Essence of Trading: Importance of Critical Thinking And Why It Is Not Enough (Part 2)


… continue from Part 1

The Difficulties In Accepting Changes

One of the reasons why many people fail to do something about their bad trading habits is that they cannot feel it. Knowing something is not good for you is one thing. Taking actions to change the situation, however, requires your full acceptance of the knowledge.

Let’s look at a simple situation here.

When you are revealed the truth that a bottle of poison is placed right in front of you, you will not drink from it. You have this strong conviction to refuse to drink that bottle of poison because you know it will kill you. You fully accept the fact that it is bad for you.

Now, as long as the knowledge you acquired in trading does not produce the same assertion or immediate impact to your mind like the bottle of poison does, it is very difficult to enforce yourself to make changes following whatever the knowledge entails.

Many people can be critical of themselves. Some may even to able to tell themselves how bad they have behaved and feel remorseful about that. But only a few have the willingness to completely utilize both the useful and harmful knowledge they identified and then live by the new rules from the understanding of these acquired knowledge.

This quality in a person that separate those who can and those who cannot make the necessary change has many names. Some people call it determination. Some call it moving out of your comfort zone. Some call it willingness to change. The name does not matter. What matters is how you can too learn to stop doing harmful things to yourself and your trading.

Write It Down

There are many methods people use to force themselves to change.

One of the simplest and effective method is to write it down. Not type it out. Just write it down. Somehow, when we write the things in our mind, it will pay more attention to what we have written and enforce the idea back into our head.

For those who are still struggling in trading – dig deep and be critical on yourself. Once you identified the issues you have, write them down. Make yourself face the problems right in front of your eyes. That way you are forced to see it and be reminded that you are hurting yourself if you continue to trade the same way.

If it is a bad habit you documented, then make time everyday to sit down and read what you have written down yourself. Visualize how that can ruin your trading, your career and your life. Do it until you absolutely hate that in your guts.

If it is a better way to trade that you know it is good for you, then do the same rituals but visualize the happiness and satisfaction you can get from following the path. Do this until you feel natural to follow the new rules when you are trading.

You will know when it is no longer necessary to follow the rituals.

End Note

Wrote this piece to honour one of my mentors. He is a self-made millionaire trader who trades Chicago futures. He is like a big brother to me as he is just 10 years older than I am. This technique to correct bad trading habits comes from him.

He likes to keep a journal of his trading and reflects on his weaknesses often. He always said the journal has to be kept secret (private) so that you will feel safe to write whatever you feel is necessary to criticize yourself. I find this to be true and necessary for the journal to be effective.

Long time ago I always took profit too early and cut short my positions pretty fast for no good reasons. It took me better than several months to truly resolve this problem after documenting the issue in my own journal. It must have been several years since I last wrote something in my journal although I keep it at my desk all the time. Maybe one day I will need it again.

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