Well maybe that's overstating it a little, but it's certainly one of the most important.
It is…(drum roll please)… “the need to be right”!
Now that probably wasn't what you were expecting. You might have thought it was going to be something like not picking the trend or putting too much money on a single trade or one of a dozen other things.
But I can assure you, from bitter experience, that this one attitude causes more problems than most other things you might do as a trader. And it's worse for men! Something to do with ego or testosterone…
You see our whole society is based on the importance of being right. The need to be right.
Your parents rewarded you when you are right and told you off when you were “wrong”. They probably still do this now that you are grown up!
>From your earliest days at school you are taught that being right is the most important thing. Isn't that what tests teach you? And this is reinforced through the rest of your life. Your boss probably reminds you of this just about every day!
But some of the best things occur when we aren't right. Like the time you take a wrong turn. Either in your travels or in your life. And you end up at this amazing place or with this amazing person that you never would have, had you done the “right” thing.
Plus there's not a lot of point beating yourself up when you aren't “right”. Because, as we all know, it's going to happen pretty regularly!
Coming from Australia, I don't know a lot about baseball. But I do understand that batters get paid a lot of money to miss hit the ball an awful lot! Think about that. Top baseballers step up to the plate every day knowing that they are more than likely not going to get it “right”. Yet they are confident and successful because they know that over a season they are going to get it right often enough.
Don't Beat Yourself Up or the Market Will join In!
I went to a speed-reading course many years ago. I didn't learn how to read faster (!) but I did learn an attitude that has stuck with me ever since. It is - “Focus. No attachment to the outcome.”
This guy was telling us about how he taught elite sportsmen to achieve their best (hope he was better at that than teaching people how to read fast!). He explained that the trick was to get them to keep taking the shot (or making the jump or whatever) without getting upset with themselves if they got it wrong.
The key was for them to focus on what they had to do in that moment, not on the outcome.
Maybe I have lost you? But the point I'm trying to make is that you need to go into each of your trades with your focus - not on being right - but on following your trading system.
And then the key is to not beat yourself up if you “get it wrong”. Because if you have followed your system and you know the system works over time, you have done the “right” thing.
Once you have confidence in your trading method your only focus is on following the signals.
“Focus. No attachment to the outcome.”
By the way, try this approach in other areas of your life. It really works! My golf was much better once I stopped getting angry at myself for every lousy shot.
Deadly Attitude in the Market
In the stock market you can't afford to hold onto the need to be “right”!
When trading, you cannot be right 100% of the time. In fact, you can be right only 50% of the time and still make lots of money. But this means you have to be wrong an awful lot!
The market will do what the market will do - no matter what your opinion might be. If you are holding a stock and you expect it to go up in price but it starts to go down, what happens?
If you are like me, a little voice inside says something like “…but this wasn't meant to happen!…it can't do this to me!… I know I'm right - it's just a temporary set back; it will come right, I'll just wait it out…
This “voice of reason” is your ego. You can't bear to be wrong, so you justify your decision to yourself. You must be right! You tell yourself that you know what's going to happen…the market's just confused…it's just got it wrong! (totally illogical reasoning - the market can never be “wrong” - but it makes sense at the time!).
This deep-seated, primordial need that we have to be right can destroy you in the stock market. It will make you put too much money on one trade. And it will make you hold onto stocks that you should have sold days or even weeks ago.
It will mean you will miss opportunities you should have taken because your view was the opposite of what actually happens. And you can miss getting extra profits from a trade because you were convinced that “…it couldn't possibly go any higher…”
By being aware of this “need” you can overcome it - over time! You need to get to the point where you “want what the market wants”. Not what you want.
Just remember.
“Focus. No attachment to the outcome.”
Author: David Chandler
http://www.stockmarketgenie.com
