by Adrienne Toghraie, Trader’s Coach
When a trader analyzes his losses, he learns about himself. If losing profits is not a compelling enough indicator to seek help, he will continue the pattern until he is out of money or it becomes too painful. The past equals the future in trading psychology unless there is a transformation of how he perceives his life.
Fear breeds fear
When there is a sell off in the markets, traders get out of the markets to prevent further losses. Their fear drives them with good reason. Case in point, a study of traders’ reasons that fueled the crash of 1987 was because of the market dropping and not because of the political and economic situation at the time, even though the climate of stability of the country could have been the compelling force.
When a trader’s personal life is weak or unstable. fear will drive his actions in the markets. This is why it is important to analyze your losses because they are a refection of your current psychology. It is important to note that fear of loss is multiplied exponentially with all of the fears of your life that you have not resolved.
Fearless Frank on trading life support
Through the 90’s Frank could do no wrong in the markets and his family’s life reflected his success. He had the seven thousand square foot home with a country club lifestyle. The family took four 5 star vacations a year and his children went to private schools. Life was good until his wife decided to leave him for another man. He did not see it coming. As far as Frank was concerned, he believed that as long as he was a good provider his family would be happy. The fact was that Frank did not participate in the family activities. He was always too busy and obsessed by the markets.
Paying spousal and child support based on his best years in trading and now only having losses in the market, Frank was reduced to living in a modest apartment. He did not have money to renegotiate a settlement. His fear would not allow him to be the trader he used to be. Adding to his negative state was the fact that his children did not want to see him. They were used to the good life and their mother was providing it for them.
When Frank told me his story, I knew I had to help. I cannot stand to see wasted talent. I did pro-bono coaching for a while on the phone, and I was able to enlist one of my lawyer clients to help him renegotiate his settlement also without charge. Here are some of the steps Frank agreed to take:
1. He put together a life plan that reflected him being happy and prosperous.
2. We created a support team of a few traders who were successful after overcoming similar issues.
3. He was to trade putting half of his profits after paying bills towards paying for my Top Performance Seminar. The other half was for building his trading account.
4. He was to give time to a charity on weekends. (There he met a woman who became a friend and then later became his wife.)
Within 3 months Frank was back to trading better than ever. He was able to purchase a condo and pay me for private coaching within 2 years. Now after 7 years he is happily married with a toddler. His children from his first wife are once again in his life. I suggested that he meet with them at places where they had to do charity work. They now appreciate their father and their situation in life with a better attitude.
Conclusion
Consistent losses are an indicator that you are throwing your profits away. You will have to take care of these issues, continue to lose profits or leave trading. What is your choice?
Adrienne Toghraie coaches traders and investors to their next level of success by helping them overcome their self-imposed limitations. TradingOnTarget.com
