It’s exciting to win. Trading is challenging. It requires well-honed skills and rock-solid confidence. After a winning streak, it’s easy to get a “swelled head” or a big ego. Why not? When you’ve just accomplished a feat seldom achieved, it’s hard not to think one is special. Most seasoned traders will tell you, however, that when you start thinking you have superior abilities as a trader, you may arrogantly think you can do the impossible. And when that happens, it usually spells doom and despair. To maintain long-term success, it’s vital to stay humble and modest.

It’s healthy to occasionally pat yourself on the back for a job well done, but be careful not to go to extremes. Don’t get too full of yourself. Just when everything seems to be going well, market conditions change, and your foolproof methods will stop working. Suddenly you start seeing losses rather than profits. By taking a humble and modest approach, though, you’ll always be prepared for this eventuality. But when you start thinking, “I’m a natural-born trader” or “I’m the king of the world,” you may be caught off guard. You may start to think you can take riskier trades, let your discipline falter, or fail to adequately control your risk.

It’s important to always remain focused on trading. You must stay calm, objective, and unemotional. Getting a swelled head often interferes with maintaining such a mindset. Basking in the glory of success can be intoxicating. You may start to think you are invincible and can do no wrong. You may then start bragging to your friends about how well you’re doing, or start spending money extravagantly. When that happens, it may be the start of a downward spiral. In a subtle way, you will start to put extra pressure on yourself to perform up to these especially high standards. You will feel a need to maintain your high opinion of yourself.

You may dread failure because should you fail, you will have to admit to yourself and friends that you were not as invincible as you had claimed. At that point, you may engage in denial. Because you can’t face your limitations, you may deny you have any. And once you start distorting reality, it’s bound to impact your trading. The added pressure to perform, along with the psychological need to save face, will take a toll on your limited psychological resources. You’ll have less energy to focus on your trading, and you will likely make trading mistakes that will lead to your downfall.

In the final analysis, the best way to ensure long-term trading success is to stay humble and modest. The more you can stay humble, the more you can stay impartial, relaxed, and alert. You won’t feel you have to prove anything to anyone. You’ll be able to stay detached and objective, even in the most uncertain and chaotic market conditions. So stay humble and modest and you’ll stay consistently profitable.


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