Why traders fail (and how to get past it)

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Failure happens. It isn’t fun, and it usually happens at just about the worst time, but it’s a fact of life.

Especially for traders. We fail all the time, and we all have excuses for it. Our research was wrong, our theory was off the mark, something happened outside our control… The list goes on and on.

If you are not familiar with the book “Extreme Ownership” by Jocko Willink, you should read it. There’s a story he tells in there about when they were in this one part of Ramadi, Iraq, and a bunch of Navy SEALs and U.S. Marines were clearing out the city of terrorists when something went terribly wrong. It was a friendly fire situation and Jocko ended up having to testify in front of the committee that was investigating the situation afterward.

He knew that there were a lot of players in the situation and that a lot of things went wrong. So he stands in front of his commanding officer, looks around the room and asks his team: who’s fault was it? The radio operator stands up and says, “it was my fault for not communicating accurately enough.” And then another soldier stands up and says, “it was my fault because when I went into the building I didn’t do X, Y, and Z like I should have.”

After he goes all around the room and every member of the team takes the blame he says, “you’re all wrong. It was my fault. I was in charge and it was my fault.”

When you take the perspective that everything is your fault and everything is your responsibility, when you even take the blame for it, that’s when you grow up. As a trader and a person.

When things go wrong for me in my trades it’s not just my responsibility. The blame is on me. Fool me once, the blame is on me. Fool me twice, the blame is still on me.

Even if you know deep down in your heart that something isn’t your fault, you need to make it your fault. Make it your responsibility. Because, in the markets, no one is going to come along and bail you out. That’s why we all do this, right? We want that autonomy.

Here’s how I take control of my own trades:

I trade like a grownup. I cut off trades that aren’t working. I take control of losing trades and end them when I have to. None of this is fun, but this is what good traders do. They don’t let failure sneak up on them; they take action when it’s needed.

I let my winners run. At the same time, when I have a good trade on my hands I let it run and sometimes even add to the position. The fear of loss needs to be gone in order to overcome the potential for failure as a trader.

I give credit. Sure, when things go well that’s technically your responsibility, but I like to give credit to other people when things go well. It’s about living a life of humility. When things go bad, you take responsibility and when things go well, you share the credit.

That’s how to turn failure into success that lasts.


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