Friday, August 12, 2005
Are you setting yourself up for faliure?
I was asked to submit to an interview last week by a small online trading magazine.
One of the questions they asked me was 'what makes you successful at trading'
This is an excellent question that I'd like to expand on. And the answer to the question comes down to your own personal definition of success. Let me tell you a story.
In my past I went along to a seminar. There were only around 12 people at the seminar and it was all about increasing your business income.
To cut a long story short at one point the presenter went around the room asking if the delegates thought they were successful. When he got to one guy he asked 'are you successful' and the guy answered without a hesitation 'No'
The delegates knew this man was a millionaire. He had a large business empire, owned a yacht and was in all the delegates eyes probarbly the most successful one there.
Everyone looked rather shocked that this guy wasn't successful and awaited with baited breath what bad news he had about his company.
The presenter asked him a smart question 'what would it take for you to be successful?' the man answered almost immediately '100 million in the bank, a house on every continent and business increasing by 10% a year'
what this man was doing was setting himself up for failure from the start. I'm not saying that what he wanted wasn't possible, as I'm sure it is. But the guy had never had the feeling of success because he set his measure of that success so high. He had set his sights on a target that was so far away from what was immediately possible that even though he had wealth, property and a great business he never felt that his aims were achieved.
The question is ... Are you setting yourself up for failure in your trading?
Your definition of success is very important. For example many traders say to themselves that to be successful they must get 30 pips per day. That might not seem unreasonable but it is setting yourself up for failure.
For the first few days the trader gets their 30 pips a day and feels successful - on day four he only makes 10 and so a psychological process begins - to keep up this success the next day he needs to get not 30, but 50 pips to make up for the day before.
unfortunately he takes a risk too far and actually loses on the day 10 pips so tomorrow he must get 90 pips to get back on track.
This continues as the trader gets more and more unsatisfied and feels a failure every day even if he makes money because he's not meeting his success criteria.
don't make the mistake of setting yourself up for failure and set yourself an easier definition.
So, when I was asked the question 'what makes you successful as a trader' I answered 'because I make money'
My own definition of success is that every week I make more money than I lose. This way even an increase of 1 pound in my account means I've had a successful week, means I feel good about my trading and means I feel successful and confident.
Hope you enjoyed this :)