From a psychological standpoint, getting into trading is the result of two goals for most people. As you may know, these are financial and personal freedom. The problem is a trade mental block can stop you from achieving this. It doesn’t matter if you’re trading options or futures. Even with all the hard work, success doesn’t come as expected.
And according to a licensed therapist, trading psychologist and performance coach Rande Howell, it’s about understanding the psychology of trading. He refers to this as “the gap between your performance as a trader and the results you’re getting.”
Your Brain May be Behind Your Trade Mental Block
Hence, you need to find a way to close this gap in your brain. This way, you can become a better trader by yourself or even with trade partners. However, the roadblock you may be facing may be your own mind. As he explains, “Your mind is blind to the ways of trading.” He continues, “The mind doesn’t want to change, and the markets won’t give you money so it’s an impasse. Something has to give. Usually, it’s your money.” Moreover, your typical notion of a winner is going to be challenged in the world of trading.
In trade, it is typically hard to be in control of the outcome all the time. However, people are generally wired to try to be in control anyway. Because without control, things can seem uncertain. And as Howell explains, uncertainty can readily lead to vulnerability. This is exactly what people are often trying to avoid.
However, what may have worked for you incorporate may not work in trading. Moreover, the human brain is typically focused on self-preservation instead of probability thinking. Essentially, you now have a way of understanding uncertainty and risk that doesn’t favor trading. “Ultimately, your survival instincts are, in fact, killing you,” Howell explains. “Your brain is focused on short-term survival and predicting outcome while trading requires a long-term mindset.”
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How Your Survival Instinct is Triggered When Trading
If you think about it, trading also has a way of tapping into your emotions. And this is linked to your short-term survival instinct in trade. As Howell explains, some fear the potential loss of money. Others experience fear of pulling the trigger. Meanwhile, for others, there is that need to win and equally important, not lose. On the other hand, there is also a fear of missing out. Aside from these, there is also revenge trading, impulsive trading and becoming overconfident. This would readily affect your trading decisions. And ultimately, your survival thinking is hindering your ability for rational thought. Instead, Howell says that you need a “disciplined, patient mind engaging the markets.”
How to Change the Way You Think About Uncertainty and Risk
For Howell, you need to “take a hard look at what’s driving the performance of your trading.” There are ways that you can learn to do this:
You need to have a better understanding of emotions and the power that it has over you. Howell says, “You don’t have emotions. They have you. That’s the bottom line.” However, understand that your emotions are never your enemy. Instead, you need to get smarter at “knowing how to use them to create the mind that trades.”
You need to regulate the triggering of emotions so that they don’t build up and take over your mind. According to Howell, this is how you avoid “getting emotionally hijacked.”
You need to come to terms with the fact that your historical self can’t handle uncertainty in trading. However, by using mindfulness, you can “redesign” the organization of yourself so that you can accept uncertainty.
Breaking Through The Mental Block That Holds Your Trading Potential Hostage
Historical Self-Limiting Narrative
This typically comes in the form of self-doubt or even revenge trading. You need to recognize it and take control of it better. Moreover, it’s also important to remember that prioritizing short-term survival prevents you from trading effectively.
Develop an Empowered Self
Don’t try to attack or avoid uncertainty. Instead, you need to learn to develop courage, discipline, impartiality, and self-soothing within yourself. You need to develop a “disciplined and partial mind.” Otherwise, it is better that you don’t trade.
At the same time, it’s also important to develop self-compassion. Howell warns that you shouldn’t beat yourself up when you lose at trading. That only makes the situation worse. Instead, he says you should “acknowledge the suffering and you work through it.” This allows you to remove fear and simply learn from your mistake.
If you can break through your mental block when trading, then you would become more formidable in the market. And with a good trading mind, you’ll be able to trade more confidently for years to come.
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