Most traders say ‘mindset matters’ but… they stop there.
For them, a path of broken-glass lies ahead. It often ends at the bank with them making yet another withdrawal to re-fund their account.
But it doesn’t have to end that way… If only they didn’t half-ass mindset.
When was the last time you took stock of your trading beliefs?
We have beliefs about everything. And these beliefs guide our actions. And since they guide our actions, they literally dictate our performance in the market.
A trader’s beliefs decide whether she or he succeeds or fails, period.
So, isn’t it critical then to become increasingly aware of what our beliefs really are?
Most traders aren’t. And so they continue to fail. I failed for close to a decade before realizing any of this.
I blew up my account over and over for ten f***ing years.
I can’t even begin to tell you the heartbreak and frustration I felt…
This isn’t the only thing you’ll need in order to trade well. But without it, nothing else really matters. It’s why it’s step one of the Mindwheel.
Shedding Bad Beliefs
Our beliefs are made up of what we’ve seen, heard, and were taught since birth.
They were all useful at some point. But it’s up to us to figure out if they still are.
Do you remember what it was like when you first learned about Santa Claus? How it felt finding presents under the tree?
How about when you finally learned there was no Santa Claus? How did you feel?
Beliefs can often be painful to let go of whether they’re serving us or not. When it’s painful, what happens?
Well… a few things.
Suppose you’re busting your ass trying to learn trading. Reading books. Watching videos. Maybe even buying a course or getting a mentor.
You understand a lot about trading but for some reason, every time you start making some progress, WHAM! You feel like you’re back to square one.
This ever happen to you?
What if you grew up watching your parents argue about money? How about if you were told there was never enough of it? That the things you wanted growing up, you couldn’t have because money was tight. In what ways could this influence your beliefs about money?
Could the things you picked up as a kid still be living in your subconscious as an adult? And if so, would you necessarily be aware of it?
Could money beliefs you’re unaware of be the weeds strangling your trading??
Damn straight they could!
These kind of beliefs can f*** you up big time! The worst part, you’re likely unaware of them. Most traders fall on their faces again and again. Laying there beaten-up on the trading floor, wondering why they continue to fail.
This happened to a client of mine that we’ll call ‘Bob’ to protect his identity.
Bodybuilder Vs. Money Beliefs: Bob’s Story
Bob worshiped his dad. Even though they didn’t have much, Bob and his two younger brothers always had enough. Their dad worked 3 jobs to make it happen.
“Nothing comes easy Bob. If you want something, you need to work hard for it. Hard work pays son.”
Bob would hear stuff like this all the time from his old man. Sound advice, no?
Unfortunately Bob applied this belief in a way that tripped up his trading.
He would work hard. Spend hours in front of the charts, reading books, taking courses. He’d make progress. But as soon as things felt like they were getting easier, Bob would give back every last penny he made. Why?
Well, if Bob wanted the answer and to make it as a trader, he’d need to start questioning his beliefs.
Together, he and I started digging deeper.
Beliefs are like car batteries. Some can have a really strong charge to them.
You are the sole driver of this ‘beliefs car’. For better or worse, all of the beliefs in it remain charged unless you do something about it.
Bob’s belief about hard work came with a super strong charge! It originated from his dad whom he worshiped. It also helped drive success in other areas of his life, like winning body building competitions.
Unfortunately Bob’s beliefs about hard work were not helping his trading. They were actually holding him back. He believed that he had to work hard for money. Not only that, if it came easily, he wasn’t worthy of it!
If I had told Bob flat out that this belief was the thing holding him back it would have put him on the defensive. He had to come to this conclusion himself. To help him out, I asked him a few questions.
Questions Are The Answer
I asked Bob about his body building. He fondly told me about his most recent feat. Deadlifting 600 kilos!
“Damn! That’s impressive!” I said when he told me. “Was it easy for you?”
“No,” Bob said. “I can only lift that amount for one rep.”
“How much were you able to lift last year?”
“Last year I could only do 400, I’ve come a long way, right?”
“Dang dude! That’s massive progress in only a year! Congrats! How hard is it for you to lift those 400 kilos now?”
“Easy! I can practically warm up with that amount now.”
Bob didn’t know it but I was about to turn his lifting into trading. I asked a very weird question “So are you no longer worthy of lifting 400 kilos?”
“What?” Bob was clearly confused by my question. “Of course I am. I worked hard to get here. And thats not stoppin’ anytime soon.”
“Couldn’t the same be said of your trading? You worked hard and it got easier. Aren’t you worthy of the ease now because you’ve put in the work?”
A light bulb turned on in Bob’s head that was so bright you could see it from space!
“Oh my god! Thank you!” he said.
Bob had a major breakthrough and his trading immensely improved. He shed a major limiting belief, became increasingly aware of his trading beliefs, and was trading in line with beliefs that served him well.
What would happen to your trading if you were increasingly aware of your beliefs?
Unfortunately, most people aren’t aware.
Most choose to remain oblivious and end up limiting themselves in the process. They either don’t want to deal with the pain of letting go, are fearful about what happens if they do, or a little of both.
It’s as if they were a tree and decided to plant themselves in a nice cozy pot instead of in the forest.
Think Of Yourself Like A Growing Tree
As a seed, you have all the potential in the world. You can be a giant tree!
Let’s suppose someone comes along and gives you an option. Be planted in a nice cozy pot and live indoors, or be planted in the forest.
Which do you choose and why?
How you answer depends on your goal, right? Do you want to be comfortable or do you want to achieve your potential?
If your goal is to become a giant tree, you’re not picking the cozy pot are you? You need to grow deep roots. Push through dirt and rock. None of this is comfortable. It requires work. But this is what it takes to achieve your potential, right?
Choose to live in the pot and you’ll only get so big. Your roots won’t expand. Eventually you forget about all the potential you had. You stop growing. The pot becomes your comfort zone.
Thankfully, you are not a tree, and you don’t live in a pot.
You can choose to step outside of your comfort zone, get uncomfortable, and keep growing!
This is a lesson I learned on my own the hard way. And it took me nearly a DECADE to do it.
I’d like to help as many as I can avoid this altogether. Start in the forest. Pot life sucks! But if you are someone who is in the pot, don’t despair. Know that you can change. And the time to change is right now!
Here’s what you’ll need to do…
Search Your Soul, Ask It Why
Why are you trading? Is it fun? On a fun scale of 1-10, how would you rate it?
Go ahead, answer it now. I’ll wait…
What’d you come up with?
If you said 6 or less, stop trading.
Ask yourself, is trading really your thing?
It’s okay if it’s not. You can still profit from the market. Get some of the basics down. Become knowledgeable enough to play in a simple way. Hire the right person to do it for you.
You shouldn’t feel like you have to trade to achieve your dreams. Life is short and we shouldn’t spend significant time doing things that aren’t fun to us.
Now, if trading is fun, if it is your game, you’ll want to get clear on your WHY. The clearer it is, the more heavy lifting it will do for you.
There’s a lot to learn to be a successful trader. Some of it will be challenging. A clear and powerful why will carry you through.
Lessons From A 4 Year Old
My daughter is at that age where she asks why a lot. She asks a question. I give her an answer. She asks why. And then why again. And again…
You ever experience anything like this?
There’s actually something really great to it!
When most traders are asked why they want to trade, they’ll fire back saying something like they ‘want to make money.’ Great.
Do you think they really care about pieces of paper with dead presidents on them? Or do you think they care about what it can get them?
You need to know your deeper why. Beyond money.
What are you trying to get out of your trading? Why is that important to you?
Got your answer? Great! Ask why again!
Go 7 layers deep with this. Write it out. If you have the courage, share your answer in the comments below.
Awesome. Now that you’ve gotten through the warmup, let’s put some real work in.
Your Growth Happens Here
Remember Bob’s story? Remember the story about the tree? Well, now its your turn to have some epiphanies of your own and grow!
You’ve gotten this far. Perhaps a few seeds have already been planted. This is where the real growth is going to happen.
We’re going to start by examining your trading beliefs and money beliefs.
Trading and money are closely tied. Most of us learn trading later in life but are given money beliefs almost from infancy! Ask yourself what your parents believe about money. What did you hear about money growing up as a kid? What was said about those who had money? Was getting money easy or hard?
This is a small sample of the types of questions you need to start thinking about. For most traders, the answers to these questions have been the culprits hijacking their trades. Unfortunately, most never do an exercise like this. They wonder why they keep repeating the same mistakes again and again. These traders never achieve their dreams.
Don’t let that be you!
Do This Beliefs Exercise
Our beliefs dictate our actions. If you lack awareness of your beliefs, you’re screwed!
Block out an hour for each part of this exercise on your calendar. You want focused effort. No interruptions or distractions.
PART 1A: Write out your beliefs about trading.
Whatever comes to mind simply write it out. Let it be a stream of consciousness. Do not judge these beliefs as they come out. That’ll come later. For now, just focus on getting them out of your head and onto the paper or onto the screen.
Examples: “The whole market is rigged.” “I need to know what Trump is going to Tweet next if I want to win.” “If I follow a proven system, I can become rich from trading.”
PART 1B: Write out your beliefs about money.
Examples: “Money doesn’t grow on trees.” “You have to work hard for money.” “Money is _____ (you fill in the blank).”
*Tip: Ask yourself: “What are my parents beliefs about money?” “How about the 5 people closest to me?” This will help get the juices flowing.
After you’ve completed PART 1, take a break. Get some water. Go for a walk. Put some time between parts 1 & 2. You’ll want to come back with a fresh set of eyes.
PART 2: Ask the following questions of each belief
- How has this belief been useful to me in the past?
- What did this belief get me into? What did it get me out of?
- Where did this belief come from?
- Is this belief serving me now? Is it helping me achieve my goal?
- If it isn’t, can I let it go? If not, why?
For any belief that isn’t serving you that you’re having trouble letting go, it’s a sign that its tied to some other belief.
Imagine you are unraveling a chord and all of a sudden you find a big knot. Before you can move forward, you have to deal with the knot. Once you do, things can move forward smoothly again. If another knot appears, you deal with that one too.
So, if you are having trouble letting go of a belief that isn’t serving you, ask yourself why. Whatever the answer is, it represents another belief. Take that belief and run it through questions 1-5.
Now that we’re clear on our beliefs, we’re ready to take a trip.
SMART Goals Drive Smarter Trades
Have you ever taken a long road trip? One that took a few hours? Maybe even a few days or longer?
How’d you do it? Did you hop in the car and drive blindfolded? Of course not, right? You had some kind of a plan. Even if it was just getting directions and checking the gas gauge before jumping on the highway.
Making your goals SMART is the equivalent of planning a road trip and putting an exact address into a GPS. You’ll know if you’re on track. When you make a wrong turn. Approximately how long it should take to get to where you want to go. You may even find out where the cops are hiding.
Make sure your trading goals are:
Skip this and you’ll be driving around aimlessly.
Here’s how most operate and get tripped up:
They start with a goal of wanting to make a bunch of money.
They don’t dig deeper into their why. They have no idea what a SMART goal is.
They do some research. Dive into the wormhole of the internet and usually learn about charts or some kinda fundamental analysis. The first things that tend to pop up on Google and YouTube when you search for trading.
Most stop there, think they’re done, and blow up their accounts.
It usually takes at least one blow-up for these traders to realize that success takes more than just charts and fundamentals. Yes, they’re an important part of the game and we’ll get to them in another post. But it’s a small part of the whole.
Here’s an example from a client, we’ll call her ‘Sheila’, of a SMART goal. She was interested in trading ETFs and had a few ideas on how to do so. I advised her to come up with a SMART goal and this is what she came up with:
“I will backtest my trading system on SPY over the past 10 years by the the end of the week to see if it is viable and worthy of testing live.”
This goal checks all the boxes and will help Sheila move closer toward having a trading process she enjoys and can execute well.
Great, you’ve got your goal. What’s next?
Building An Epic Set Of Beliefs
You’re doing the work necessary to grow. This hasn’t been easy. You’ve gotten uncomfortable. Badass!
This is what champions do! And you’re well on your way to becoming one!
Birds Of A Feather
Champions surround themselves with other champions. Other peak performers trying to do the same or similar things that they’re doing. It’s far easier to fly farther and faster with other peak performers than it is to do it alone.
So how do we find these types and get around them?
As you may already be aware, there’s a lot of fakes out there. Surround yourself with them and it won’t end well for you.
However, the new you (yes, you’ve already started growing so it is the new you) is armed with the above exercises, stories, and knowledge. You’re in a better position now than ever before to not only spot fakes, but to question anything that’s thrown at you.
Adopt only the beliefs that serve you. That move you toward your goal.
Where To Find Epic Trading Beliefs
I made a list of the trading books I’ve found to be the most useful. I’m always adding to this list whenever I’ve read one and know it will be worth your time. Click here to check them out.
Trader’s Mindchat Room: This is a community where you’ll not only get the support you need, but where you’ll have the opportunity to help others too!
When I started to become active in trading communities and started giving back over a decade ago, my trading hit a whole new level. I want the same for you. Click here and try Trader’s Mindchat free for a week.
Check back on Marawealth.com frequently. We’re going to be posting a LOT more content.
Remember to drop a comment with your trading beliefs, goals, and any other thoughts or questions you have.
Michael Lamothe founded MARA in 2018, and his mission is to help traders succeed in the market by focusing on mindset. Michael has helped thousands of traders through his methodology. He is an international speaker, presenting at AAII, Stocktoberfest, Benzinga’s Global Fintech Awards, and more! He’s also been featured on NASDAQ Live.