Principle Centered Trading: Can it Help You?

This is a very special time of year.  There are a number of religious and secular holidays in this month spanning the Globe.  In fact, there are literally hundreds of celebrations, but of course, some of the most popular, in the US at least, are Christmas, Kwanza, Hanukah and the Winter Solstice; all culminating at the end of the month with the New Year.  And, speaking of the New Year, it represents a renewal, an opportunity to reconnect with your core values and principles; a time to reestablish a sense of direction and alignment of your body, mind and emotions in order to successfully achieve your goals and objectives.  Also, as you take a look at this process, for most of you it becomes clear that it’s time to re-calibrate your trading attitude.   You’ll find that it’s time to open up your centers for identifying and following your values and principles in trading and in life.

One thing that is important to consider is the similarities between values and principles.  Many individuals go through “values clarification” which is a process that helps to keep their most cherished values on the dashboard in order to connect with them when it is most important. When establishing these core values one often will confuse values with principles.

A principle is a guiding standard of conduct that one often aspires to even if it’s difficult and they sometimes fail.

A value is what you are actually following in your life.

For instance, there are many people who claim “healthy living” as a value even in the face of eating unhealthy, smoking, being overweight and not exercising.  In this instance “healthy living” is a principle and not a value.   If you claim to value honesty and integrity but often fail to be forthright and frank, then honesty and integrity are principles and not your values.

In this instance, as traders when you need to take the high road with authenticity to do the right thing you’ll find yourself floundering and equivocating in the face trading trials.  This is an important distinction because one’s values can be a source of disruption in your trading if they are transient and defective.   But when you are clear and aligned with your core values they can be a strong source of support as you wade through the volumes of minutia in the trade.  You’ll want your values to be in alignment with your beliefs, images, internal dialogue, emotions and goals.  If you are just giving lip service to clarifying your values, then you’ll run the risk of plugging into a flimsy energy source when your results are on the line and it becomes critical to manage your trading process in the face of all the things that can and do go wrong.  At this point if your values are steadfast and true to your convictions they act like a lightning rod to keep you on target, on task and on purpose.  If on the other hand your values are flimsy and weak because they are aspirations and not a way of life, then you are subject to a wavering conviction with a feeble commitment to doing what is in your best interests.

One of the ways to ensure that you are engaging real values that will drive your positive results is to write them down.  Once you have written them down, you’ll want to go through each one and identify whether or not you are consistent in what you have identified and what you are following through on.  This is where you are using your journal to track patterns of thinking, feeling and doing.  This is where the rubber meets the road as in what you do and how accurately it reflects what you felt and what you thought.  Any discrepancies must be routed out and reframed (as in changing the content and/or the context of the faulty values statement) so that you’ll change the emotional relationship to the concept.  For instance, let’s say that you “value” patience, and in your trade you become aware that you are consistently rushing the construction of your plan causing you to be impulsive in your entries and to prematurely exit the trade.  In this example, it is clear that there is a dearth of patience which causes confusion in the trade entry and management.  This flies in the face of the value to which you ascribed. Continued denial about the lack of patience here means you would not recognize it as an issue that you needed to address.  Hence, in all likelihood, you would continue to manage this type of trade in the same manner over and over and you would continue to get the same poor results.  On the other hand, if you were to recognize that patience was not a “value” that you truly embraced you could then incorporate a mental/emotional tool to address this issue one trade at a time and eventually rectify it.  Without challenging your stated core values so that you can make the distinction between true values and lip service you’ll continue to find yourself in disappointment after disappointment often confused about why you are getting the same negative loss oriented results.

Now that we’ve established the importance of having clear values, it is important here to reestablish the importance of being principle driven.   Having a distinct direction in your trading with a moral compass that is made up of overarching principles is necessary so that these principles can be developed and eventually become values. This will take you a long way toward maintaining an eye on the prize.

It is true that principles are aspirations but you must remember that you’ve got to start somewhere.  Values, the standards by which you live and trade, don’t become values overnight.  They begin as principles that you desire to incorporate in your process; principles that you first must become aware of as important incumbents to becoming effective in your follow-through.  This is what we teach in Mastering the Mental Game online and on-location courses.  Ask your Online Trading Academy representative for more information.  And, get my book, From Pain to Profit: Secrets of the Peak Performance Trader.

Happy Holidays

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