Trading can be frustrating at times. You put in a heroic effort, but it doesn’t always pay off in the way that you had hoped. When you finally do win big, you naturally want to celebrate. You may even get a “swelled head,” and feel invincible as if you are on top of the world. Why not celebrate? You deserve it. It’s healthy to occasionally pat yourself on the back for a job well done, but don’t get too full of yourself.
There are many tales of expert, skilled traders who were at the top of the field and the idol of many, but due to changes in the markets, they ended up busted. Just when everything seems to be going well, market conditions change, and methods that once brought in steady profits suddenly stop working. That’s why seasoned traders suggest staying humble. You must stay humble, and focused on continually honing your trading skills in anticipation of the next major change in the markets. A humble approach to trading will help you stay calm and focused.
Getting a swelled head often interferes with maintaining a calm, objective, and unemotional mindset. Basking in the glory of success can be intoxicating. You may start to think you are invincible as if you can’t lose. 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 your demise. In a subtle way, you will start to put extra pressure on yourself to perform up to especially high standards that are almost impossible to maintain.
You’ll try to keep up your reputation. 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’ll have trouble staying objective. And once that happens, 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.
It’s important to keep your ego out of trading. Don’t build yourself up, but don’t overly criticize or condemn yourself either. Stay realistically upbeat and focus on developing your skills as a trader. Work toward excellence, not perfection. You have to be good, but not perfect. You must have top-notch trading skills, but you don’t need to be the best trader in history. When you take your ego out of the picture and stay modest, you’ll find it easier to concentrate. And when you focus on the process of trading, rather than the prize, you’ll trade more profitably.