The most important question a trader can ask …

This time tomorrow morning, I hope to be up to my neck in the Irish Sea, a bit of seaweed around my ankles, swimming a mile across a North Wales bay as part of a sea triathlon.

When I mention my hobby to people, the most common question is, “Why?”

It would seem that most people (my family included) just can’t understand why I’d want to spend my weekends racing across various stretches of icy water around the British Isles.

I guess it’s not to everyone’s tastes, but I love the challenge, the thrill, and the satisfaction of improving my performance.

For some reason, however, people never ask me why I trade.

Perhaps they see the answer as obvious.

For the money?

But unless we question why we do what we do, it’s all too easy to lose track of our goals.

Which is why today I’d like to ask Bulletin readers: Why do you trade?

And to offer some thoughts on how our assumptions about why we trade can sometimes get in the way of achieving our goals.

If we want to succeed at trading, one of the most important factors is to have the right motivation.

So, what motivates you to trade?

Trading can be tough. So, if you don’t have enough motivation, chances are that you won’t be able to sustain yourself through the tough times.

So give the answer some thought.

Is it to make money?

The problem with focusing all your attention on making money is that it can lead to some serious problems …

The first is a lax attitude to risk management. If you just want to make money, chances are you’ll cling on to losers to avoid registering that loss – instead, hoping the trade will turn around. Over time, this kind of trading will have a devastating effect on your profitability.

The other problem with focusing on money is that all traders will go through periods of drawdown. And if your entire worth as a trader is based on money, you’re likely to start losing faith during one of these slumps.

Even the most skilled and successful traders go through lengthy losing periods. (In fact, one of the ways in which Bernie Madoff gave himself away was the fact that his track record showed no drawdowns.)

If making money is our entire motivation, then a natural drawdown will be a serious threat to our self-worth. It’s likely to affect our trading, and even cause us to give up entirely.

Trading isn’t like most jobs. Most jobs have an obvious motivation beyond the financial (I’m not talking about commission-based jobs here). If you’re a doctor, you want to heal people … if you’re a teacher, you want to educate your students … if you’re an architect, you want to construct a beautiful building. And in any of these jobs, having your fees cut, won’t affect how you feel about your work – although it may affect how you feel about your employer!

For a trader however, if you don’t make good money, it is harder to find the motivation to continue.

Being your own boss

Some people will tell you that trading is the perfect job, because you’re released from the daily treadmill … you don’t have to answer to a boss … and there’s no limit to how much you can achieve.

There is some truth in this, and it is one of the things I love about my job.

However, I don’t want to kid you that this is the “easy option”. (There’s a lot to be said for the security of a steady payslip at the end of each month.)

A successful trading career comes through hard work, sticking to rules, being disciplined, and stepping out of your comfort zone.

So, if it’s not just the money … or the lifestyle …

What motivates me to keep trading?

I guess it’s not that far removed from what motivates me to put on a wetsuit and run into the Irish sea …

The motivation to learn, to improve and to master the challenges that are thrown at me.

I’m not the fastest in the water, but each season I’m improving, I’m dealing with challenges better, I’m becoming more resilient, I’m overcoming injuries and I enjoy it more and more.

And when I’m faced with set-backs, I see them as a challenge, rather than letting them undermine my motivation.

But don’t get me wrong – sometimes when I lose money, I still swear at my charts and kick the desk! As with all aspects of my trading, my motivation is something I’m learning to master …

What I’d really like to know is what motivates you to trade? And any techniques you’ve found to keep yourself on the straight and narrow.

Related posts:

Why trade? You need to be able to answer this one question