Forex Trading Articles

WHAT ARE OUR NEEDS?

By Dick Thompson for Forexmentor
©2010, Forexmentor.com, July 2010

As we journey through the early stages of learning to trade, we are often told that our personal psychology is of the utmost importance in trading success. We are cautioned to understand who we are, and we read how our emotions can strongly influence how we trade. We learn to understand how our day to day mindset can interfere with logical thinking and ability to focus.

Sometimes it is easy to see the cause and effect of these concepts. For instance, we can see how trading after an emotional argument with a spouse can upset us and interfere with our concentration. Or how being overtired from too little sleep can fog our minds. But what about some of the deeper aspects of our personalities, our behavior and our hierarchy of needs. How do these things affect our success in trading?

I’d like to relate a story of an individual who was a very experienced trader but who had never really been successful. I’ll call him Henry.  Henry didn’t lose much money, yet he did not make much either. He was a net loser though because he had spent quite a large sum on books, courses, workshops, etc. which he had not recovered.

During this time, which extended over a few years, Henry became very knowledgeable about trading and actually was able to be quite helpful to many less experience traders. He helped others through a local trading group in his community and also through internet trading forums. He spent many hours posting answers and taking part in other discussions in these forums. But Henry was frustrated because he could not understand how someone who had so much knowledge, who found it so easy to see the solutions to other traders problems, could not be successful in his own trading. And this translated into guilt because he saw that he was portraying himself to others as an expert trader, which of course he was not. Those who can, do; those who can’t, teach.

Eventually, Henry came to realize that this activity, this role as a “trading consultant” was hugely important to him. He had a great need to be recognized and respected as a knowledgeable, competent trader, even though he was at best, mediocre. He came to realize that he had a need to be this person and much of his trading life was spent trying to fill this need. He also came to realize that this effort, directed as it was towards fulfilling this need, was detrimental to trading successfully. His focus was not on executing trades but on studying the markets so that he could respond to his “students”. And the guilt and frustration became a barrier to successful trades because of the emotional impact.

With Henry’s understanding of who he really was, he was able to take corrective action. He left his User’s Group; he stopped spending time on forums; he worked hard at finding other avenues for fulfillment other than being a trading consultant. When he felt he had this under control, he returned to trading and concentrated on nothing but trading. It made a significant difference. He still is not a an “expert trader”, but his results are significantly improved. The equity curve is no longer flat.

Henry’s experience is not unique, in my opinion. We all probably have some needs or issues or other personality characteristics that get in the way of our trading. The sooner that we understand that we are human and spend some time in introspective analysis, the sooner we can accept who we are and deal with any of our own barriers to trading.

Good luck and good trading.

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