I am going to start this article with a question which could signify a major portion of your current level of success or failure in trading.
The question is;
Do you believe willpower (and specifically - your willpower) is a limited resource, and if so, what do you think it limits you to learn, achieve and accomplish?
A follow up question to this is:
If you work on a difficult task, say learning to trade price action, will you need more energy and resources to accomplish an even harder task, especially one involving self-control, such as using proper risk-management, trading with discipline, following your rule-based systems or trading plan, etc.?
Take a moment to reflect on these questions, then write down the answers.
Before we get into the answers, we are going to talk about a recent experiment on doing difficult tasks and the Stroop test.
There has been a lot of testing on willpower lately and the general experiments went like this;
People were asked the question about willpower, how they felt about their willpower and what they could achieve and accomplish.
Their answers were noted and then divided into two groups, and then they were all given the same following two tasks.
They started off with an easy task which was to read a page of written text and cross out all the instances where they saw the letters 'es' together.
Then they were given another page of written text where they started off crossing out all the instances where the letter 'e' showed up, then midway, had to change to crossing out every 'e' except when it was followed by another vowel. The second task was obviously more difficult then the first because they had already learned to cross out the 'es' in the first version of the task, then cross out all the 'e's regardless of how they occurred.
The reason why the last task was most difficult was a) the task was more specific, and much more importantly b) they had to prevent themselves from doing a behavior they had already built up a habit to perform.
After doing this set of tasks, they had to perform a 'Stroop test'. This is one test I do every day in my Lumosity training whereby you read various names of colors in a word on the left, and have to determine if the color on the right word matches up with the color on the left.
For example, you would see the following two words;
Yellow and then the word Red which would be colored any of the following possibilities (yellow, red, blue, green, black).
If the word on the left was yellow, but the word on the right, say 'Red' was colored red, blue, green, or black, you would have to quickly determine if they matched up or not (in this case not). If the word on the left was 'yellow' and the word on the right 'red' was actually colored yellow, then you selected 'yes', if not, you selected 'no' which is the Stroop test.
Here is the interesting part.
If the person's response to the willpower questions (the same ones I started the article with) was they believed they had a limited willpower to accomplish any task they wanted to achieve, these people made far more mistakes on the harder tasks, especially the Stroop test, then those who believed they had unlimited willpower to achieve anything they set their minds out to. Even more importantly, those that believed they got energy from doing the more difficult tasks, tended to outperform those that felt taxed from them.
The answer lies in ego-depletion, which is whereby those who think their willpower can be used up based on the tasks they are doing on a regular basis. What this led to was a person having less access to their natural intelligence and resources, whereby doing one difficult task (especially a self-control one...i.e. trading, money management, following a trading plan, etc.) made it harder to do the second task which was more difficult and required more self-control.
In contrast, those who believed willpower is essentially unlimited did equally well regardless of the letter crossing task (easier or harder). They were not affected by this feeling of ego-depletion and therefore had the same amount of resources available for the easy or harder tasks.
Now one additional study was done in this experiment, which was to train people through various statements to either a) believe that 'working on a strenuous task can make you feel tired and less able to accomplish more difficult tasks later or b) believe that working on a strenuous mental task can make you feel energized for further challenging activities.
These groups did the same tests (letter crossing, Stroop) as the first groups, and the results were as followed;
-The group that was taught to believe through statements that willpower is limited and they will need a break, or more energy to complete the more difficult task, performed much more poorly on the Stroop test after performing the most difficult letter crossing task
-On the other hand, the group trained to think willpower is unlimited, and that they will gain energy from each difficult task they accomplish, did just as well on the Stroop test regardless of whether they had an easy or difficult letter crossing task before.
So what does all this mean for you?
A simple translation is your beliefs about your own willpower is one critical factor that affects how effective your willpower will be, especially in trading, keeping to your money management, following a trading plan, being disciplined, patient, etc.
But more specifically, the more you believe your willpower can keep you from doing the things that you don't want to do (write in your trade journal, keep using proper money management after a large series of wins or losses, etc), the more likely you will be to us your willpower successfully in trading.
Although positive statements are necessary, they are not sufficient by themselves. Only until you take the proper actions will those statements, beliefs and ideas start to change the grey matter in your brain, and construct the proper neural connections to trade successfully.
The good thing is if you currently have limiting beliefs about your willpower which are interfering with your trading process, whether you trade price action, or the ichimoku cloud, or whatever system you use, it does not matter. You can train your mind to build this willpower and relate to the difficult task of learning to trade successfully. That means almost every single person, with the right training, practice and diligence can learn the proper skills to trade successfully.
While it is true some people will have more natural abilities that will help them in their process, almost everyone can learn to trade successfully with the right effort, the right training and the right mindset.
In an upcoming webinar in about a month, I will talk about various methods to re-program your mind to remove those limiting beliefs which inhibit you in trading and cause you to repeat the same patterns again and again (in trading and in life).
Until then, stay tuned, but I welcome your comments and thoughts on this post.