that, and what message are you giving to those around you?

As a youth, I hated myself for not being good enough. All my inadequacies and failure, not being kind enough or generous or understanding enough would assail me at night. It became a habit to be guilty and self-castigating, not liking myself because I was unworthy. I really tortured myself... Mira Sorvino (Academy Award Winning Actress)

Your true identity cannot be defined by your choices. Your essence—what makes you a unique human being--exists independently of your decision-making process. This is one reason why we are able to love someone (and, ideally, ourselves) without condition. We love who they are as a person, and understand that people do not always make choices that are in their best interest or the best interest of others. Nonetheless, we continue to love them.

Trading is not about being right or wrong. It is about making money. It's about making more than you lose.

All trades contribute to your development and are an integral part of your evolution to trading mastery; yet, they are still separate from you as a person. A trade that does not result in its intended outcome (making money) is in no way a reflection of who you are as person. (The same is true for winning trades, and I will have more to say about that at another time). Nonetheless, a trade gone bad (losing money or not cutting your losses short) can have dire effects on your ability to trust yourself. Your self-esteem suffers, and this spills over into every aspect of your life.

You can avoid becoming your trades by affirming that a "bad trade" was just an experience, that you did not let your losses run, and that the markets will always give you another chance. Every trade is an opportunity to learn, grow and make yourself a better trader. If you are not learning, you are not growing and your trading ability will stagnate. You will not progress through the four critical phases necessary to achieve trading competence.

What is a weed? A plant whose virtues have not yet been discovered... Ralph Waldo Emerson

You are not your trade, but you are RESPONSIBLE for your trade. If it doesn't work, get out, regroup yourself and wait for the next signal. It is fine to analyze after the fact what you did and why you did it. In fact, it is essential to trading success to look at every trade you do, why you did what you did and how you felt at the time you did it.

However, be quick about it. Avoid lingering in the past and beating yourself up over the bad trade. Try to analyze, backtest and reflect on the consequences of your decision from a rational rather than an emotional standpoint. Allow your primitive, limbic, rat brain to send emotional signals quickly into the new, rational brain for processing and integration. Accept your rat brain and feel the feelings, but get out of
that part of the brain and into the higher learning centers. Strive to understand why you made the choice you did, forgive yourself, and then move forward. In other words, get over yourself as quickly as possible.

A perceived mistake becomes a valuable learning experience and is, in essence, a gift from which to learn and grow. You are not a bad person and you are not your trading decisions; you are simply human. Keep going, keep trying, learn from your great trades and your not-so-great ones, and never ever give up!

I have not failed 700 times. I have not failed once. I have succeeded in proving that those 700 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work...Thomas Edison
 

Until next time,
Good Trading and Brain On!

Janice Dorn, M.D., Ph.D
Prescriptions for Profits
www.thetradingdoctor.com

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