The famous psychotherapist Fritz Perls once noted that people feel anxious and fearful when they worry about, and mull over, their past mistakes or worry about the future. A peak performance mindset is where a person focuses on the ongoing action, the here-and-now experience. The more you can stay in the moment, rather than worry about the past or the future, the more you’ll be able to trade profitably.
The wise person learns from his or her mistakes. We’ve heard this sage advice over and over. There’s some truth in it. It would be foolish to touch a hot stove more than once or fail to prepare for your driver’s test and end up failing. When it comes to trading, it is similarly wise to plan your trades carefully and manage your risk. There are general pieces of advice that it would be wise to follow, and if you need to learn it for yourself, do so only a few times and then follow conventional wisdom. Indeed, there are some events in life where it is useful to learn from a mistake or to learn from others’ mistakes. But there are times where there is no lesson to learn, yet we over-analyze the event, and mull over it incessantly, trying to interpret what it all means.
If every event we faced were exactly the same, then it would be wise to dissect all past events in detail and find out what went wrong, so as to avoid making the same mistake the next time. But one event is rarely like another event. For instance, when asking a potential romantic partner out on a date, there isn’t one right way to do it. People are different and what works on one person doesn’t work on another. It doesn’t make sense to search for the perfect method because there isn’t one.
It is the same for trading. Market conditions are never the same. The best you can do is approximate what you think is happening, implement a trading strategy and see if it works. If the right conditions just happen to be there, you’ll profit. If the conditions weren’t there, then there was nothing you could have done about it. You just need to accept the fact that nothing is certain, accept the outcome, and move on. If you mull over it, however, you’ll gain little. You’ll just feel bad about yourself and may start building up inhibitions and self-doubt, which will subvert your efforts in the end.
When it comes to trading, it is better to look toward the future. Think positively, gain as much experience as possible, and move forward. Don’t mull over the past, looking for past errors. You will just waste your time worrying when you could be trading and building up the skills you need to trade profitably and consistently.