“In this world man has two significant possessions: intelligence and emotion. These two possessions govern our day today life. But very often we see that emotion gets the upper hand in our life. We know that even if someone is extremely intelligent, when his emotion comes to the fore, it will devour him. He is compelled to do what his emotion asks him to do.”
If you are a trader, you have worked hard to gather the capital you need, have read countless books and articles about those who have made it big and have formed your own plan for success. Moreover, if you are like most traders, you have a healthy ego to go along with your work. There’s nothing wrong with that; self-confidence is the key to success in the financial markets. When your own personal self-worth dwindles, your trading can be sabotaged.
However, successful traders also know that they must focus constantly on separating their self-concept from their trading. Too many ego-driven financial leaders have been brought down by thinking they are above the rules of the markets or even the law. Don’t let that happen to you!
Trading is a psychological game. Most traders think they are playing against the market, but guess what? The market doesn’t care! A trader is playing against himself, period.
You’ve heard the expression “Check your ego at the door.” Usually it is said in the context of an over-achieving sports team or a cast of highly paid actors. Nevertheless, it applies to trading, as well. If you don’t put in stops, overtrade, get stuck in a trade, or grab a profit too soon, you are trading with your ego. Check it at the door!
One way to separate your ego from your trading is to build healthy boundaries between yourself and your trading. A boundary sets limits and makes clear the distinction between you and others.
Let’s say you see a trade signal and before you execute it, you say to yourself, “But what if I am wrong?” Right away, you begin to doubt yourself and, chances are, you will let the trade go by. Put a boundary between your ego and your trade, and you’ll be much more objective and open to taking calculated risks.
When you make a trade, put your money on the line, not your ego. Take losses in stride is by trading only with money you can afford to lose. Losses shouldn’t hurt. It’s not about you and your ego, it’s about you and your trade!