A belief is what you hold to be “true” and you “feel” a level of certainty about it. You become what you truly believe. Whatever your beliefs are, the first matter of business is to know them, especially those that impact upon your trading performance. As Amber did, you’ll want to monitor your thoughts and what you’re telling yourself as you track your trades in your Thought Journal (a log of your internal data – your thoughts, emotions and behaviors associated with your trades). In this way, you’ll begin to identify the “limiting beliefs” that are driving your thoughts and emotions which in turn drive bad behavior.
Beliefs influence all behavior. Here is a list of proactive beliefs:
- There are no failures, only lessons
- Every problem has a solution
- Creativity is at my core, and I can always trysomething different
- Mind and body are part of the same system
- Knowledge is not power, the application ofknowledge is power
- All that I need to know is either inside of me oravailable to me
- If I am patient, there is always another trade
- I don’t have to always participate in the market
- The market is made of people like me, therefore, ifI can determine my poor decisions, I can take the other side of the tradewith a high probability of being right
Beliefs are MAPS (mental models and paradigms – lenses through which you see the world) and serve to create views about self and others that you use to determine decisions. These beliefs and MAPS, if they do not serve you, are learned limitations that become “dyed-in-the-wool” and strongly held, often coming from authority figures and loved ones we incorporated into our maps.
Consider how wounding and destructive beliefs like the following can be:
- You’re a dummy
- You’ll never amount to much
- You deserve everything that you get
- You’re a bad seed
- You’re lazy
- People can’t be trusted
- Rich people do bad things
- You’ve got to get all you can before it is takenaway
- Only greedy people have money
You can create your own beliefs and rewrite your history. It is a matter of identifying the results you want and formulating the mindset aligned with getting those results.
- Belief – I have the potential to win any trade Imake.
- I follow all of my rules and size my positionsappropriately. I manage my portfolio.
- I only take high probability setups in keeping withmy strategy.
- I’m able to visualize the winning trade as hittingmy target. I can see the price action moving in my favor. I see myselfsmiling as I click the mouse to enter and to exit the winning trade. Ihear myself say, “Well done” after the winning.
- I feel confident and am aligned with my strengthswhile resisting disruptive emotions like anxiety, fear and greed.
- I put my full attention into the trade. I amfocused and the “knowledgeable trader” in me is fully present.
- I look for patterns, pivots, resistance and supportand use them adroitly.
- I notice when I have “danced with the marketwell” and celebrate my wins.
- I prove my belief to myself by taking advantage ofgood high probability setups that have a high rate of win returns.
If, on the other hand, Jim believed he had to fight the market and it was difficult to win, and that at any moment the markets would take his money, the scenario would be more like the one below.
- Belief – beating the market is difficult and Idon’t have much of a chance. Winners are lucky.
- My rules don’t really matter that much. I need tomake money when I can. If I play more, I can make more.
- I take advice wherever I can get it and take anyand all setups. I’ve got to remain flexible. If I don’t, I’ll miss out.
- I hope that this trade will win. If I anticipatethe move of the price action, I can get a jump on the trade, but I knowit’s going to go against me as soon as I get in, and when I get a smallprofit, I’d better take it now because the price action will move againstme.
- I’m feeling anxious and fearful that I’m going tolose.
- I know it’s going to break out of resistance, soI’ll go long early. I don’t need confirmation. If I wait, I’ll miss partof the move.
- I feel like a failure when I’ve lost in a trade.
- I prove my belief to myself.
This scenario plays out over and over again in trading rooms and on computers across the planet. Be proactive and intentional about your belief systems. This is the way to create the results in your life and in your trading that you want. Your “A” Game is dependent on your beliefs. That is why it is so important to identify those that are not serving your best interests.
Dr. M. Woodruff Johnson can be contacted at The Online Trading Academy