For many, New Year’s Day is a time of psychological rebirth. It is time to forget our past defeats and get ready to focus on new challenges. But for some people, it’s hard to put aside the past and devote full attention to capitalizing on the opportunities of the coming year. Casting aside the past can be difficult. There are many sound reasons for clinging to the past. First, we believe that we can learn important lessons by studying our past mistakes. Second, some people believe it’s impossible to shrug off the past. A common belief is that our personality, habits, and current performance are a function of our past experiences.
Third, there’s an emotional attachment to the past; if we cast our past history aside entirely, we fear we are also casting aside a vital part of ourselves, or a cherished memory. Despite these very good reasons, it’s useful to put the past behind us, especially memories or beliefs that interfere with our current functioning or future performance. Upon close examination of the reasons for clinging to the past, we find there are also good reasons for putting the past behind us, and moving forward.
It is often productive to learn from our past mistakes. That’s especially true of trading. If you keep a trading diary, it’s useful to see if your trading decisions were impulsive or emotion-driven. It is also useful to determine which trading strategies are producing profits and which ones are not, and make changes accordingly. However, there’s a tendency to think that there are more lessons to learn from our past mistakes than there really are.
Many people tend to mull over the past in excruciating detail, needlessly trying to find a lesson in every past mistake when there is none. It may be useful to study past mistakes, but agonizing over the past isn’t useful. A sensible rule of thumb can help you overcome this quandary: If a past mistake doesn’t have a lesson that is immediately apparent, you probably aren’t going to find it, or your psyche may not be ready to learn it.
Many times it seems impossible to just shrug off the past. After all, aren’t we the products of our past histories? Although this belief may be true to some extent, it can be limiting. If we believe we are a product of our past, it is tempting to further believe that our past dictates our future performance. But this is not necessarily true. Past performance need not dictate, or even influence, future performance.
Psychologists who study optimal performance have discovered that individuals who achieve success tend to focus on the here-and-now, the immediate experience. Focusing on the past often causes anxiety. It precludes you from paying enough attention to your immediate experience, and the opportunities for success that are immediately ahead. A strong focus on your immediate experience, the here and now, is vitally important for your trading success.
There is a deep emotional connection to the past, and this is why we are hesitant to just abandon it. But reliving the past is much like daydreaming; it’s fun to daydream, but doing too much of it is a means of escape. One tends to focus too much on getting away from living life in the moment.
And that’s what mulling over the past also seems to do. It takes us out of the immediate experience. In bad times, it helps us to remember the good. But it may be useful to just move forward, rather than find solace in the past. However grim one’s current circumstances, it’s always better to find a solution in the here-and-now and move forward.
With a new year upon us, it’s wise to put the past behind us and move forward. Think optimistically. Look at the new year as full of opportunities. Through hard work and persistence you can overcome all adversities to trade consistently and profitably.