Anatomy of a Trader’s Mindset

I had a great chat with one of my students last week and something hit me from our conversation. Like me (and probably you) he’s an avid reader. It was such a great conversation, I came away with something…

We were talking about the most recent assignment that he was working on and he got WAAAAY off the subject by telling me all the fundamentals of the company etc “In 2002, they listed on the FTSE and their main product was…” and I was like “Whoa, what the heck does 2002 have to do with today and trading in the ever-evolving moment of NOW in January 2014…?”



Like I wrote about in my book, we are conditioned to read and work on our trading like we’re back in high school or college. The problem with that is – IT DOESN’T WORK. He went on and did like 6 hours of extra work and he can’t apply any of it – neither to this lesson, nor to trading right now.

By the end of the conversation he saw how he went down a fruitless path of RITUAL. It feels good to go read and study, but in this case it had nothing to do with the subject at hand. (Research wasn’t even part of the lesson – he did this on his own). He told me that he felt like he “had to do something more…” His words, not mine. But he thanked me because this has been a pattern in his “trading” for the last 3 years and he’s not made any progress. Enter Michael Martin…

Conclusion: You can develop very bad habits from reading too much on your own. The more you know, the smarter you’ll become – YES.

The downside is, the more you know, the more confused you’ll be on where to get started. In other words, I know a great deal of THERAPISTS, ANALYSTS, AND CONVERSATIONALISTS per the chart above.

Sadly, they all think of themselves as PRO TRADERS, forsaking years of potential great trading, absorbing huge opportunity costs, yet thriving on rituals that feel good but don’t change their P&L.

Ironically, although they are reading voraciously, “ignorance is still bliss” — and it’s also very expensive in this context.

If you find yourself “reading too much,” you may lack confidence or be in fear about your ability. Guess what: every trader on the planet has been there at one time or another and had moments of self-doubt. I include myself in that camp…

What I’ve found is that the RSI (Relative Strength) of the feelings of self-doubt, insecurity, or lack of confidence is what will eventually compel you to take action (or not).

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