Think Like A Trader Blog

Friday, 13 April 2018

The Battle Inside You - How to Make Good Trading Decisions

Reading Time - 4 Minutes

We’ve all been there, sitting at the computer waiting for that perfect trade. Discipline, we tell ourselves. Patience, we mutter under out breath. We blow the steam from our coffee and smile because we know we are in a good place, ready for this thing called trading, fully prepared this time.

And then that asshole chirps up in your ear. He’s bored. Impatient. Scared of missing out on a trade. He seems to get lounder the longer you wait. Now you’re blowing so hard on your fourth cup of coffee that its splashing over the rim of the cup and dotting across the desk.

What happens next?

A lot of the time, you let the asshole win out. Mistakes happen.

A different scenario?

You’re on a diet. You really want to lose weight. You’re not happy with yourself and all that extra ‘baggage’ you’ve accumulated. But that’s ok, because you’ve thrown out all of the junk food and have bought ninety-seven healthy cookbooks. The Sainsbury’s order is in and the fridge is so green it might be the Hulk you’ve got stuffed in there. Monday goes well. You’re doing it this time. Tuesday is great.

And then on Wednesday you’re tired after work. The asshole chirps up in your ear. Sure, you want to lose weight, but you need a reward. And you’re exhausted. You can get back to the diet tomorrow. Or, better yet, start again next Monday, on a fresh week.

What happens next?

Ding-dong, it’s the Dominos delivery guy.

There’s a constant battle going on inside of us. It becomes even more prominent whenever we need to exercise discipline and restraint. And for a lot of people, they end up listening to the voice that damages them and that seeks short term gratification. It’s like stubbing your toe against a doorframe and then hopping around in agony. But, instead of learning from it, you continue to do it every time you walk through a doorway.

What is going on here? Why are you doing it?

It reminds me of a proverb I read a long time ago. It explained that there is a battle of two wolves inside of us all. One is good and one is bad. At the end it asked, ‘Which one wins? The one you feed’.

There is a lot of truth there. The more you allow the laziness and the self-destructive behaviour to win out, the stronger that wolf becomes. Because that one is being fed, and the other is starving. As time goes on, that wolf becomes dominant and it can become almost impossible to even hear the voice of reason in your head.

Think of it this way – what hand do you use to write? Or what foot do you usually use if you’re kicking a football?

That hand or foot is being used a lot more than the other for the task. You automatically favour it and it becomes good at carrying out the task. Now, if you were to suddenly switch the pen to the other hand, or decide to kick the ball with the other foot, what would happen? Your writing would likely be ineligible and the ball would go through your neighbour’s window.

So, how do you start ‘feeding’ the wolf that you want to be the dominant force in your life? By using it on a daily basis.

You need to set up small daily tasks and routines whereby you make the ‘right’ decision. And it can start off incredibly simple.

Let’s say you want to eat healthier and lose some weight. The mistake most people make is that they dive fully into it and then wonder why in a week or two they give up. Well, the wolf you need to rely on isn’t strong enough. You have spent years feeding the wolf that wants to eat junk.

So, you start slowly. Imagine it like feeding the ‘good’ wolf back to health.

Maybe on Monday, Wednesday and Friday you take a healthy lunch to work. That’s it for two or three weeks. Then on the Tuesday and Thursday you bring in healthy dinners when you get home. A few weeks down the line you add in a weekend walk.

Slowly. Baby steps. Feeding the wolf or muscle or whatever you want to call it back to health. Let it grow to be the dominant force in your head.

If you’re a trader who constantly makes mistakes, don’t sit down at the computer on Monday and think you are suddenly ‘cured’ and can trade impeccably from now on. Set yourself small targets.

A perfect day where you don’t make a mistake and follow your plan. Then the next day you start all over again. If you make a mistake, stop trading. Punish that ‘bad’ wolf and do not allow yourself to trade the day after the mistake.

If you have a perfect week? Reward yourself. Go to the cinema. Go out for a meal. Whatever it may be.

You need to start thinking of the decisions you make as being made by a ‘muscle’. If the stronger muscle is the one that causes you to make poor decisions, then it is going to take time to build up the other side and gain the upper hand.

I hope you all have a great weekend!

James Orr


  1. Awesome write up James. I can relate this to my weight loss and trading. Especially, when losses were made earlier due to bad strategies, urge to cover the losses drives to make more mistakes.

    I tell myself to be patient and wait for the right opportunity. To focus on the process (right entry, right exit, position mgmt.) so that outcome can take care of itself.

    Somewhere read this, buy at the right price, selling price will appear automatically.

    Thanks for the wonderful psychological posts.

    Signed up for zone trader, started and didn't continue after 2weeks. Need to re-start again.
    Will do, remembering and retelling this post to myself again and again.

    Cheers, Vijay

    1. Hi Vijay.

      Thank you. It is a strange experience when you are trading. Having the mind try and act as your worst enemy for extended periods of time is very tough to deal with. Very similar to your diet experience and just about anything else we try and do. It is a wonder us humans get anything done with the mind getting in the way.

      Thanks again.

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