- 2000: Volume 9, No. 1 The Proud Trader

Has your pride, the very quality that has inspired you to reach farther, try harder, and refuse to accept mediocrity, nearly cost you your business? If you are like Martin, a trader with a once solid career, you serve both as the master and the slave of your pride. When we fail to consciously choose which of these relationships we are going to have with our pride, we can place our trading at great risk.

The Call Before the Fall

For the past decade, Martin had been trading exceptionally well. After a long preparation period that was devoted to the development and testing of his system, Martin moved into trading in a smooth and successful transition from his former career as a top-level computer programmer. While learning the business of trading, he discovered that he possessed qualities such as patience, self-discipline, courage, and the ability to control his fear and greed that he never knew he had.

The result of Martin's growth as a trader was the creation of a level of comfort for himself and his family that brought him pleasure and pride. He moved his family into an enormous house in a very exclusive neighborhood. His wife joined the most select clubs and his children attended an expensive private school, took countless private lessons, and wore the designer-label clothing that brought them acceptance into even the most popular circles.

The material symbols of success were nice, but Martin had established a growing reputation in his ever-widening circle of influence as a trader with a nearly perfect track record of significant profits year after year. He was beginning to experience the heady sensation of being recognized and deferred to when he attended conferences and seminars. His opinion was sought and his ego was massaged. Life was good and Martin was a happy man.

Then the Trouble Began

As Martin began to enjoy more of the perquisites of his success, he spent less time doing his homework. In fact, his focus on trading was continually diluted by his undivided attention to his reputation. In the midst of this, he made a serious mistake in his trading and sustained a significant loss. Emotionally unprepared to handle loss, Martin's reaction was one of shock and dismay. All of the genuine confidence that he had exuded for years seemed to suddenly vanish. Rather than feeling confident, Martin was scared while pretending to still feel confident. This unsettled emotional state eroded his trading and he experienced a string of losses. Suddenly, he was in great danger of ending the year with a significant loss. In order to return to sound financial footing, he and his family would have to do some temporary belt-tightening, which coincidentally would occur at the holidays, when they tended to shower themselves with expensive gifts, trips, and entertainment.

These year-end losses would also mean that he was off of his perch as the trader with something to crow about. Now that his trading record was becoming open to comment, he would have to admit publicly that he had done badly.

Martin was having a problem with his pride. He had begun to believe in his own invulnerability. He had also begun to feel that the privileges and comforts that he supplied to his family were so important to their sense of self that he could not withdraw them without losing face. The fear that he was feeling was new for Martin. He had never faced the prospect of having to swallow his pride and take a step backward, even temporarily.

Stepping Backward

But, stepping backward was exactly what Martin did. Instead of recouping his losses and rebuilding, Martin maintained the illusion that everything was going well. He dug in deeper financially to spare his wife and children the embarrassment of doing things on the cheap. The truth of the matter was that Martin could not face the embarrassment for himself.

As Martin took money from savings and then resorted to using his good credit, he began to worry. He would awaken in the middle of the night with anxiety attacks that would leave him shaken. The following day, he would be off his feed and his trading would suffer. As a result, he made more and more mistakes. Facing catastrophe, he fell apart. His wife, Anne, was so absorbed in her social activities and in chauffeuring their children from one activity to another that she had failed to notice the change in Martin's outgoing nature. When Martin collapsed emotionally, she was shocked and frightened, but she was able to take charge and insist that he seek help.

That was when Martin called.

Pride and Prejudice

Most people cannot reach high levels of personal achievement without high self-values. The self-confidence and self-esteem that give impetus to our goals are based, in large part, upon our pride in what we are and what we have accomplished in the past. Very few individuals are capable of attaining their goals out of a sense of shame or failure. So, pride in what is worthy in ourselves is a valuable asset.

Pride also allows us to live healthier lives. We take care of ourselves because we take pride in our appearance and strength. Our resulting good health, in turn, allows us to achieve more and reinforces our sense of pride. This self-reinforcing system spirals upward, making our lives better and better.

If this form of pride is so wholesome and supportive, how does it become such a destructive force for traders?

The process of pride becoming a liability for a trader rather than an asset is usually a very slow and innocent one. As a trader builds his business, he devotes enormous energy and time to the perfection of his craft. Eventually, if his commitment is strong enough, he will begin to reap the rewards of his efforts. If he began the journey with a sense of self-worth, his pride justifiably will increase through his awareness of the enormous difficulties that he faced and the skills that it took to overcome them. He will take further pride in the visible signs of his success. He begins to hear the voices of others telling him how smart, how successful, and how worthy he is. At this point, our trader will begin to believe that he is special.

The danger is that a successful trader will begin to believe what he hears. If he internalizes the voices around him, like Martin, he will tell himself that he is invulnerable and deserves to succeed. His self-esteem, once linked to his positive qualities of character and the goals that he has achieved is now linked to his sense of superiority and entitlement from his feeling of invulnerability. This transformation is so subtle that the trader is unaware of it until he makes a misstep and must deal with the consequences. Then, the great danger is that he cannot or will not admit that he might be wrong and stays on a path that is completely wrong. He continues the downward spiral because his pride will not allow him to admit that he is imperfect. Disbelief is followed by anger. How could this be happening to me?

The High and the Mighty

The process of pride overtaking talent and success has strong parallels to problems that many high-profile performers and athletes develop when they acquire a large public following and are paid vast sums of money. The pride-driven misbehavior that occurs in these pampered public figures is played out for all to see in the newspapers and on television magazine shows. Instances of this problem abound ranging from the actor who insists upon total artistic control over an expensive film project that bombs to the over-paid athlete who assaults the umpire for making a call against him. The result of pride-driven self-destructive behavior in celebrities is often the loss of the public adoration that sustains their success. Suddenly, the air rushes out of the balloon and they land with a painful thump. At this point, actions coupled with a little luck determine whether they are able to rebuild their healthy sense of pride and make a chastened comeback to public acceptance.

Putting the Air Back in the Balloon

With luck, a trader whose career takes a nosedive due to excessive pride is also able to make a comeback. Actually, luck has almost nothing to do with it. In Martin's case, he needed to take the plunge and admit to a supportive listener what had happened. The more he detailed the chain of events, the more relief he began to feel and the more responsibility he was able to take for what had occurred. Eventually, he began to put the entire situation into perspective:

• He was not his reputation, but a human being.
• He did not have to be perfect .
• His family would and could be happy with less.
• His value as a human being was not a function of his bottom line.
• He was a valuable, capable, and worthy human being.
• It was OK to lose and to make mistakes because these experiences were opportunities tolearn and grow.
• All traders, no matter how great they are, have losses and draw-downs.

Martin had to undo the damage that his string of losses had inflicted to his confidence. Left alone, these feelings will continue to sabotage his trading results and he will be unable to trade profitably. Once he was able to overcome his negative associations with trading, Martin began to focus on trading instead of the distracting emotions and thoughts that had plagued him. Strangely, Martin announced that he was feeling more proud of himself than he had ever felt before. But this time, he was aware of the flip side of pride and was able to guard against the feelings of invulnerability.

Conclusion

It is not enough to be proud of your trading skills and accomplishments. You must be able to keep that pride in balance with the awareness that losses do occur and have no relation to your worthiness. Healthy pride in your self-discipline, courage, insights, hard work, and accomplishments that result will keep you on the road. This pride keeps the focus on the process and not on the end result. And finally, it is important to listen to your own inner voice instead of the voices that come to you from the outside. Too often they come your way with an agenda that is not one that you would choose for yourself.