Take a deep breath Traders – A Long one with lots to think about
Most experienced Traders will probably agree that trading is a tough profession. Fierce battles are constantly being waged within the mind of the trader. Intertwined among many of these battles are the conversations we have with ourselves and the perceptions we have about ourselves. Even the best traders I know sometimes have thoughts like this…
“Stacy is killin’ it and she’s only been trading half as long as I have. What’s my Problem?”
“I’d love to make a career out of trading, but I’m a moron;
I’ll never make it”
Efforts to increase Self-esteem do not lead to Confidence
Many Traders link their self-esteem to their trading results and the opinions of other Traders within their circle. Basing self-esteem on your P/L or the approval and recognition of peers escorts the Trader onto a devastating roller-coaster ride of emotional turmoil. At the very least, this roller-coaster ride isn’t productive. Self-Esteem hounds shout out the successes attempting to gain the approval and admiration of other Traders. During this process, the aspiring Trader often associates a bad trade, several setbacks, or lack of measurable improvement in the P/L as personal failures. Instead, what these occurrences really demonstrate are common and necessary things on a growth path. Trees don’t grow 24/7/365. In periods of drought they conserve themselves. In periods of bad weather, they may lose a limb or be otherwise scarred. Fast growing trees that have not experienced hardship are weaker than those that have. In the end, strength comes from weathering many storms.
Self-Compassion builds Confidence and Strength
Compassion is the act of empathy expressed for another person. An acknowledgement that life is tough, messy, not fair, and often filled with hardship and pain. We as aspiring Traders need to have this same sense of warmth and positivity towards ourselves.
Dr. Kristin Neff is an associate professor at the University of Texas Austin, and the foremost researcher on self-compassion. She defines the concept this way:
“Instead of mercilessly judging and criticizing yourself for various inadequacies or shortcomings, self-compassion means you are kind and understanding when confronted with personal failings — after all, who ever said you were supposed to be perfect?”
3 main elements of Self-compassion
- Self-Kindness: Be supportive of yourself; Treat and speak to yourself as you would a family member
- Common Humanity: We as aspiring Traders are all in this together; Recognize you’re not alone in making mistakes or suffering pain
- Mindfulness: Develop the ability to observe your thoughts and feelings in real time. Deal with them in a non-judgmental way.
While self-esteem is fixated on how you feel about yourself positively or negatively, self-compassion is about having understanding for wherever you’re at right now and embracing a full range of thoughts, emotions, and reactions — without judging them as right or wrong. It’s about recognizing that your inner voice is trying to protect you, and shifting your self-talk to be benevolent, not punishing.
Why build skills for greater self-compassion? Simply put, because it works. Self-compassion gives you greater confidence, makes you more resilient, and fosters authentic growth in your abilities.
3 Ways to Build Self-Compassion
- Change your Self-Talk: Words matter. Screaming profanities at yourself isn’t helpful, its destructive. Cultivate the use of a better, more supportive vocabulary toward yourself.
- Hit the Re-Set: Take a recent episode and deconstruct it. How could you have handled it in a more compassionate and constructive way. Example: By deconstructing a bad trade, you may discover you missed a reversal zone, ignored your stop, abandoned your process, or all 3. Recognizing those things are important. It opens the door to improvement on your path to becoming a strong and confident trader.
- Meditate: To me, the primary challenge of the aspiring Trader is to calm the mind. Meditation will go a long way toward helping you gain perspective and purpose. I call that Quiet Confidence. It has helped me immensely in my trading.
Like any skill, learning self-compassion will take time to develop. Keep at it; Keep practicing. You’ll be rewarded by becoming the strong, resilient trade you aspire to be.
Credit: Although adapted for Trading, the inspiration for this post came from an article written by Melody Wilding. Certain passages / phrases were used without significant changes being made. If you’d like to reference her work, find it HERE