We fear the ability to achieve what we set out to do, so we never try in the first place (failure from the start) or we simply give up along the way (failure midstream). Much has been made of the theoretical “fear of success” vs. the “fear of failure,” and frankly, I’ve experienced both kinds, plus some others for good measure. Understanding the different kinds of fear is an excellent way to identify which you struggle with the most.
Fear of Failur.. This is probably the most common. This is the reason that salespeople fail to make their cold calls, and it’s why shy people end up really lonely. If you struggle with a fear of failure, you’re in good company. Fear of failure also includes instances when we just stop trading because we’re afraid we’ve lost so much of our account value that the only way to stop losing is to not trade at all.
Fear of Success. This sounds a bit silly at first, but many of us live with a fear of what will happen if we succeed. One of the saddest moments in my life was when I realized that a person I love dearly was so afraid of having to accept success that she decided to sabotage her own victories. People who fight this fear often are worried that if they are successful, the world will expect more of them than they are able to provide.
Fear of the Unknown. Most of us have felt this when we get lost while driving. Once in high school, I summoned the courage to beat back fear of failure: I asked a beautiful, smart girl on a date. She accepted. On the night of the date, I was so afraid of what to do on a date that I never even picked her up. When I saw her at school, I avoided her. I never spoke another word to her. Enough said about that experience.
When you’re afraid of what you don’t know, you’re more inclined to almost implement a new trading strategy. For instance, you’ll open a live account and then not quite follow through on everything you learned from the demo account experience. You’re afraid of what will happen if you just let the strategy fly with real money. That’s a good way to lose your live account.
There are many other examples of types of fears that we encounter. Succumbing to these fears gives one a sense of comfort. A salesperson, when he decides to not make a difficult cold call, feels more comfortable. Of course, he has succumbed to an enemy of discipline. In this way, each of us trades the chance for success each time we succumb to these fears.
Giving into these fears doesn’t make you more comfortable in the long term, however. My first job after law school was my big introduction to the world of finance, as I worked as a headhunter for top-level financial professionals. I did very well at that job because every morning when I walked in the door to work, I picked up the phone immediately and started making as many cold calls as I could. Every evening I made a list of cold calls to make the next day. I was uncomfortable when I made the calls. I felt very comfortable, however, when I closed deals because I had been willing to make those calls. On the other hand, in 9 months of work I watched the four people that sat around me fail miserably – they didn’t make as many calls, and they eventually felt far less comfortable.
Enemy 2: Distraction.
Distraction is the experience of trading what you should be thinking about for what is more convenient or urgent. It’s when you daydream when you ought to be driving (this is bad); it’s not when you daydream while you’re taking a Geometry test (this is completely natural and harmless).
Distraction is not bad all the time. I think allowing ourselves to become distracted on a regular basis has some merit; in fact, I find a lot of comfort in allowing myself to play a couple of rounds of a video game in the middle of the workday. Letting yourself go for a while can be healthy.
But it can also be destructive.
After the fifth grade – and the year that I had decided, once and for all (at age 10) that I was going to be a writer – I promptly forgot everything that I had decided. I entered the sixth grade, I started having to switch classes. I discovered that girls existed (although they did a fine job of ignoring my existence for the next, well, forever). Instead of writing, which I still loved, I let the talent slip. For at least two more years I didn’t pick up a pen and paper.
Enemy 3: Delay.
They say that necessity is the mother of invention – that when we’re under pressure to produce, we become more innovative. I propose that procrastination is the mother of regression.
As I’ve toured the country and spoken to traders, I’ve been told that procrastination is just a system that works well for some people. I’ve been told that sometimes, you just can’t think clearly about a project until the very last minute. I accept that as valid. It’s happened to me many times. At the last minute I seem to have the mental resources to complete a project.
If that’s a valid point, then why would delay be an enemy of discipline?
Procrastination, or delay, is the act of avoiding what you know you must do. It doesn’t build character. It saps you of character. It might bring out a lot of creativity, but it robs you of precious time, and you subject yourself to unnecessary pressure.
I’ll put it as simply as possible: when you procrastinate, you might find a huge resource of energy to complete a project – but you don’t have any time to review what you’ve done. I think you and I are prone to do some of our best work under pressure. I also think that we’re sometimes prone to do some of our worst work under pressure.
Now, if you’re absolutely, positively, motivated to do your very best work at the last minute, then I suggest that you follow the advice of Jerry Hirschberg, the designer responsible for many of Nissan’s most innovative vehicles. He says that if you’re motivated and inspired by tight deadlines, then you should set preliminary deadlines. I think it’s a fantastic exercise, and we’ll talk more about it later.
This applies to trading, too. There is a pervasive belief amongst traders (both equity and forex traders) that time of day matters little when trading – that you can make profits any time of the day. So, for U.S.-based traders, they decide that they don’t have to get up in the middle of the night to catch the European and Asian markets. Well, this is a form of procrastination: trading sleep for profits. If you want to be successful at trading on the foreign exchange, you have to be willing to consistently get up and get going at the same time every day.
Worse yet, many traders I meet with have lost substantial amounts of money by staying in a losing trade for too long – procrastinating the exit. This can drain your account faster than anything. It can tear you to pieces, too. If you have this problem, or the opposite (exiting too quickly), increased discipline will give you everything you need in order to make better, more profitable trading decisions.
Enemy 4: Despair.
There simply doesn’t exist a more pernicious enemy to discipline. We are all susceptible to some form of despair, and we’ve all battled it. Some of us have been more successful than others. But when it gets hold of us, it saps of us of our discipline faster than anything else.
Here’s a letter I received that makes the point better than I ever could:
I always dreaded coming home, but on the day that I received my 12th grade report card I was more fearful than ever. My dad expected the very best in me – this was the same man who resolved his problems with my mother by yelling, by breaking furniture, and by threatening to do things much worse.
I carried in my hand three Cs and two As. I knew that if I revealed the report card to my father, that anything was bound to happen. But I also knew that if I didn’t show it to him, he was going to find out about it anyway.
I thought about running away from home that day.
Instead, I showed him the report card.
And he beat me. I let him hit me. He chased me down the steps of our house (no one else was home) and he told me that I was stupid. He said a lot of other things, but when he told me I was stupid, well, that hurt more than anything else. He chased me down the stairs and beat me with his boot.
Read More : The Four Enemies Of Discipline
