A LOT OF YOU MAY WONDER AS TO WHAT IS THE BIG RELATIONSHIP BETWEEN YOUR PERSONAL LIFE AND TRADING PERFORMANCE. AFTER ALL, ARE WE AS TRADERS NOT SUPPOSED TO KEEP OUR PERSONAL AND PROFESSIONAL LIVES SEPARATE? THAT IS EASIER SAID THAN DONE. IN FACT, YOUR PERSONAL LIVES AND YOUR PERSONAL CHALLENGES DO TEND TO HAVE A PROFOUND IMAPCT ON YOUR TRADING PERFORMANCE. REMEMBER, TRADING IS AS MUCH A MENTAL GAME; IN FACT A LOT MORE COMPARED TO A GAME OF SKILL. AND, YOU ARE UNLIKELY TO WIN A MENTAL GAME WITHOUT PEACE AND POISE.
GETTING THE BETTER OF THE MENTAL GAME
You must have surely heard of trading rules like, “Don’t panic”, “Look before you leap into trades”, etc. What do all these point towards? Essentially, they talk about trading as a state of mind; something that is contingent on how clearly you are able to think and how focused you are able to remain. Personal problems could come in a variety of ways. It could range from health related issues, to anxiety over uncertain events, to a failed marriage and an impending divorce. All these are personal risks that could gradually spill over into your trading performance. There is a certain irony in going through a tough period personally. The anxiety and the uncertainty tend to leave you confused and you end up making sub-optimal trading decisions in trying times. Ironically, this uncertainty is exactly the time when you actually need to maintain your equanimity, poise and balance.
HOW YOUR PERSONAL LIFE SPILLS OVER INTO YOUR TRADING
As much as we may talk about creating silos between our personal lives and our professional lives, it is highly impractical to expect that happen in reality. Irrespective of whether you are trader, a sportsman or a stage performer; your personal life does spill over into your professional performance. Here are five ways in which it happens. Firstly, it forces you to make decisions in the wrong state of mind. This is especially dangerous when you need to make critical trading decisions. Secondly, personal problems tend to de-focus you from your core trading activity and that is not great news. Thirdly, you lose the ability to criticality to evaluate the opportunities in the market with an unbiased approach. Fourthly, trading is largely a game of concentration as you are talking about multiple variables, understanding the combined impact, protecting your capital, enhancing your returns etc. A clear mind is a must. Lastly, many personal problems also have large financial implications, especially divorces and medical challenges can be quite taxing. That also can substantially impact your trading decisions.
“To be a good and successful trader, make your life a pursuit a happiness and not a pursuit of pain. Trading success will follow” – Paul Tudor Jones
6 WAYS TO PUT YOUR PERSONAL LIFE IN ORDER FIRST AND FOREMOST
- The great Jesse Livermore once said that there is more money made in trading by just sitting than by jumping in. If you feel that your personal life does not provide you the mental condition to trade smartly, just put off your trading venture. It is always better to delay your trading till you are fully prepared mentally rather than to jump in and then realize your folly along the way. No harm in sitting out for some more time!
- Don’t let your personal problems fester. Personal challenges are part and parcel of your professional life. You can take them in your stride. The big challenge comes when you let these problems fester. Try to take on personal problems head-on. That is the only way to do it by facing up to the reality. The moment you let your personal problems to fester, you are actually creating the recipe for a gradual de-focusing of your mind from your trading activity. That is something that must be avoided!
- Make provisions for the financial costs. Whether it is a divorce, a medical emergency, personal health issues etc. The best answer to worry is insurance. Today, adequate insurance can address most of your worries pertaining to health and life. Why not make the best use of it. When you take insurance, it is the peace of mind which it offers, that is the biggest takeaway.
- Recognize that there is a personal problem rather than trying to live in self-denial. The best way to address a personal problem is to accept its existence. Otherwise, your personal problems will continue to impact your trading performance and you may not even realize it as you are still living in a state of self-denial.
- Celebrate your small victories in trading. That is the best way to tide over your personal issues and ensure that it does not impact your trading. When you make a good trade or outdo your expectations, treat yourself along with close friends. The easiest way to let personal problems fester is to lock yourself up. That impacts your trading performance!
- Get professional help if you find it hard to manage your personal challenges. There is nothing to really be wary about seeking professional counselling help. You may actually get a fresh perspective which may normally get lost in the noise. Also the professional counsellor will be able to pinpoint the specific aspects of your personal life challenges that are impacting your trading performance. That is worth its weight in gold!
DON’T UNDERESTIMATE THE IMPACT OF PERSONAL CHALLENGES
That is the bottom-line. Don’t dismiss personal problems as minor issues and ignore them. That is when they start to fester and impact your trading performance. A better way is to tackle them head on, accept the reality and seek professional help if required.