My late grandmother used to tell me “If you put your troubles in a bag with everyone else’s, you’ll pull out your own,” and that was her way of reminding me that nobody really had it much better—or much different—than I did. It meant that we’re all flawed…even those people we look up to, so if you tend to imagine now that successful traders are “perfect” or off in a class by themselves, well, don’t!
Indeed, it’s not that successful traders are without flaws; it’s that they manage to be successful despite those flaws. And while nobody ever aspires to be an emotional trader, an inexperienced trader, or a one-dimensional trader, the fact is that you can be successful that way…plenty of people already are!
I tend to think that being a complacent trader is hard to overcome, though, and that’s because complacency causes what I believe to be the worst thought a trader can have: “It’s going to be like this forever.” For better or for worse, it’s never “going to be like this forever,” which is why I caution you to be who you are—flaws and all—but don’t be a complacent trader. Here’s why…
Some will be able to picture these scenarios quite vividly, as they’ve lived through them: The markets turn especially challenging, volatility dries up, and set-ups become scarce. Or maybe your strategy produces a couple or a few consecutive losing trades. In either case, the complacent trader is quick to think “It’s going to be like this forever,” and then panic sets in from there.
Now suddenly cast into the throes of despair, the complacent trader can make any number of mistakes, each one caused by just that one misplaced thought: “It’s going to be like this forever.”
Those mistakes could include:
Proper discipline and patience too often elude the complacent trader, who would be much better off simply not trading at all while emotions like anger and despair are part of the equation. Instead, rationale might warrant tightening risk, trading smaller size, or maybe simply sticking to a proven strategy—even in difficult times—all the while being mindful of the fact that it’s not “going to be like this forever!”
The plight of the complacent trader isn’t limited to feeling despair amidst the bad times, though! Actually, whenever the going gets good, the complacent trader feels alive with elation, like they’ve finally mastered this trading thing. It’s the most fun they’ve ever had trading, but while riding high, the complacent trader once again mistakenly thinks, “It’s going to be like this forever!”
While feeling invincible, it’s easy to start betting bigger, improvising with regard to strategy and risk, and overtrading, and admittedly, even experienced traders may fall victim to any or all of those!
See also: Trading Hang-ups That Bug the Pros, Too
The way the complacent trader bounces from extreme emotional highs to equally extreme lows is nothing like the consistent, even keel for which most traders aspire. And here’s the funny part: The problem isn’t even the actual events that they encounter in the markets; it’s that whatever the situation—good or bad—the complacent trader will choose to believe that it’s permanent, when inevitably, it’s not. The problem is simply flawed thinking, all caused by what I think is the most damaging thought that can cross a trader’s mind: “It’s going to be like this forever!”
Despite our propensity to imagine some ideal, prototypical trader who has the icy demeanor of a fighter pilot, is extremely well-capitalized, and has a deep arsenal of set-ups at their disposal, the truth is that you can be successful with far less! In fact, I would assert that even flawed individuals like the fiery trader, the low-budget trader, and even the newbie trader all stand a fighting chance in the market…but the same can’t easily be said for the complacent trader.
Instead, the complacent trader faces a distinct disadvantage, and not due to a lack of knowledge, insufficient skills, or a sub-standard strategy, but because they’re prone to having the one thought that no trader should ever allow into their mind: “It’s going to be like this forever.”
Perhaps more than any other, complacency is the flaw traders should fear the most, but if it’s not one of yours, then embrace, and trade well in spite of, whatever your flaws may be. For you can be successful by being who you are, but it’s hard to be successful by being a complacent trader!