Updated from its original posting on 29-10-2010
In life, we often try to compartmentalize things to make sense of them. For example, we separate what we like from what we dislike, what we are good at from what we are bad at, and what makes us happy from what makes us sad.
As a result of this division, it is only natural that we gravitate towards those that make us feel good. We downplay failings as simply “this one time,” accidents, or even just plain bad luck. Sometimes, we just ignore them altogether.
And just like in life, we see this happen often in trading.
Suppose you’re trade suddenly goes in the red because of some news event that you failed to consider. Out of frustration, you decide to widen your stop and let your trade ride. Eventually, your trade goes back to breakeven and you end the day flat. You focus on the “positive” result, and move on to the next trade.
While you did not lose a cent in the trade, you also did not learn from it. The next time a similar event happens, you could end up doing the same thing, but with a very different, possibly devastating, result.
Ask yourself, “Am I only thinking positively because I do not want to recognize my weaknesses?”
It may sound counterproductive, but you have to embrace your weaknesses to grow. Choosing to look past your weaknesses is akin to sweeping clutter under the rug. Yes, it may look “neat” for now, but in time, the clutter will build up and create a huge mess.
Embracing shortcomings is something you, as a trader, must learn to do because there is ALWAYS something to be learned in trading. The world of trading operates in a dynamic environment that shows no mercy to those who stand still.
You might even say that you have more to learn from your weaknesses and losses than from your strengths and wins. Chinks in your armor give you a concrete target to work on improving. Ultimately, overcoming your own Achilles heel is what will make you a more well-rounded trader.
So what can you do to “embrace weakness”? You can start by creating a trading journal.
In your trading journal, you shouldn’t only include the trading idea, market behavior, and the result. You should also record what you felt during the trade, what mistakes you made, and what you will do in the future to improve on your trading. By writing down everything, you are acknowledging the loss and not just running away from it.
You are telling yourself, “Yes, I made a mistake, but I want to make the best out of it.”
By writing down the experience, you are implanting the lessons learned from the mistake into your mind. The lessons will remind you of how you felt when making those mistakes, making it less likely for you to do the same in the future.
By embracing weakness, you allow yourself to grow and broaden your horizons. You learn what works and what doesn’t. In the end, dealing and acting upon those weaknesses can lead to you becoming a stronger, more successful trader.