Stocks & Commodities V. 11:5 (224-225): Beliefs And Trading by Ruth Roosevelt
Beliefs And Trading by Ruth Roosevelt
You are what you believe—and that includes your trading beliefs. Your unconscious mind is the final arbiter of whether you will succeed as a trader. Ruth Roosevelt, director of the Wall Street Hypnosis Center, explains how to understand your unspoken beliefs and use them to achieve trading success.
T
he beliefs that you hold, whether conscious or unconscious, have the power to affect your trading.
Some are ingrained in your character, and you react to everyday life with them at every turn. On the other hand, there are other beliefs that you know you hold: you are absolutely certain about these "facts"—even if logically they may not hold water. Conscious or unconscious, if you firmly believe something, it affects your life and your trading. Let me give you some examples: He was a floor trader on the New York Stock Exchange. He knew he needed to hold some of his stocks overnight to significantly increase his profits, but he found that he couldn't make himself do it. Later, he realized he had hooked up his self-esteem to turning a profit each and every trading day. Without the profit that he required, he felt all would be lost. She was a trader who had spent four years developing a mathematical system for trading futures. Consciously, she was satisfied that the system worked, but not unconsciously. She found herself unable to follow the signals of the system; there she would sit, frozen with her hand on the phone. At best, she followed her carefully developed system randomly, with random results. Unconsciously, she didn't believe that any system could work over time. This happens much more frequently than you would imagine. Hundreds of would-be traders buy proven systems each year, only to make alterations or modifications to the systems or randomly follow the
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Stocks & Commodities V. 11:5 (224-225): Beliefs And Trading by Ruth Roosevelt
signals. Before long they replace one system with another and another. Why? Inevitably, it goes back to the beliefs these people hold about themselves. the markets or systems trading. What is a belief? A belief is a generalization you have made about yourself and/or the world that you are convinced is true. Your beliefs are organized around your values, and usually they take the form of rules about how to achieve important positive criteria or avoid something of critical negative significance. Your beliefs, which for the most part are unconscious, drive your behavior. Just as you do not question your need for oxygen, you do not question your beliefs. As you swim in a sea of your beliefs, you're not likely to notice them: you don't think very much about them and are rarely conscious of them until they're successful traders hold: brought to your attention.
One way to find out what to believe to succeed is to look at successful traders and pattern your trading after theirs. In modeling human excellence, the first place to begin is to model the beliefs of the masters. What you believe affects what you experience. You behave in accordance with what you believe. Then, what you experience inevitably affects what you believe. You are locked into a self fulfilling cycle. The belief creates the experience and the experience reinforces the belief. Thus, your beliefs are held strong and constant by the particular filters you use to enable yourself to see and experience what you already believe to be true. Your beliefs also have the potential to determine not only your actions but also your perceptions. This is particularly dangerous when dealing with markets where you must understand exactly what has happened, is happening and will happen. As a trader you must keep an open mind. Any belief that limits your horizons can wreak havoc with your sense of self and hence your trading results. If you find yourself repeating certain trading errors, you can ask yourself what belief is causing you to do this. If you find yourself feeling fearful while trading or depressed at the end of a trading day, you can ask yourself what belief is causing you to feel this way. A common and crippling belief that traders suffer is the thought that any individual loss spells potential disaster. Even if you realize consciously that losses along the trading way are inevitable, you can still find yourself resisting the idea that some losses cannot be avoided but that in the long run it is not something that needs to be worried over. Closely linked is the idea that each and every trade is crucial to your trading results or total equity. With that idea, each trade becomes highly charged with significance, rather than just being one in a series of trades, both wins and losses. Another damaging belief is the assumption that you must be right, not just to win but also to maintain your self-esteem, like the floor trader I mentioned before. Making your self-esteem dependent on the results of any given trade or even your total trading can be detrimental to your trading health. To trade with comfort and confidence, you must have a sense of your self-worth that goes beyond your net worth or any trading program. MODELING THE MASTERS Successful traders are not only free from limiting beliefs, but they also hold an array of beliefs that
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Stocks & Commodities V. 11:5 (224-225): Beliefs And Trading by Ruth Roosevelt
encourage and support their self-esteem. One way to find out what to believe to succeed is to look at successful traders and pattern your trading after theirs. In modeling human excellence, the first place to begin is to model the beliefs of the masters.This is a partial list of beliefs that many I can make money trading the markets. I will control my risk. I will adhere to my methodology. Any individual loss is unimportant. Did I follow good trading principles? I will be prepared. Trading requires commitment. I will stop trading or at least cut down when I'm temporarily losing. Markets are fascinating and fun. Mistakes don't matter as long as I learn from them. Money is not important. I can trust myself to do the right thing. I will keep my trading in perspective. Beliefs resist change. Because you are what you believe, your beliefs become associated with your identity. You will fight to preserve that identity as if your very life depended upon it— because the life you know does depend on it. History abounds with examples of people willing to die to protect their beliefs. Indeed, wars are usually fought for the major purpose of defending belief. How we create and dismantle beliefs is a continual process. Limiting beliefs can be replaced with positive beliefs, and even a change in only one belief can have a profound effect upon your trading and your life. Ruth Roosevelt is the director of the Wall Street Hypnosis Center.
ADDITIONAL READING Douglas, Mark [1990]. The Disciplined Trader: Developing Winning Attitudes , New York Institute of Finance. Tharp, Van K. [1991]. "Scheduling time for market study," Technical Analysis of STOCKS & COMMODITIES, Volume 9: November. [1991]. "Predicting the market with unreliable sources," Technical Analysis of STOCKS & COMMODITIES, Volume 9: July. [1991]. "Flowing with the markets ,"Technical Analysis of STOCKS & COMMODITIES, Volume 9: June. [1991]. "Avoiding overconfidence," Technical Analysis of STOCKS & COMMODITIES, Volume 9: May. [1987]. "The loss trap," Technical Analysis of STOCKS & COMMODITIES Volume 5: November.
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