Improving your performance by changing your self image and beliefs

"Self-image sets the boundaries of individual accomplishment." - Maxwell Maltz

Negative self beliefs can work to create a glass ceiling to your performance as a trader. These can be formed either by continually criticising yourself, from previous experiences, or from comments from others. The longer they are in place, the harder they can become to break.

This was discussed in the book Self-Esteem by Matthew McKay and Patrick Fanning: "The pathological critic [inside you] is busy undermining your self-worth every day of your life. Yet his voice is so insidious, so woven into the fabric of your thought that you never notice its devastating effect."

Self sabotage in trading either comes from repeated bouts of:

• Poor planning (i.e. risking too much capital on a trade, or overriding your trade selection criteria);
• Poor goal setting (looking for a specific monetary target on a trade, or in a set period of time);
• Poor execution (such as taking profits too early, or not heeding an exit signal);
• Hesitation or indecision in acting on a signal, which can lead to profitable trades being missed, or you end up chasing a trade once it has started to move from your intended entry level.

If left unchecked, negative self beliefs start to create a self-fulfilling environment. When you keep making the same mistakes you end up saying to yourself  things like "You idiot! Why have I done that again? You know what you should do, so why can't you?"

Talking to yourself in such a forceful, negative manner only serves to reinforce those limiting self beliefs.

There are people out there who would say that all this is poppycock - the system or method is everything. To me, they are talking purely from a theoretical viewpoint, not the practical, and is doubtful whether they have successfully traded themselves. There is a world of difference between theory and practice, and those people fail to appreciate how the mind can react and affect performance when trading.

To break the cycle, those beliefs which limit you need to be overridden, with a new set of beliefs. The new beliefs need to be positive and motivational, and work towards building up your self-belief.

In other words, to change your performance, you have to change your beliefs. Only when that has happened can your actions change.

"The 'self-image' is the key to human personality and human behavior. Change the self image and you change the personality and the behavior." - Maxwell Maltz

In my experience, working on these aspects can make a much bigger difference to your ultimate performance as a trader, than say continually fussing around with minor system parameter changes.