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15 Jul 5 Limiting Beliefs Which Will Hurt Your Trading

The only thing limiting us in life is our belief that there are limits

Turning 40 has an odd effect on some people. I would imagine that wisdom increases with age and with every year that passes you become more "enlightened" as to why you think/feel/act/react the way that you do. Personally, I welcomed this major milestone in my life as a time for some serious reflection.

After all, if I chose to view this milestone negatively - and become resentful about things in life that I don't have - what kind of person would I be for my friends and family to deal with?

Honestly, I think I'm old enough to understand what it's like being around a person that only "darkens" the room and doesn't offer any positive energy to those around them.

Do I really want to go in that direction in my life? No, thank you.

I come from a very small town in the mid-west. I was brought up in a very small family (no brothers or sisters or father) in an environment that wasn't necessarily welcoming to any type of profession that didn't bring home a steady weekly paycheck.

Growing up, I've done just about every job you could imagine, from cleaning up Park/Recreational area bathrooms, to working in a nursing home, to being a painter (no, not impressionistic art, I painted houses), to filling pot holes for the city, to working in fast food, to delivering newspapers, to building websites...[I won't bore you with the continuation of  this list] and always thought that this is what life is about - you work a job you hate, so you will have enough money to pay rent in a place you don't want to live and whatever is left over, you buy some alcohol to numb the pain so you can get up in the morning and do it all over again.

I guess my description of that lifestyle is a bit harsh - but it's obvious that as I get older, I have less of an ability to sugar-coat things. The real point to all this is that when you are trapped in a negative cyclical environment, it's really difficult to break the cycle. There are many many many people out there that had it far worse than I did, that's for sure, but realizing that never made me feel any better.

I always knew how grateful I would be when all of this changed for me and I was finally living a life that gave me a certain amount of freedom, rather than simply selling hours from my life to someone else. Life has a funny way of giving you hints as to the path you are supposed to take; which are difficult to notice if you shut yourself off from them.

Looking back and reflecting on some of the thoughts that used to pass through my head, as well as the hordes of opinions of the people around me, I distinctly remember how the same limiting beliefs kept getting beaten into my brain - which to this day - still project their shadows in my mind.

Here are the 5  limiting beliefs that can keep a person in a not-so-perfect state:

1. Our Experiences

Our experiences in childhood and early adulthood form a type of cause-and-effect bond in our minds that can become a permanent belief. Evolution has molded our brains to choose the path of least resistance in our normal day-to-day thinking, which as a result always draws on our prior experience to accomplish certain task, deal with problem, feeling, etc and we react based on this prior information first, even if it might be the wrong or harmful to our long-term happiness.

In trading, everyone experiences a loss from time to time; this is a fact. However, we have to be very careful not to let recent or past losers burn a negative image into our minds that the same setup will not be profitable in the future.

Let's face it - humans are not hard-wired for trading. We are emotional beings that thrive on the interactions with others; this is why trading is one of those professions that can take a lifetime to learn.

2. Our Education

It's not earth-shattering news to state that the educational system in this country is broken. Our teachers work tirelessly within the constraints miniscule budgets in order to provide our children with a foundation a knowledge to help them succeed in life.

It is not surprising that some people working within the educational system can sometimes become bitter, annoyed and cynical. Unfortunately, these overtones seep into the minds of children either directly or indirectly.

As we become adults, it becomes apparent that not everything we were taught in school is necessarily unbiased. It takes a truly exceptional teacher to cultivate the individuality of each child and it is unfortunate that it is difficult to put any type of metric to measure this type of success.

3. Past Errors in Judgement

Throughout the course of our lives, we make constant decisions - some have estimated that humans make upwards of 40,000/day. As we grow older and our memories deteriorate, the outcomes of these decisions can sometimes get "jumbled". What might have actually been a positive experience can sometimes get mixed with a situation that was negative, especially if the environment in which it happened was similar.

When this happens, our brain once again chooses the path-of-least-resistance and assigns a negative experience to a positive. A person can sometimes notice this phenomenon when comparing experiences (stories) with friends or family many years afterward.

In regards to trading and teaching, I've witnessed this with my students. One in particular, had consistent wins in a certain stock which provided for a nice quarterly return. One day she experienced an unexpected move and her trade was a loser - not a devastating loser, but a loser nonetheless. Afterwards, she stopped trading that stock, even though it was a consistent winner for her so many times in the past.

4. Creating Excuses

When we create excuses for our failures, this is actually a by-product of protecting our beliefs. It feels so comfortable for us to sometimes wrap ourselves in a warm blanket of denial. This is a protection mechanism for our emotionality; a way to remain blameless for situations which could have provided us with a learning experience which could have been a catalyst for change in our behavior and in our lives.

5. Fear of Unknown

Fear can be thought of as the doorway to our limiting beliefs about ourselves. Fear is the factor that tends to trigger our belief system to engage and tell us what course of action to take or not take.

In trading, obviously fear is something we wrestle with daily. The good news is that since fear is the doorway, the ability to control if the door opens or stays shut is an empowering skill that can be harnessed.

I have actually dedicated another post to Fear, because it is such an expansive topic in trading.  Read more about my thoughts on Fears in Trading here.

Trading System vs. Trading Psychology

As a trading educator, I receive a lot of questions from my students. Looking back over the years, I have noticed that probably 95% of these questions have to do with how to build a successful trading system (indicators, option strategies, what stock to trade, etc) and very little to do with psychology.  This is understandable - since my video course mostly deals with teaching profitable setups, etc.

I would encourage you though to study the psychological factor within yourself - even more so than your trading system. What limiting beliefs do you carry around with you? Why are they there? What can you do to change your thinking when these beliefs aren't serving your purpose and start becoming a detriment to a happy life?

May I wish you the greatest happiness on your road to success.

 

 

 

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