It’s been over three months since I posted a new blog entry here. I only like to write when I feel inspired, so that my readers consistently get content that can add value to their lives and never get a post that was posted “just because.” Having said that, I’ve been thinking about this for some time: Trading is the most difficult challenge you’ll ever face. Even if you do manage to make it over the seemingly insurmountable mountain of trading “tuition,” you’ve still got a long road ahead of you: you need to develop consistency, develop a sense of balance between aggression and conservation, learn to constantly adapt to changing market environments, learn how to handle taxes and fees, and adapt to your new life of freedom from “the grind.”
As traders – as students of the market – our education is never complete. The market environment is constantly changing and the tides are constantly shifting: one week biotech stocks run straight up, the next week the entire market falls apart as news from OPEC rattles it, the week after that some political figure says something that hypes everyone up and back to highs we go … it never ends. Being "ok" isn’t good enough. Mediocre performance equals death in this world. You have to be an expert and you have to be able to adapt to changes at a moment’s notice. A huge part of being able to do this comes as a side effect of personal development done outside of trading, and the reason many traders fail is they neglect this constant requirement. So, I’d like to share with you six things I personally do which have drastically improved my trading results through outside personal development:
1. Write a purpose statement for your life:
This idea came from my own mentor and good friend via a recent presentation he gave at a trading event. In it he drops this bomb:
“There is nothing more dangerous in the world than a man with a purpose, because that man will do anything to get what he wants; He cannot be broken.”
Those words really spoke to me, so for the next week or so I thought about what my purpose is. I wanted to understand why I’m trading, and I knew it wasn’t just to get rich. There was something deeper there, something that drove me to come back to it time and time and time again after failing and working my ass off and seemingly never seeing any improvement. I just didn’t know what that something was. So, recently I wrote my purpose statement and in doing that, I gave myself a reason to focus on doing things right in my trading every single day. So sit back and think about it. Let the inspiration come to you and go with your gut. There are no right or wrong answers, only what you feel in your gut. It might take you a week, or a month, or it may come to you instantly and slap you in the face so hard your head will do a 360. However it comes to you though, when it hits you you’ll know it. Write a purpose statement and use it to guide your every move in your trading journey.
There’s no denying that trading is a high-stress job. Stress is a destroyer of rational thought and logical behavior. I meditate often and I find that it vastly improves my calmness of mind and deliberateness of action when I trade. Personally I'm a big fan of The Honest Guys and their guided meditations. For me they’re a good way to escape the reality of the day and venture off into a sort of fantasy land where nothing matters and all is well. It might seem silly, but this disconnection from reality can really help to put into perspective what’s important in life and get your mind off anything bad that’s happening with your trading. They work best when you listen to them with noise cancelling headphones and in complete darkness so you can become totally immersed in the story and the meditation, so I usually listen to one a couple times a week before bed or whenever I’m feeling stressed. It’s made a big difference in how I feel about trading.
3. Listen to calming music:
Music influences our moods heavily. It’s actually been shown in studies that music can cause the release of endorphins and hormones that can drastically affect the way we feel, and in fact the same thing happens in the animal kingdom, with some studies showing that dogs are affected emotionally by music. So, whenever I’m trying to focus (especially early in the morning while I’m reading news and preparing for the trading day) I like to listen to some sort of calming/ambient music.
A great example is what’s playing on my Pandora as we speak: David Lanz – The Enchantment. This type of slow-tempo, ambient, soothing music can reduce our stress levels and increase our focus during the morning when we are forced to quickly take in tons of information in a very short amount of time. Normally I only turn on faster, more upbeat music after I’m mostly done trading for the day. While there are certain times I like to get pumped up in the morning, if I start the day listening to Almost Famous I will most likely blow 1000 bucks in the first 15 minutes!
4. Get an accountability partner:
This is a huge deal. I’ve always had an accountability partner to help hold me to my word when I say I’m going to do something. Your partner should be someone who inspires you. It doesn’t necessarily need to be a trader, either. It could be anyone who has made progress in their life that motivates you or makes you want to push yourself forward. I have a couple of different ones but recently struck up a connection with an old high school friend who has gone through a lot in his life and come out on top. He's now in the process of starting his own business. We meet once a week and talk about our goals for the upcoming week, write them down, and hold each other to them. In fact, this blog post was one of my goals for the week since I hadn’t done one in a while, and due to our recent conversations I was feeling inspired to talk about personal development and how it has affected my trading!
An accountability partner can not only hold you to your word when you say you’re going to do things, but can also be a great person to bounce new ideas off and get feedback from. Having this type of relationship in your life will improve your trading results because even if your trading is suffering you’ll feel like you’re constantly moving forward in other areas of your life. Trading is an emotional game, and feeling like you’re moving forward is what will keep you going when times get tough.
5. Force yourself to commit to others:
This is similar to having an accountability partner but a bit more intense. I’ve found that forcing myself to make commitments to others has improved my trading results because it makes me more decisive. What I did to achieve this was begin offering up free services and YouTube videos weekly, so that I’m forced to put some work into something and I know that people are expecting it from me. In this way if I don’t do it I feel like I’ve let all my loyal followers down which really bothers me, so I absolutely will not do it!
I strongly recommend that anyone reading this do the same in some way. Maybe it’s starting a weekly newsletter, maybe it’s joining a local club and teaching people something, maybe it’s committing to a presentation of some odd skill set you have. The key is simply that it must be something you commit to and that other people will find valuable so they’ll be disappointed if you don’t do it. There are also a number of studies that have shown that if you want to achieve something, it’s better to promise it to someone than to set it as a goal for yourself, because most people are more likely to keep promises to others than to stick with personal goals promised to themselves. So promise the public that you’ll do something, make sure they'll feel let down if you don’t do it, and don't let them down!
6. Attend networking events:
To me, one of the most ironic things about being a trader is that when you’re good at it, it’s actually a really lonely and boring profession. You get about 2 hours of excitement from 9:30AM to 11:30AM, and then all the fun is gone and you just kind of sit there for the rest of the day waiting for the closing hour. Most successful traders I know make almost all their money in that first 1-2 hour period or in that last 3-4PM hour. Because of this it’s easy to become socially inept or reclusive which can drastically and negatively affect your trading, especially if it’s going badly.
I like to attend networking events in my area just to meet new people, exchange business cards, make contacts and get to know interesting people. I’ve met a ton of people this way who have offered unique ideas that have improved my trading both directly and indirectly, and have also struck up some really good opportunities to grow my own ventures. If you don’t own a company or think you have no reason to network, trust me, just try it. You never know who you’ll meet and some of the connections can be really awesome. Plus, many people lack the confidence to simply walk up to a stranger and introduce themselves and these networking events give you an excellent place to practice building that confidence. The confidence you’ll develop this way will actually translate into more confidence in your trading which can lead to better results.
In the end, your trading is what you make it. Like any challenge, you need to face it full speed ahead and with conviction. Personal development is a huge part of this and the cool thing about it is that it’s relatively easy to achieve these things. If you’re looking for an accountability partner, look to your old friends who’ve been successful or who are working on a big project right now. If you need meditation or calming music, YouTube and Pandora are great, free sources. If you’re looking for networking events or ways to commit to the public, check out meetup.com for your area and see what’s going on. If you live around a big city there are most likely tons of events happening that you don’t even know about! There’s also Toastmasters which can be an incredible way to build confidence that can translate into more deliberate trading activities and better trading results.
I hope this information is useful. Until next time, best of luck and happy trading!