By Yvan Byeajee

2015-09-27_1212While a proven edge and a sound risk and money management technique are important, psychology is what glues everything together. The reason for that is rather simple: Trading is a very tough profession as it requires us to take quick and often counter-intuitive decisions. And most of the time the quality of these decisions is affected by myriads of factors based on our current mental state – are we sad, happy, anxious, depressed; are we hungry, tired, etc. These decisions will also involve all of our beliefs about money, certainty, failure, right and wrong, and so on. When you’re forced into making quick decisions, if you are incognizant and unaware of your inner states, the strongest thoughts, feelings, or emotions are going to prevail. So to succeed as a trader, we need a certain presence of mind and an awareness of our inner states.

I don’t believe we should attempt to control our emotions, as we often hear — if by this logic, “emotional control” suggests eliminating or suppressing emotions. Unfortunately people take such platitudes and fallacies take for granted. I have been trading for 8 years now and I still can’t figure out what it means to control emotions, or to trade without them. From personal experience, even though I’ve been trading for quite some time now, the emotions never go away completely. So, rather than “controlling them” we have to learn to sink beneath them. In other words, we don’t associate ourselves to them anymore. We become passive observers of our thoughts, feelings, emotions, in such a way that they do not impede our behavior anymore. By means of observation, we become detached from them!

The character of this conversation we’re constantly having with ourselves is by and large what engineers our results. Our worries and anxieties, self-doubts, and self-criticisms — they demand expression and they will find a way to do so when we interact with the markets. Thoughts are necessary and we couldn’t navigate our lives without them but this automaticity of being lost in thoughts; of identifying with them, and not knowing that we’re thinking is really the root cause of our mediocrity in the markets.

The good news is that there is hope, and introspection allows us to inquire about the nature of our mental occurrences. Doing what is difficult over what is easy is a skill that we can learn, and how we pay attention to the present moment largely determines our ability to cultivate and apply that skill. By that same token, it allows us to trade our set of rules efficiently, thus returning consistent results out of our trading operations. What can be expected, if such a behavior is practiced and refined, is the learning of enjoying the struggle. In other words, when we keep doing things that are in our best interests — as hard as it is to do those things — slowly our minds start to create new neural pathways; new associations, consequently linking the mental struggle to the ensuing pleasure of having consistent trading results.

We mold our own reality in the markets! Although hard to accept, this is an undeniable truth. Seen through the right angle though, this truth can become quite liberating because if trading success is a function of how you perceive things and how you decide to act on that which you perceive, then I think it is safe to say that you have the power to change your trading results. You just have to work on yourself first.

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