Why Having a Mission Statement Behind Your Trading is so Critical to Your Success as a Trader I

You probably have some specific goals in your trading. And if you don't, then I'd suggest that you develop some. But if you do, you might need some discipline to help you meet those goals. As a result, I thought I'd focus this week's psychology tip around helping you to better keep meet your goal. Here are several ideas that may help you to continue your meeting your goal throughout the entire year.

As a trader, you need a mission statement. I've recently spent several days doing creative brainstorming on how to take my company to the next level. Part of that process involved determining our mission statement. I've always known what its mission was, but I've never put it down on paper. Nor have I thought about our expansion with respect to that mission. It's a critical process and it's one you should do with your trading as well. It also fits with the overall idea that you must first understand who you are and who you want to be before you develop a business because your business will develop out of your statement about who you want to be.

In the brainstorming process, I learned a technique that works in running any successful businesses. And when I thought about it, it was obvious that it was a technique that it very applicable to trading success. However, the first part of it is to create a mission statement for your trading business. Here are a few examples of what that mission statement could be for you.

• Help others to prosperity by becoming a highly successful money management firm.
• Build a hedge fund with at least $250 million under management.
• Produce an infinite wealth stream for me within five years.
• Be a vehicle for me to grow money-wise and as a person.
• Fund a charitable foundation.

Second, you need to evaluate new projects with respect to the mission statement. When you have such a mission statement, you can constantly evaluate new projects with respect to that statement by asking: Is my objective in this project critical to the mission of the company? People are always asking me to do this project or that project. For example, one trader, who was a sound engineer by training, said that when he came into town, we could start working on developing specific meditations for traders. And while he idea is a great one, it is very low on my list of mission-critical tasks that need to be done in the near future. As a result, it probably won't happen. But without such a process in place, I'd probably spend most of my time doing such non-critical tasks and thus not be able to accomplish what is important for the company to meet its goals.

Most traders just treat their trading business like a hobby. They don't treat it seriously. For example, some are constantly looking for new or better systems. Some trade discretionarily. Still others will manage the money of a few friends or relatives without thinking of the consequences. These types of objectives need to be evaluated with respect to your trading mission statement to see how they fit.

Let's make the assumption that you have a mission statement for your trading business to produce an infinite wealth stream for yourself within five years. Infinite wealth basically means that if you stopped working, including working at your trading business, you would have enough passive income (i.e., your money working for you) to continue your current lifestyle. You could accomplish this two ways: First, you could accumulate enough money so that if you invested it in t-bills or some other form of passive investment (i.e., I'd recommend a good hedge fund over t-bills because you can get a much better rate of return), you'd be infinitely wealthy. Second, you could automate your systems for trading so much that you could hire someone else to execute the trades for you.

Now let's take a look at some of the objectives we introduced to see if they fit within this mission statement:

"Let's try this new system to see if it works better." If you have a system already that can help you achieve this goal, then you are probably just wasting time. For example, I've know people with systems that can easily net them 100% or more each year who constantly jump on the next new system that comes along. On the other hand, if you don't have a system that will meet your mission, then you need to evaluate both your current system and the new one in terms of R-multiples, expectancy, opportunity, and the concepts involved so see if you have something that logically makes sense. For example, if you assume that you will risk 1% per trade, then you only have to net about 8R per month to make 100% per year. Think about it. In most cases, someone else's new system will not help you because they have not evaluated it in these terms. It's usually just a slight change in your thinking that will net you great rates of returns. Thus, looking at a new system is probably a total waste of time, given this mission statement.

"I want to make discretionary trades because I think I can outperform a mechanical system." This objective might fit within the mission of infinite wealth if your plan is to accumulate a certain amount of money and then invest it into various forms of passive income to produce your infinite wealth. However, if you plan to produce infinite wealth through your own trading, then it does not fit within the objectives because you will always be tied to your trading—you will always have to work if you make discretionary trades. In the second case, you should abandon the idea of discretionary trading.

"I'll manage money for a few friends and relatives." This objective could be a total distraction for your mission or it could be a means to an end, depending upon how you treat the aspect of managing money. For example, are you going to do it for free or are you going to charge a fee. If you plan to charge a fee, then it could help you meet some monetary target. However, are you prepared to deal with the psychology of the people for whom you are managing money? Do you have back office accounting procedures in place? Is the effort to deal with accounting and your clients worth the distraction to your trading? If the answer to any of these questions is "no," then this is not a mission critical objective and should be abandoned on the spot.

Discipline in Meeting Your Goals

You probably have some specific goals in your trading. And if you don't, then I'd suggest that you develop some. But if you do, you might need some discipline to help you meet those goals. As a result, I thought I'd focus this week's psychology tip around helping you to better keep meet your goal. Here are several ideas that may help you to continue your meeting your goal throughout the entire year.

1. Divide a General Goal into Specific Steps.

Most trading goals are usually huge. As a result, I'd suggest that you divide that goal into specific steps. It's much easier to accomplish small steps that you can imagine doing for the rest of the year (or the rest of your life) than it is to fulfill a giant goal that would be huge. Start with something that is easy and make sure you can accomplish it.

Thus, a resolution to make 50% this year in your account could be broken into a number of steps such as (a) look at ideas that might help improve your trading; (b) test each idea and see how much improvement you will get from each one; (c) implement the best idea following the ten tasks of trading (which is part of the Peak Performance Course).. In fact, your resolution might simply be to follow the ten tasks of trading each day and notice what that means for you.

2. Make Promises to Yourself and Include the Reason for the Promise in the Resolution.

Suppose your promise to yourself is to do a daily mental rehearsal. The way you might phrase that is to promise yourself to do a daily mental rehearsal in order to plan ways to increase your discipline. The second statement is much easier for you to follow through with on a regular basis. Also make sure that the promise you set is something you want to do and not something someone else wants you to do. If I tell you that you must do a daily mental rehearsal, you are not likely to do it. On the other hand, if you decide how important this kind of rehearsal will be for your well being and for your trading, then you are much more likely to do it.

3. Determine Your Triggers.

If you are setting a resolution, it is probably because you want to do something that you have not been able to do. There is probably a reason for your inability to do it - certain triggers that set you off. What are those triggers? Are there environmental triggers, such as the presence of certain people or certain conditions? Are there certain internal feelings that set you off? What are those feelings and when do they occur?

Once you determine what your triggers are, you are much more prepared for them. I strongly recommend doing extensive mental rehearsal around the issue of dealing with those triggers. Use the mental state exercises in book four of the course and rehearse dealing with those triggers so that you have more discipline in situations in which you will need it. Awareness is a big part of keeping your resolutions.

4. Look at the Positive Side of Your New Goal.

When we get into the act of keeping our resolutions, we sometimes feel as if we are denying ourselves. Instead, look at the positive side of what we are accomplishing. Turn on something positive. For example, if you are trying to stop taking trades that have nothing to do with your system, then concentrate on the joy of following yours system and making money. Concentrate on the joy of the new behavior instead of the negative that you are trying to overcome. You'll find that moving forward is much easier.

5. Keep a Diary of Whatever It is You Are Working On.

A lot of what I've suggested for you involves mental awareness. Most people are unaware of the big picture that's involved in accomplishing some goal. However, when you keep a diary that lists your accomplishments and your thoughts, you'll find it much easier to understand what is going on inside of you.

Listing your accomplishments is also a form of reward. When you start focusing on your accomplishments - especially if you've followed step one and have set small steps toward your total goal - you'll feel great about what you achieved and where you are going.

6. Make It Okay to Give In Occasionally.

If you are attempting to make a major change, you may have occasional setbacks. If you view that setback as failure, then the resolution is over. You can give yourself a bad name. On the other hand, if you make it okay to have occasional setbacks, then you can keep going - it's just a setback.

Realize that your setback is an opportunity to learn something about yourself. What happened? What were your thoughts? Write down all of that information in your diary and determine what you can learn from that. You might discover a new trigger and then you can plan for how to get around those triggers. In any case, forgive yourself for the setback and then move on.

Quite often setbacks are due to inadequate preparation. Perhaps you didn't do enough research with respect to your trading. Perhaps more mental rehearsal was needed. Perhaps you discovered something about your thought process that you didn't expect, but can now use in your preparation. What additional preparation can you do to make sure that you move ahead toward generally keeping your resolution?

7. Reward Yourself Throughout the Process.

You need to acknowledge accomplishments early in the process. The first few days will probably be the hardest. Consequently, when you get through those days and accomplish your goals, find a reward. Make the process fun through a system of rewards.

Do A Thorough Self-Evaluation Before You Start Trading

I'd like to center this tip around some concepts that you must master as a trader. First, you need a strong initial evaluation of yourself and what you needed to do to improve your own performance. Let's look at it this way. Suppose you are in the middle of the desert. There are no roads, but you do have a map indicating where you are to go. However, what's missing is some indication of where you are now. And remember that you are in the middle of the desert. Bottom line is that how can you get where you want to go, when you don't know where you are. Similarly, how can you work on yourself as a trader, if you don't know much about yourself. And that's the situation most people face. They think they know themselves well, but they really don't know anything about themselves.

Secondly, if you want something, you must practice "being" it. Being, in other words, comes before doing or having. In my opinion, most people want to trade well, but their primary concern is in how to do it and in having the success. You must practice being a successful trader first. From that state you will get information about what to do and that will produce what you want to have. Many people also believe that they must struggle and work hard to get ahead. This again is the antithesis of the "being" successful statement. If you believe you must struggle to become successful, then you probably will struggle a lot.

Third, many traders have what I call the perfectionism-complexity complex. In other words, what you have is never quite good enough. It can always be improved in some way. There is always another exit or another entry that will make it better. What this means is that you will always be struggling with new ideas. There is always something more to test. Consequently, you never gets to the real issue of trading and just being a trader, doing trading. Instead, there is always one more thing to test - always one more thing to do, and never enough time to just relax to trade. Give up complexity and move toward simplicity.

The best traders are always those who practice simplicity. For example, at a recent seminar, one trader remarked, "I just buy what's going up. If it goes against me, I get out immediately. If I goes in my favor, I let it run. I've made a lot of money doing that." That really is simplicity, but you can only do that if your mind and spirit are pure and you are really paying attention to what the market is doing. It's the purity of spirit that makes a big difference. This particular trader always asks inside for guidance before beginning the trade day. I tend to believe that makes a big difference.

Fourth, many traders (and people in general) suffer from low self-esteem If you don't believe you are worthwhile, then that belief will tend to predominant everything else. You might have a belief that if I can just make money trading, then I'll feel better about myself. But that belief is really composed of two beliefs, low self-esteem and the belief that low-self esteem will be "fixed" by trading success. Unfortunately, that doesn't seem to be the case. The low-self-esteem always seem to predominant and produce behaviors to justify itself. Unless, of course, you are aware of it and do the kind of self-work that will improve your self-esteem. If you think that life is a struggle, it's probably due to your low self-esteem.

They key to all of these issues is to really understand yourself and realize that you are at the root cause of your results in trading. When you make that decision, then you have started on the route to success.

Do A Thorough Self-Evaluation Before You Start Trading

I'd like to center this tip around some concepts that you must master as a trader. First, you need a strong initial evaluation of yourself and what you needed to do to improve your own performance. Let's look at it this way. Suppose you are in the middle of the desert. There are no roads, but you do have a map indicating where you are to go. However, what's missing is some indication of where you are now. And remember that you are in the middle of the desert. Bottom line is that how can you get where you want to go, when you don't know where you are. Similarly, how can you work on yourself as a trader, if you don't know much about yourself. And that's the situation most people face. They think they know themselves well, but they really don't know anything about themselves.

Secondly, if you want something, you must practice "being" it. Being, in other words, comes before doing or having. In my opinion, most people want to trade well, but their primary concern is in how to do it and in having the success. You must practice being a successful trader first. From that state you will get information about what to do and that will produce what you want to have. Many people also believe that they must struggle and work hard to get ahead. This again is the antithesis of the "being" successful statement. If you believe you must struggle to become successful, then you probably will struggle a lot.

Third, many traders have what I call the perfectionism-complexity complex. In other words, what you have is never quite good enough. It can always be improved in some way. There is always another exit or another entry that will make it better. What this means is that you will always be struggling with new ideas. There is always something more to test. Consequently, you never gets to the real issue of trading and just being a trader, doing trading. Instead, there is always one more thing to test - always one more thing to do, and never enough time to just relax to trade. Give up complexity and move toward simplicity.

The best traders are always those who practice simplicity. For example, at a recent seminar, one trader remarked, "I just buy what's going up. If it goes against me, I get out immediately. If I goes in my favor, I let it run. I've made a lot of money doing that." That really is simplicity, but you can only do that if your mind and spirit are pure and you are really paying attention to what the market is doing. It's the purity of spirit that makes a big difference. This particular trader always asks inside for guidance before beginning the trade day. I tend to believe that makes a big difference.

Fourth, many traders (and people in general) suffer from low self-esteem If you don't believe you are worthwhile, then that belief will tend to predominant everything else. You might have a belief that if I can just make money trading, then I'll feel better about myself. But that belief is really composed of two beliefs, low self-esteem and the belief that low-self esteem will be "fixed" by trading success. Unfortunately, that doesn't seem to be the case. The low-self-esteem always seem to predominant and produce behaviors to justify itself. Unless, of course, you are aware of it and do the kind of self-work that will improve your self-esteem. If you think that life is a struggle, it's probably due to your low self-esteem.

They key to all of these issues is to really understand yourself and realize that you are at the root cause of your results in trading. When you make that decision, then you have started on the route to success.