Mindset / Psychology

What's Holding Back Your Trading Progress?

3 Min Read

I was just thinking about a funny thing that used to happen a couple of years ago - back when I had a team manually testing the trading strategy that we later turned into an automated system.The testing would take place 24 hours a day on weekdays, with each team member taking their turn in shifts.At the end of each shift, the person ending their stint would give a 'handover' for the person taking over from them. During this time, they would discuss their results and double-check the trades that took place during that shift.


When it was a good shift, with a high success rate - the handover went smoothly.But when it was a particularly bad shift, with a lower than expected success rate - arguments would erupt.At the time, I just put these little back-and-forths down to sleep deprivation (we were staying extremely dedicated!) But over the years I've noticed a trend.

Turning a Blind Eye

On one end of the trading spectrum, you have the cocky traders who add a generous dose of bravado to their approach in the markets.On the other end are the humble traders, who - even if they are very good - will never show even an ounce of cockiness or a need for recognition.But no matter where a trader is positioned on the spectrum, they always share one funny little quirk - they take their trading results personally.You see, when someone was pointing out that certain trades actually should have been losses, the trader didn't take it as a negative aspect for the system - they took it as a personal attack on their own ability.And this is exactly what I've discovered from working with private traders too.

Excuses, Excuses...

With trading, it's all too convenient to adopt selective attention without even realising it.When looking at new trading tools, or new indicators, we can immediately spot the times it's working amazingly well - and as a result, we think it's perfect.However, somehow we miss the times when the performance just falls off a cliff. This leads to us making all sorts of excuses to defend the tools and strategies, when our results don't match the expected outcome.You've heard me bang on about the importance of keeping a trading journal on many occasions. But unfortunately, this is one of the drawbacks of using one - it doesn't protect us from our own selective attention.So what can be done about this awful curse?The solution is there - obnoxiously sitting right under our noses.

Getting Back to Basics

We seem to forget that when we're learning to trade, we're actually learning a skill.Which means, if we go back to basics about how we learn a skill, we will have our answer for overcoming our own selective attention.Malcolm Gladwell, in his best-selling book 'Outliers', popularised the theory that to become world-class in any skill, an individual must achieve 10,000 hours of purposeful practice.However, more recently, new theories have suggested that this can be reduced quite significantly - even to around 20 hours in some cases, by breaking down a skill to its essential parts and learning in a more efficient way.Among these steps are two important ones that we always need to keep in mind:

  • Self-reflection
  • Self-correction

With the use of our trading journal, we can go through 'self-reflection', by looking at what we did well or what we did badly.However, if our notes are written when we're wearing our rose-tinted glasses that give the selective attention version of the truth, how can we possibly self-correct?The answer is: we can't.However, what we can do is go even further back to the basics of learning a skill - and I can remember from my days of studying this at college that the correct use of a skill is best adopted when learning is reinforced intrinsically and extrinsically.Intrinsically, we all get that feeling when we know we've done something right or wrong, and extrinsically we can see in our results whether what we did was good or bad. However, that falls into the category of self-reflection.In order to self-correct, we need someone to guide us. But in order to do that, we need to be open about what we're doing.

Active Learning

Entering into a discussion about what we're learning; which involves asking and answering questions, falls into the category of 'active learning'.Active learning means you go beyond just listening and reading, and actually engage in 'higher-order thinking tasks', which include discussions about performance. This has been proven to improve the student's learning by up to 38%.As you know, trading is all about gaining percentage 'edges' here and there. Which means a 38% learning edge, should be something only dreams are made of for most traders. But now you know the secret!I'm sure you're sitting there thinking: "but Nicholas, how can I actually go about doing this?" So let me give you a helping hand...Your first port of call will be to find yourself a trading mentor. This will be someone experienced at trading, who has consistently achieved positive results. Unfortunately, not everyone knows someone that fits these criteria.But worry not, young trader - we have another solution for you, that's even better...