Why do people trade? The obvious answer to this question is, “For the money.” It may be a no-brainer to some, but to the seasoned trader, the answer isn’t always so obvious. When one is focused on the profits and the glory of making winning trades, he or she tends to put too much pressure on oneself to succeed. And when the pressure is high, it’s easy to choke, making trading errors and ending up with a blown-out trading account. What seasoned traders know is that it is vital to loving trading for its own sake.
You should enjoy trading so much that you would do it for free if you could. The backgrounds of top traders seem to all be the same: They tried to get a job in the trading industry as soon as possible, any job as long as it involved trading in some way. The markets fascinated them; the money was either secondary or not an issue at all. But ask a typical non-trader or a would-be trader what he or she thinks inspires traders, and the impression is quite different.
Many think that traders are out to make big bucks, achieve high status, and show it all off with luxury cars and nice homes. These may be the side benefits of trading, but they aren’t the primary motivators. Successful traders love the challenges the markets offer and view their work as meaningful.
Psychologists have long known the advantages of pursuing goals that are intrinsically interesting and personally meaningful. When trading is pursued these intrinsic rewards it can be especially fulfilling. It’s more useful to follow one’s passion than to be overly consumed with the competition, financial reward, and high-status Studies have demonstrated that people who pursue goals for intrinsic rewards are better adjusted and more satisfied with life, compared to those who seek out external rewards, such as profits and status. They are also better able to control their ego. They can easily accept their limitations; they don’t mask their limitations by feigning superb trading ability. Instead, they make heroic efforts and achieve high levels of performance.
You have a choice when it comes to the reasons you pursue trading. You can focus on the glory, the profits, and status. You can be a big shot and show your friends and relatives that you have the upper hand. But you’ll pay a big price for this approach in the end. It will overly tax your limited psychological resources, and in all likelihood, you won’t be able to maintain profitability over the long term.
It’s much more fulfilling to trade for intrinsic, passionate motives. When you follow your passion, you’ll find trading intrinsically satisfying, enjoyable, and meaningful. You will gladly work tirelessly to achieve high-performance levels. So focus on intrinsic rewards. You’ll enjoy the process of trading. And in the end, you’ll stay consistently profitable.