Your Response to Trading Mistakes Defines You

The greatest reward for doing is the opportunity to do more – Vince Lombardi

Just because we’ve momentarily lost our way in trading doesn’t mean we are lost forever. In the end, it’s not the failures that define us so much as how we respond. We all get steered off course at some point in our trading journey. What really counts isn’t that we make mistakes but the choices that follow these mistakes.

Just because you failed doesn’t mean you can’t succeed. We all fail. Mentally resilient people realize that its not failure that defines your identity but how you respond.

Shane Parrish – an inspiration to this post

A trader who breaks his risk management rules, for example, can accept responsibility of his actions, change his behaviour, and go on to have a fantastic trading day, or he can see only failure and tumble into a vicious cycle of committing ever-larger trading crimes.

If there is no consistency in your own mind, how can you achieve consistency in the market? Develop consistency in your own mind first. The rest will follow.

Sometimes we lose our way. We make mistakes. We focus on the wrong things. We pursue goals at all costs. We teeter on ethical and moral cliffs. We get too far down a slippery slope. We steal. We cheat. We lie. We deceive others. We deceive ourselves. We don’t open ourselves up to friends. We see crime or fraud and don’t speak out. — Shane Parrish

It’s not that you stumble, it’s that you get back up. It’s not that you did something wrong but that you realize what’s happening and change. It’s not about chasing losses or that you messed up in a trade, it’s that you see ways you can do better. Doing the wrong things, breaking your rules when trading is bad enough, but realising that and refusing to change is worse. You must take the time and realise this is happening to you, and how you respond in these situations will define your trading day.

The mind spends most of its time lost in illusions, fantasies, always reliving pleasant and unpleasant experiences and anticipating future ones with eagerness or fear. When your lost in all that commotion, it becomes difficult to be aware of what is happening here and now.

“I like people admitting they were complete stupid horses’ asses. I know I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn.”

Charlie Munger

In these moments we’re a poor trader, and we’re far less in tune with ourselves, and far less than the trader we’re capable of being.

You can be a good person and still exercise poor judgement.

It’s the courage to do the right thing that counts!

“Forgetting your mistakes is a terrible error if you are trying to improve your cognition…
Why not celebrate stupidities!”

Charlie Munger

Mistakes are bad, no doubt, but not learning from them is worse. The key to learning from mistakes is to admit them without excuses or defensiveness, rub your nose in them a little, and make the changes you need to make to grow going forward. If you can’t admit to your mistakes, you won’t grow as a trader.

Some traders need to focus more. Others need to broaden their perspective.

Some traders need to try harder. Others need to stress less.

Some traders need to care more. Others need to let it go.

The secret is you are both people. The key is to know which one you are in this moment.

Trading is about being a better version of yourself. And when that happens, your effort and energy go toward upgrading your personal operating system every day.  You become happier, free from the past and focused on the present moment.

Risk | Forex | Psychology - Trading is primarily a behavioral exercise; understand your behavior and your more likely to be a successful trader.

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