Don't Get Stuck

When your money is on the line, it's natural to want to make every effort to protect yourself. You want to account for every possible adverse event that may thwart your trading plan, but you don't want to overdo it. Some traders have difficulty making a distinction between sound decision making and an obsessive need for perfection. Rather than acting decisively, they have an insatiable need to seek out certainty and security. One of the ways they seek out certainty is to make up superstitious rules to follow. They continuously search for rules that identify the "right" and "perfect" way to trade, but many times, there are no infallible rules that guarantee success. Traders must live with uncertainty and accept the fact that there are times when you have to go with your gut instinct and see what happens. But the obsessive-compulsive trader is overly concerned with trading perfectly. It is as if a little voice in the back of their mind nags them, and threatens to punishment them when the "right" rules are not identified and followed unconditionally. They may waste time trying to find the "right" indicator or the "right" trade setup. And even when they see it, they have a strong need to want everything to be perfect. Because if they don't, they are certain that they will pay for it. Perfectionism can be a curse when trading the markets, however. It's essential that you strive for high standards, but not get so obsessive with perfectionism that you get stuck.

"The harder you strive for perfectionism, the worse your disappointment will become," according to Dr. David Burns (1980). Perfectionism has more disadvantages than advantages. When you strive for overly exacting standards, you feel so uptight and nervous that you actually aren't very productive. You are unable to take risks because you fear failure. Trading is a profession where you must take risks and explore new market opportunities. If you continuously strive for perfectionism, you'll never feel satisfied. You'll always think, "I could have done better."

If you have a problem with perfectionism, Dr. Burns suggests a simple exercise: Lower your standards. Rather than try to trade to perfection, feel what it is like to be average and see what happens. Rather than search for the ideal setup, why not just find a profitable setup? What happens when you just make an average trade? Sure you won't make as much profit, but you might feel better. You will probably feel relaxed. Compare what it feels like to strive for high standards, moderate standards, and low standards. You may find that merely going for moderate standards makes you feel better. You may also find that you put on more trades, and achieve greater levels of profitability. Trading can be a matter of probabilities. To get the law of averages to work in your favor, you must make trade after trade. If you manage your risk, and put in a moderate effort, you can make enough trades to come out ahead. As long as the setups are reasonable, and you are using sound trading strategies, you can get the losing trades "out of the way" and focus on the winning trades. But if you are an extreme perfectionist, you'll always be on edge and unable to make trades. And because you are so concerned with overly high standards, you may never discover and take advantage of new, profitable market opportunities. By easing up, you'll feel more relaxed and creative. Ironically, you may end up more profitable by daring to be average, instead of striving for absolute perfection. So lower your standards a little. You may be surprised at what you find.