You need to be able to answer this one question

Hearing about the excesses of Sam Bankman-Fried’s FTX team in the Bahamas has got me thinking this week … about why we trade?

I suspect most Trader’s Bulletin members aren’t looking for Amazon deliveries by private plane … $55k bar bills … or a yacht called ‘Soak my Decks’ …

… or perhaps I shouldn’t make assumptions about your motivation?

Which is why this week, I’m putting the question out there. I want to hear about what it is that motivates you …

It’s a question we don’t give enough time to. Perhaps we just assume it’s about the money. But it’s rarely just that. Let me know why YOU trade in the box below ⬇⬇⬇

Results of survey

If you aren’t clear on your reasons for trading, you’re never going to find success, because you’ll be chasing after the wrong things.

Making money

The focus on money making can obscure the real motivations behind our trading behaviour.

Profitability is often seen as the only measure of our trading success. But profitability can be measured at the end of each day … at the end of the month … at the end of decades of investing …

Which is the relevant measure of success for you?

If you trade for 20 years, but for the first 5 years you lost money … have you had success?

If profitability is seen as the short- and medium-term measure of our activity, then it’s likely that you’ll lose motivation in a period of drawdown, as it will seriously dent your self-worth.

Or worse … you’ll take ever bigger gambles to try to earn back losses.

Learning & challenging

For many traders, the profits we earn from trading are just an added benefit to ‘winning’ – what really matters is that we pitted ourselves against the markets and we came out on top!

With this in mind, the drive behind our trading is about learning and challenging ourselves. This is where performance measures can really help to motivate us – looking at how our edge over the market grows as we learn and improve.

This can make trading deeply satisfying – even when we’ve taken some losses.

Which brings me to a more controversial reason we trade …

Trading can be fun

Doing something well AND getting paid for it can be fun.

But also the rush of winning can be quite an adrenaline hit! It’s a dangerous side to trading, but even more dangerous if we don’t admit that it’s there.

We’re all human, which means we’ll all get a buzz out of winning – it’s when that drives our decision-making that it becomes problematic.

Personally, I manage this by dividing up my trading into a spectrum from ‘sensible’ at one end, to ‘fun’ at the other end. Most of my money will be invested in the sensible end … but it’s not always where I get the best returns.

 

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