6/29/2025 - Whatever your goals might be--in trading and in life--do a little piece of them each day, building on your progress one step at a time. What we do regularly, we internalize. Be the person--and trader--you wish to become in some small but consistent fashion each day. Then tackle the next piece and the next. The enemy of progress is not emotion, but distraction. When we tap into our core motivations each day, we find that daily effort gives energy; it does not drain us. How, today, are you going to be the person you wish to become? How, this week, are you going to be the trader that you are at your best? And most of all, how can you build the intensity of your focus to overcome distraction and stay grounded in who you are? That will be the next set of posts--
6/27/2025 - If our trading challenges are a function of failing to tap into our highest motivations--and not simply a matter of poor discipline and lack of emotional control--then what is the top motivation that individual traders fail to tap into? What I see at hedge funds and true proprietary firms like SMB Capital is how individual performance is a function of team participation. Many, many traders have extroverted personalities, which accounts for their interest in risk taking. Trading in social isolation frustrates the extroverted personality and, indeed, fails to draw upon the strengths of social motivation. Look at leading financial organizations, from hedge funds to investment banks to sovereign wealth funds. All are organized in team structures. Teamwork helps cover more markets and ideas, but teamwork also taps into motivations to help others, teach others, learn from others, and enjoy the comradery of others. If you're not reaching your trading potential, perhaps you're playing the game the wrong way.
6/26/2025 - Here is a corollary to the best practice outlined below. We often assume that our trading challenges are the result of negative thought and behavior patterns that we need to change. Hence the common advice to work on emotional control, discipline, etc. But what if our trading problems are the result of failing to properly engage our strengths and our core motivations? In other words, what if the trading processes we develop don't adequately leverage what we do well and what keeps us motivated and inspired? Frustrating our strengths can be every bit as destructive to performance as acting on weaknesses.
For example, suppose I develop a very strict, rule-based process for trading, but one of my strengths (and greatest sources of motivation) is creativity and the discovery of new opportunities. I find myself operating outside my rule-based framework, not because I lack discipline and am too emotional, but because I need the freedom to explore and discover. Until I find a way to incorporate creativity and idea generation into my rules-based framework, I will fall short of my potential.
I look forward to developing this--and related--ideas in
my next book that will focus on the strengths of successful traders, not just the shortcomings of beginners.
6/24/2025 - Here's a life and trading lesson from our new friend Nomi, who offered a reminder of the Naomi principle. Nomi came to our home at two months of age, weighing only two pounds. She was understandably frightened in her new environment and hid in the bed, at the base of the headboard. She could not be coaxed out.
I opened a can of food that our other cats love and dipped my finger in the moist mix. I held it near Nomi and she quickly lifted her head and came out of her hiding place. Her fear of strangers was strong, but her drive to eat new food was stronger. That began our petting and getting acquainted.
The principle here is that we don't change our negative behaviors through motivation or discipline. We change our negative behaviors by drawing upon our core motivations. We might not make a change because we want to, but if we can find a reason that speaks to us, the change follows surprisingly easily.
Helping others is one of my core motivations. I might not be the most disciplined trader on my own, but if I'm part of a team and my teammates count on me for help and role modeling, suddenly I'm inspired to be my best self. Nomi didn't motivate herself to open up to me; she found a motivation that made it easy to open up.
What makes you tick? What are your core motivations that drive you, inspire you, and make your life meaningful? If you can find a way to connect your trading to the motivation that helps you be your best, suddenly you'll be able to access your best trading.
Additional Reading:
Best Trading Practice: Rule-Base Sizing of Trades
.
