Making Better Mistakes Leads to Better Trading
The attitude you bring to a trading loss is the key to transforming your trading, according to trading psychologist, Rande Howell of TradersStateofMind.com.
How you handle mistakes (and losses) in trading, both emotionally and psychologically, reveals your capacity to grow as a trader. Do you seek to learn from the mistake or do you want to avoid making another mistake (which, by the way, is impossible)? When you make a mistake in your trading that leads to losses or loss of profit potential, how do you react? How do you typically engage the mistake? Do you explore the mistake as a way of learning or do you beat yourself up for making a mistake? What quality of conversation do you have with yourself about the mistake—what does the mistake represent to you as a trader and your performance in the act of trading? When most traders answer the above questions, they discover they work with the mistake in a way that ensures continued problems in their trading performance.
Are you emotionally swept away by the loss and do you berate yourself for making the mistake (the typical way a trader acts), or do you curiously and thoughtfully examine the breakdown in the emotional and mental process of your performance that led to the mistake, and then re-construct the process from a sense of suspended time for a higher level of performance (the path of peak performance mind training)?
Failing Your Way to Success
Most traders are so blinded by a mental attitude of “trading not to lose” or “not making a mistake” that they cannot learn from what the mistake can teach them about the very mind that they, as a trader, bring to the performance of trading.