What Do You Believe?

[dc]I[/dc] want to share an important exercise with you today. The journey along the path to trading mastery can be difficult because it requires some conflicting skills—on one hand, you must rule certain aspects of your behavior with iron discipline and must also begin managing your thoughts and belief systems. On the other hand, learning to trade requires patience and gentleness. You can’t force much of what will happen, as some of the changes and adaptations take time—it’s a growing process. However, we all have limited time and it’s important to focus on tools that give solid results. Today’s exercise has the potential to give you the power to make sweeping changes in many areas of your life, and maybe to help you a few steps along the path to mastery.

Many authors have pointed out that we don’t trade the market, we trade our beliefs about the market, or another way to think of it is that we don’t truly interact with the actual market, we face our beliefs, both enabling and limiting, about the market. This is actually true of many things beyond the market. (For instance, how much miscommunication is due to the fact that people are not really listening to each other while they are paying more attention to their own beliefs and preconceptions about what that other person is saying?) Most people careen through life, bouncing from one experience to the other, without really digging into the beliefs and motivations that drive them. Socrates put it in black and white: “the unexamined life is not worth living”, yet I wonder if so many of the distractions of day-to-day life are designed to help us avoid that examination—to help us avoid the hard questions.

Today’s exercise is about those hard questions. I would like you to block out a full hour’s time. Turn off the phone and computer, no texting, no television, maybe put on some background music. Sit down with some blank paper and your favorite beverage of choice, and start to list your beliefs. I would suggest focusing on three areas: your beliefs about the market, your beliefs about the process of trading, and your beliefs about yourself. If you want to go a step further, maybe you can also work on a list of beliefs about the universe and reality itself, but realize that any of these lists is probably enough material to write a substantial book. Do the first part of this exercise with no judgment, simply listing beliefs as fast as you can think of them. Make an effort to list both empowering and limiting (or, you may choose to think of them as good and bad) beliefs, and just keep going until no more come.

After you’ve done this, return to the exercise over the next few days and add things you’ve missed. You should have several pieces of paper filled with a pretty jumbled list, and then the second part of the exercise begins: organize and clean those lists. Notice the difference here: the first part of the exercise was stream of consciousness with as little judgment as possible (brainstorming), and now you switch gears to an editor’s mindset. There are other ways to think about this division: unstructured / structured, creative / reductive, intuitive / rational, subconscious / conscious, etc. You will now find some of your beliefs overlap, some can be edited, some can be discarded, and some probably were in the wrong list. Clean those lists, and you will end up with a set of beliefs that give you some pretty deep insight into your heart and mind. Incidentally, many of the most effective trading practices work to integrate different types of analysis or different ways of “being”, and this little exercise can help you experiment with balancing those sometimes conflicting and contradictory approaches.

The process of trading can be very stressful, and I think many people would find great benefit in working with a mental health professional at different points along the way. This little exercise, however, encourages you to be your own therapist, to do your own work. You can next begin the process of transforming some of those limiting beliefs, or learning how to operate within the belief structure you have. It’s pretty difficult to just “change what you believe”, but most people are blissfully unaware of the power of their beliefs to influence their actions and their results. So, once again, I encourage you to find a few quiet moments, shut out the outside world, turn inward, look deeply with, and open yourself to understanding and growth. Why not take those first steps today?


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.

This Post Has 2 Comments

  1. Markus Fernandez-Kennedy

    Great post Adam. Thank you. I have really been enjoying the ‘whole of life’ approach you take toward trading and its mastery. It is very powerful and has significantly changed my life for the better.

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