Channeling the Harsh Realities of Trading Into a Psychological Edge

Key Takeaways
• The world of sports psychology can often offer great insights that can be used to improve your
trading. An excellent book that does just this is “Golf is Not A Game of Perfect” by Bob Rotella. It
talks about how at the top levels of golf, everyone can hit the ball well and everyone is very skilled,
but what separates the great from the good is their ability to handle adversity and all of the
imperfections of the game.

• When we transfer these insights over to the world of trading, we realize that trading is not a game
of perfect. From one side, this means that it is futile to seek perfect entries, exits, and numerical
values for any indicators. There’s no perfection possible; there will always be ambiguity; and we
should strive simply for close approximations so as not to become frustrated from expecting
unreachable perfection.

• The other side of this statement is that trading is a game that is won by those who can best
deal with frustration, disappointment, and adversity. Since trading has harsh realities full of
losses, missed opportunities, drawdowns, and unforeseen events, those who can best deal with
these things will perform the best. When things go right it’s easy to be disciplined. It’s when things
go wrong that our psychology is truly tested.

• Most traders are simply coping with the harsh realities of trading as best they can. But the key to
having great psychology and outperforming, is to embrace the realities of trading and make it
your priority, challenge, and goal, to handle adversity and frustration well. Instead of coping
with it, you want to THRIVE on it. You want to embrace it and make it your very purpose. Your
purpose is no longer to make money. That will take care of itself when you do the right things.
Rather, your purpose is to thrive on adversity and handle all the imperfections and frustrations so
well that you will be able to do the right things consistently.

• And you do this by proactively preparing for it. You expect adversity during the trading day, and
you prepare your mind for it by actually looking forward to it. This seems strange and
unnatural, but no natural way of thinking will make you a great trader. And you can look forward to
adversity simply because you know that your ability to handle it well is your purpose, and you want
to fulfill your purpose. And you know that fulfilling this purpose is what will separate you from most
traders. When you think about it in this way, it’s not so strange anymore to actually look forward to
the chance to prove yourself and do the very things that will bring about great performance.
Losses, missed opportunities, drawdowns, and unforeseen events are no longer looked at some
unfortunate incidents that are happening to you, but rather as your biggest source of edge,
because you know that handling them well is what will separate you from the pack. They’re going
to happen whether you like it or not, so instead of cursing them decide to embrace and thrive on
them.

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