Trading Psychology
Build The Trading Identity That Gets You Paid
If you are trading a profitable strategy and still not getting its results, the problem may be that you do not have a trading identity that matches it.
A trader was one trade away from a $26,000 payout. The trade moved into profit, reversed, and took him out for a loss.
After that loss he lost control. He spiralled, overtraded, over-risked and revenge traded, hoping to recover what he had lost. That was the start of a revenge sequence that ended with him blowing the account. One trade from the payout to nothing.
The Question That Changed the Conversation
When I spoke to him, I asked whether part of him felt relieved that he did not get the $26,000 payout. Whether part of him felt relieved he blew the account.
He sat with it. Then he said that as much as he did not want to admit it, it was true.
We kept digging. Did part of him feel more comfortable not having that payout? And it came out that he did not feel he deserved it.
If you are trading a profitable strategy right now but struggling to get that strategy's results, part of the issue could be that you do not have a trading identity that matches it.
What Top Athletes Do
A lot of top performing athletes have an alter ego they step into. An identity that can manage pressure and hold focus in high pressure environments.
Part of how they step into it is a pre-game ritual, a set of actions that unlock the version of them that can handle the moment. Rafael Nadal is the well known example. His pre-serve ritual has often been mistaken for OCD-like behaviour, but it is how he locks in his focus and deals with the pressure around him.
Traders can do the same. Some use blue light blocking glasses, or frameless glasses, put on when they sit at the screen. For others it is meditation, a particular candle or scent, or specific music. It works as a literal physical pattern interrupt that signals you are stepping into that state, prepared for what the market is about to do.
The One-Sided Fantasy Trader
I asked him what his idea of a top trader looked like. The kind who actually collects a $26,000 payout.
He said: these traders are winners. They stick to their plan. They stop after a loss. They stick to their risk.
Every one of those was a compensation for a part of himself he was judging. He was judging himself for being a loser in that moment, for breaking his rules, for continuing after a loss, for not sticking to his risk.
They have moments of being a loser. Moments of breaking their plan. Moments of continuing after a loss and breaking their risk rules.
So the problem was not that he took a loss or broke a rule. It was that he held such a strong fantasy of how he should look as a trader that when his actual trading did not match it, he was triggered into tilt for letting the fantasy down.
The trigger that started the sequence which blew the account was not the loss. It was the gap between what happened and an image of a trader that does not exist.
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Frequently asked questions
Why do I sabotage right before a payout?
Frequently because the payout does not match your identity. If a figure sits outside what you feel you deserve, collecting it means stepping outside your comfort zone, and blowing the account can unconsciously feel safer. Traders will often admit, when asked directly, that part of them felt relieved.
What is a trading identity?
It is the version of a trader you unconsciously believe yourself to be, including what size of result you believe you deserve. A profitable strategy will not produce its results if the identity holding it cannot tolerate those results.
Does a pre-trade ritual actually work?
For many traders yes, in the same way it works for athletes. Rafael Nadal's pre-serve ritual is how he locks in focus under pressure. A physical pattern interrupt before the session, whether glasses, meditation, a scent or particular music, signals that you are stepping into the state you trade well in.
What is the one-sided fantasy trader?
It is the image many traders hold of a top trader: always winning, always sticking to the plan, always stopping after a loss, always respecting risk. That trader does not exist. Even traders running seven figures have the other side. Holding the fantasy means every normal moment of falling short reads as failure.
Why does falling short of my standards trigger tilt?
Because the gap between what happened and the image you hold of who you should be is itself a trigger. In the case above, the loss was not what started the revenge sequence. Failing to match the fantasy was.
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