Prime your mind for success
Traders constantly hear about economist and market expectations. Knowing how the market will react to news and data is part of trading but managing your expectations of yourself is critical.
In short, markets will give you exactly what you expect from them. If you go into a day or a trade thinking you will dabble or punt then you’re in the wrong frame of mind.
I’m reading a book about behavioral economics called Predictably Irrational. One chapter focuses entirely on expectations and talks how people’s experiences of things like food or music are different when atmosphere and presentations are right.
What’s stunning is experiments that show that our expectations of ourselves affect our own performance. Author Dan Ariely uses stereotypes to make the point:
One stereotype of Asian-Americans, for instance, is that they are especially gifted in mathematics and science. A common stereotype of females is that they are weak in mathematics. In a remarkable experiment, researchers asked Asian-American women to take an objective math exam. But first they divided the women into two groups. The women in one group were asked questions related to their gender… The women in the second group were asked questions relative to their race.
The performance of the two groups differed in a way that matched the stereotypes of both women and Asian-Americas. Those who had been reminded that they were women performed worse than those who had been reminded that they were Asian-Americans.
Asking questions about race and gender is called ‘priming’. In that case it’s stereotypes but the messages we send ourselves are even more powerful. If you’re internal dialogue reminds you that you’re a good trader or a good decision-maker or about how you deserve to be successful, then you will be.
As you get ready for the trading day use this information to prime your mind. Tell yourself that you’re patient, that you’re confident and that you have all the wits and courage to make a great trade.
Related:
Do you believe in free money? Your answer says what kind of a trader you are (you might be surprised)
