The Mindful Trader

 

The Mindful Trader Newsletter !​ ​Issue #1 - Apr 29, 2023 Hi, ​ I am Arun Bau, founder of Mindfluential Trading, I am excited to send you our first newsletter of “The Mindful Trader”. As we know, In Trading - Mindset & Psychology matters more than 70% of your trading success; the rest is your strategies and risk management techniques. We will start off this newsletter with one main psychology topic that affected me most during my trading journey (and it still does to a small extent) - “The EGO Factor”

The Ego is a powerful emotion that can affect many areas of our lives, including trading decisions. This Ego factor can affect a trader in 3 ways (not necessarily in the same order) 1st way: One of the main ways that ego can manifest in trading is through overconfidence. ​ When we are overconfident as traders, we may take on too much risk by increasing the position sizing or jumping into trades that are not based on proper analysis. When I started trading, I made profits quickly in earlier days; it created a sense of overconfidence in me, thought it was very easy to make money from trading. it did not take many days before I realised that I was wrong. 2nd way: Another way that ego can impact our trading is through the need to be right. When focused on being right, we may hold onto losing positions for too long or refuse to cut our losses when we should. ​ This can lead to significant losses and damage to our trading accounts. This is especially true if we have a big ego and don’t like to admit we’re wrong. I am from a finance background, and when I started trading, I had a false belief that I could easily pick the stocks for trading as I know how to analyze the company financials etc. So I always felt my analysis has to be right. Later I realised that there is no relation between short-term trade decisions and the fundamental analysis of a company. Trading losses over a period of time will keep teaching you to get comfortable in accepting that: “Your analysis can go wrong no matter how good it was. You must start managing/adjusting your positions according to the new sentiment/analysis and not stick to your initial mindset when you entered the position.” 3rd way: In addition to the above two main ways that ego can affect our trading, there are other ways that it can manifest. For example, we may become attached to a particular trade or investment, even if it’s not performing well, simply because it’s “our” trade. This can lead to holding onto a position for too long and missing out on better opportunities. The ego might not always be the main reason for this, but sometimes Hope also makes us stick to trade even if it’s performing badly. Say any Finance Creator / Telegram channel / Analyst have recommended stock and you are took that trade without doing your own analysis; in such cases, you do not want to exit with a loss because you are biased towards the view of those who recommended it. If you exit that trade, you must accept the mistake you did not analyse before taking the trade, so your ego may not let you do that, and you continue to hold on to it. So how can we overcome our egos and become better traders? One way is to focus on the process rather than the outcome. By focusing on our trading process and ensuring that we follow our rules and strategies, we can avoid making emotionally-driven decisions based on ego. It’s also important to cultivate a growth mindset, which means viewing losses and mistakes as opportunities to learn and improve rather than as personal failures. ✔️Practical Personal Hack: The kind of emotions that we show in normal life indirectly impacts what kind of decisions we take in trading. ​ So if you are the kind of person who gives more importance to ego and refuses to accept your own flaws, be it with colleagues in the office or your partner or with friends. ​ Then the same egoistic patterns tend to repeat in your trading as well, making you less responsive to accepting your mistakes. Try to work on the emotional responses in your regular life by being more accepting of what is right and wrong, ​ If you are wrong, and if you accept it. It makes you a better person than trying to prove you are right. It can take time to work on balancing your ego because it’s a kind of Onion - It has many layers to it depending on your personality. No single answer works or all. In summary, our ego can be a powerful force that affects our trading decisions. By being aware of how it can impact us and taking steps to overcome it, we can improve our trading performance. It takes time but worth it. Remember, trading is a journey, and staying focused on the process and continuing to learn and grow as a trader is important. Tips to keep your ego in check Keep a trading journal where you record your trades and analyze your decision-making process. This can help you identify patterns of behaviour that are driven by ego and make adjustments to your approach accordingly. ​ Seek feedback from other traders or a mentor, as an outside perspective can help you recognize when your ego is getting in the way. By staying humble and open to learning, you can continue to improve your trading skills and achieve success in the long run. ​ Comparing yourself with other traders and getting into the unnecessary competition is another way the ego can affect our trading. It is important to remember that each trader has a unique style and approach, and there is no "right" way to trade. Thats it for this newsletter. Thank you for reading our first "The Mindful Trader" Newsletter. Hope it was helpful. Stay tuned for more valuable insights and tips to improve your trading performance.