Why are You Trading?
One of the most important and often overlooked questions we must ask ourselves is “Why are we trading?”
The most obvious answer would be the unlimited upside for potential income.
Not everyone trading, is motivated by the financial potential. The answers can actually be quite varied. For most traders I’ve met, it is the idea of control. Control over your own financial destiny and freedom from the “rat race.”
The reason you are trading will have a direct effect on your trading psychology – the more urgent your need for income, the more haphazard your approach to the market. If you are in “survival” mode (needing immediate income to cover daily living expenses) you are going to struggle. Your decision making will be motivated purely by emotion. You will be too focused on the outcome, not the process. This is a recipe for failure. You will behave irrationally and erratically with every tick in the trade. You will not be able to overcome this challenge until you find a steady source of income to satisfy your immediate needs. Only then will you be able to focus without this overwhelming and stressful distraction.
If you have adequate income for expenses and to invest, your approach will be more tranquil because you can afford to lose the money. This can be detrimental as well because you will not be compelled enough to totally commit and your view of trading will be one of folly. Money lost can be easily replaced, so why worry about really learning the skill of trading. You view this “investment” as you would laying down cash in a casino throwing dice at a crap table or playing blackjack; simply for the fun of it, to see if it works, with no real expectation of a meaningful payoff. If you can afford it – great. But I maintain it is no fun wasting or losing money.
The other trap is to view trading as a part-time endeavor. Except the Attitude, there is nothing called as part time. We all have to start somewhere before we can transition to trading full time, time wise, Attitude wise – that’s a given. But the perception that trading only part time will lead to the consistent success and return we seek is a fallacy. This perception also sabotages the maximum commitment required to learn the skill of trading and prevents us from doing the necessary work needed to truly become proficient in the market. Think of your current job or primary source of income and imagine performing it part-time. For most of us that idea would make no sense at all. So whether you ultimately make it or not, your goal should be to become a full time trader. This is the only way you can be thorough and focused enough during your trading journey. It will keep your mindset professional and mature.
It is important that you ask yourself the question and then answer in terms of the present circumstances of your life. We all know that the ultimate reason is for money, but your current underlying reasons and intent will manifest themselves in your results – and this will be our constant reality check as we measure our progress.
Do an honest assessment of your current situation. Make sure your trading resources, approach and goals align realistically with your availability and life style. If not, you will be making this harder than it already is and adding unnecessary time and frustration to your learning curve.
"Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver"
