In This Episode
- How to differentiate between knowledge and ego
- How to break down your trading during analysis
- The big trap of successful trading
If Your Ego is Getting in the Way, Here are Some Ways to Fix It
Your ego can be the biggest stumbling block to your success.
In this episode, we talk about how your ego can get in the way when you are starting out, and how it can actually get worse as you become a better trader.
We also talk about how successful traders can get trapped in a certain mindset and how to be able to identify that in other traders.
Read the Transcript:
Hugh: Hi, Walter. How do you tell the difference between your knowledge or your skills at work and your ego telling you what to do?
Walter: That's pretty good, isn't it? For me, that would be execution. Ego is tricky because I think as traders, that becomes one of the biggest challenges. The better you get and if you've ever seen this among other traders like who've been around for a long time, you will see the ego creep up.
It's interesting because I think as we develop as traders, a lot of things kind of you know get easier. I guess so to speak in some ways with experience, that's the one thing I think it's not.
The way that you phrased it was, how do you know if it's ego or what was the other thing?
Hugh: When you are making a trading decision, how do you know if that decision is coming from a place of knowledge and skill or your ego trying to take over and run the show?
Walter: So for me it always comes back to execution. I need to answer this question. In this part of the trade whatever part it is. It could be the risk management, the pyramiding, the entry, the exit. In this part of the trade did I do what I am meant to do?
If I didn't and you even see this in traders like George Soros who was famous for it in his interview in the Market Wizards or New Market Wizards or whichever book he was in. A lot of traders, if you go to the traders who speak and stuff those things, you will see it.
You will definitely see it where these guys get up there and they say things. It's funny because then they get sucked in this trap where it's like, “You must do this. This is the only way you can make money in the market.”
I understand why they say that because that is their experience. They are like, “Well man, look what I've done”. I get that but that's tricky. I think that's a big trap. A lot of people are going to fall by the wayside because they quit.
The longer you trade which means obviously you are making money, the more ego can seep in and convince you that you should break your rules in this instance or you should do something different in this instance. Or, that you are responsible for your results and not your system.
Hugh: Hey there! I hope you find this episode useful. I just want to let you know that Walter and I give away something valuable every month that helps traders improve their skills. You can enter to win by simply leaving an iTunes review and leaving a comment on our YouTube videos.
At the end of each month, we'll look at the comments and reviews from the month and we'll pick a winner at random. Each comment and each review counts for one entry during the month that it's pitted.
So, if you're interested in that, be sure to enter after this podcast is over. Alright back to the episode.
Walter: It's kind of like you are a bus driver. You are just driving the bus. You can drive a VW bus or you can drive a Mercedes bus, it doesn't matter. You have got to drive the bus and not wreck it.
So to me that is a really good question because trying to disengage those two things is a common one I think I really do. If you can go out and look on the internet and see. Do you hear any traders saying things like really kind of beating their chests and saying, “This is the only way. You should do that. You should always do this. You should always do that.”
Hugh: Pretty common.
Walter: A lot of times. They are not saying that because they are trying to lead you astray but they are saying that because they are coming from their experience. I can't speak to their motivations. I should say that but I think in a lot of cases they are actually well-intentioned. It's just sort of that's all they know. Do you know what I mean?
Hugh: Yeah and also the truth like in terms of a track record, that is what they can prove. So that is what they are going to say and talk about. It makes sense from that standpoint.
Walter: That is why I think just reading those Market Wizards books is so good. That was the real eye-opener to me. The big lesson from those Market Wizards books by Jack Swagger. There's so many different ways. You come across all of these interviews and you just realize, “Man, this guy did that and that guy did the opposite. They both made money, what?”
It'll snap you out of the idea of finding the Holy Grail or the perfect strategy because you are like, “Dude, all these guys did totally different things and look what happened”. It's crazy. I really like how that can help you see trading for what it is. It's a personal journey to match up what you should be aligned with. What makes sense to you.
Hugh: For sure. Funny story. Last month I heard about this guy who had some crazy returns in his trading and his secret is basically mushrooms. I don't know how sustainable that is but trading on mushrooms.
Walter: So he takes the psychedelics and then he uses those to kind of see the future or something, how did he?
Hugh: I think he feels the market flow better or something like that. I don't know. I don't know what that's going to do to your brain long-term but it's an interesting thought.
Walter: That was crazy. It makes me wonder if you can't just achieve that same thing through different means you know, through non-chemical means or something.
Hugh: It’s an interesting thought though. Cool. Thanks, Walter.
Walter: Thanks.
Hugh: All the information in this podcast is for educational and informational purposes only and is not trading or investment advice.
Enter the Monthly Contest
We give away a trading prize every month, so be sure to enter to win.
You can win by doing one or more of the following:
Each action counts for one entry in the month that it was posted. We will pick a winner at random from the entries that month.
The giveaways can include books, coaching sessions, trading tools, or surprise gifts.
It will usually be something that will help you improve your trading psychology.
Listen to the Audio Version
Click the play button below to hear the audio-only version. You can also download the mp3 file below.
Podcast: Play in new window | Download
How to Get New Episodes of The Think Profit Podcast
You can get notified of new episodes of the podcast by subscribing to our email list, or subscribing via any of the major podcast platforms that can be found here.
If you enjoyed this episode, a 5-star review on your favorite podcast platform is always greatly appreciated!
Thanks for listening and we hope that your trading is going well!