How to reach your potential as a trader (Key points/cheat sheet)
Here are the key points from our video ‘How to reach your potential as a trader (developing grit)’ that you can use as a reference guide or ‘cheat sheet’. The video is available on our YouTube channel and at the bottom of this article.
- The concept of grit is something that can be developed and that you can see played out in every day life.
- It’s been shown that grit levels increase as we get older, so inevitably, you will improve at this with age.
- Grit is seen as being the combination of passion and perseverance. Perseverance is nothing without passion because if you’re not passionate, you’re not going to have the ability to see something through for the long term.
- Passion can be broken down into a combination of interest and purpose. Interest is quite straight forward as hopefully you are getting involved in trading because you are interested in the actual activity of trading itself and not just because of the money. An important part of grit is that you have a genuine interest.
- Jeff Bezos, the founder and CEO of Amazon once said “One of the huge mistakes people make is that they try to force an interest on themselves. You don’t choose your passions. Your passions choose you.”
- The second point is purpose. In Angela Duckworth’s studies of people, she found that purpose far outperformed pleasure on the grit scale. She also found that purpose was more important when it was defined based on how something you’re doing will benefit other people, not necessarily yourself. It was all about how you are contributing to the lives of the people around you; how your life had a meaning that was greater than just yourself.
- You might neglect this and think, “it’s OK I’ll just push through anyway” but that isn’t what tends to happen. Instead, you might push through but not actually continue developing.
- People fall into three different categories. We have the people that will drop out because trading is too hard for them or they suffer a bad experience, such as going live before they’re ready and losing money. Then we have arrested development and the world-class experts. Without passion and purpose, you’re likely to fall into the arrested development category; you’ll reach a certain amount of potential and plateau there. If that level of potential is below being a profitable or consistent trader, you aren’t going to have a good time.
- If you know you have passion and purpose in what you are doing, one big way to improve your grit is to be aware of the concept in the first place. The video we did on fixed and growth mindsets is heavily linked to the concept of grit. They go hand in hand and the psychologists who developed both of these concepts have actually worked together.
- Studies on school children showed that when the kids were explained the concept of grit and things like deliberate practice, they were seen to then outperform children from a test group over the course of the school term. So simply by being aware of grit, you can become more gritty.
- One of the most important parts of grit is putting things in the right perspective and understanding where to focus. When we fail at something or when things start going wrong it is our natural tendency to look at the things we can’t control and blow those out of proportion. Instead, we need to focus on the things we CAN control and try to improve those.
- This ties in with the concept of fixed and growth mindsets because if you have a fixed mindset, you will consider your talent to not be something you can grow. In reality, over the long term you can develop your talent. But you need to adopt a growth mindset to be able to do that.
- With trading we have something very specific to deal with: the market. We can’t change the market. It is what it is. So rather than focusing on how difficult we are finding the market or focusing on things we can’t change, such as how much money is at our disposal, instead we need to focus on the things we can change. The things we can develop. Even if this is only 10% of the overall equation, it’s something we can control.
- If you made a big loss you can’t change that now, it’s happened. What you can do, is look at what happened and work at changing what went wrong, then you have a chance in the future to make back what you’ve lost and continue on your path of development. It’s all about the process of developing, not necessarily individual results.
- When you want to use your ability, you should make full use of your strengths, but when you’re developing your ability, you need to focus on working your weaknesses. These are things that are in your control.
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