Capital. It’s what makes every market across the world move. It’s why traders trade, financial gain. But, when speaking on capital, most only think of physical capital. Dollars and cents. Well I’m here to tell you that PHYSICAL CAPITAL is nowhere near as important as MENTAL CAPITAL. Physical Capital denotes your account whereby you can always put a specific number on it. Mental Capital, on the other hand, denotes your emotional state, your ‘brain power’ if you will. When traders fall into bad habits such as over trading, trading beyond their normal risk limitations & changing their game plan, the problem usually lies within their mental capital.
Let’s start with the basics. The market owes you NOTHING. Did you catch that? NOTHING. They want to take your money. The big funds, the professional traders, the high frequency traders, they’re ALL trying to take your money. The sooner you can accept that, the better off you’ll be. You have to accept that the market is a zero sum game. When one person is buying,another is selling. When one person is making money, another is losing.
The typical trader wants the market to fulfill his expectations, his hopes and dreams. We live in a world of social constructs where people acting reasonably is accepted, but this CANNOT be said of financial markets. The market has no responsibility to give us anything or benefit us in any way.
Taking losses is painful. The threat of pain generates fear and fear is the source of most of our trading mistakes. To succeed in the trading world, you need a clear head to make educated decisions.
The best traders in the world are absolute robots every single day. They’re not fist pumping after wins and they’re not breaking keyboards after losses. These people could have doubled their account or lost their shirt and you would never be able to tell by their demeanor. They are completely detached from the money and the trade, they’re just following their game plan and reacting accordingly. They are consistent from one trade to the next, completely eliminating emotion from the equation.
That is the ultimate goal in trading. Complete and utter detachment.
Do you have balls?
The questions in this handbook will work a bit differently than the previous. Since the psychology of trading will affect everybody differently, these answers are for your own personal experiences. These lessons should be reviewed every few months to stay sharp. For any questions you see in this program it is best to post them in the Trading Psychology group chat.
- When do you recall having an unsuccessful trading days where it had severe wear and tear on your mental capital?
POST IN TRADING PSYCHOLOGY CHAT
- Has there been a time when your Mental Capital balance was too low that you didn't take a step up you would have normally taken?
POST IN TRADING PSYCHOLOGY CHAT
- What are some bad habits you noticed yourself falling into bad habits such as over trading, position sizing, or changing your game plan that could have been due to a drainage of Mental Capital?
POST IN TRADING PSYCHOLOGY CHAT
You are already 5% towards reaching your goal of finishing these lessons, keep it up! If your proud of this say “I’m at the 5% mark!” in the Trading Psychology Group Chat!