Too many people in the world hold the belief that they don’t have control over what happens in their own life. The majority of the world believes that they are a victim of circumstances out of their control. Negative events are always someone and something else’s fault. They live their lives justifying being in a state of inaction due to fear of failure and risk.
There’s always some excuse about why they never started that business or trading stocks, why they never were a professional athlete, ect, ect. Its always because they got unlucky or someone else’s fault. Most people are risk-averse in their life to avoid the feeling of failure. Accountability is tough in real life, but even harder in trading.
But when trading stocks, the risk is unavoidable. Besides being profitable, accountability is the biggest difference between winning and losing traders. If you don’t know how to maintain successful accountability in trading and in your life, you will NEVER achieve the highest levels of success in any area of your life.
External Locus of Control
Successful accountability begins with having an internal locus of control. This means that you believe the results and events that happen in your life are the results of what you chose to do and not do. This mindset is quite rare, and you will more often see the people with the opposite mindset: An external locus of control.
These statements are typical of most people with an external locus of control: “The system is rigged.” “I was born in a bad neighborhood.” “The economic conditions aren’t ideal now.” “Someone’s already doing it.” “My boss won’t let me.” “Now is not the right time.” “I’m just unlucky.”
Internal Locus of Control
Do you see what all of these statements have in common? They justify being in a state of inaction by blaming external circumstances. This takes the blame off themselves for not achieving a goal or dream they had. There is no doubt that socioeconomic and other factors out of your control can make it more difficult to find success. But I guarantee I can find an example of anyone throughout history that came from a similar or more difficult situation than you and still managed to find massive success in some area of their life.
If you have an internal locus of control you can achieve anything you want in life because YOU know you are the only person in the world capable of making it happen. You believe that everything in your life is directly or indirectly the result of something that you did or did not do. With this mindset, you will find a way to change whatever you want in your life and find the actions needed to make it happen.
In the Context of Trading
If these statements sound familiar, you have an external locus of control: “The market is rigged.” “The market makers screwed me.” “The algos saw my stop order.” “The insiders tricked me.”
After working and interacting with thousands of traders every month, we’ve heard every excuse in the book about how a losing trade wasn’t your fault. Losing traders take responsibility for their winning trades, and blame others for their losers.
The best traders take responsibility for ALL of their trading outcomes, regardless of what happened. Having an internal locus of control is essential for finding trading success in the long run.
Biggest Obstacles For This Mindset: Fear of Failure
Failure in most societies is associated with parental disapproval, and as a result, we are taught from a young age to avoid it like the plague. The reason most people have an external locus of control is that they perceive failure to be a negative event. They won’t have to take responsibility for their failures and shortcomings if its someone or something else’s fault. As a result, these people have an easy way to avoid the feeling of failure.
Failure is actually the best thing that can happen you. You learn more from failure than you do from success. Unsuccessful and unproductive patterns of behavior usually aren’t changed until failure is achieved. Failure shows you exactly what not to do and pushes you to a better path towards success at whatever you are trying to achieve.
No Risk = No Reward
A general rule in life, that applies to trading and anything entrepreneurial: No risk, no reward. Any worthwhile result in life is achieved through risk. Becoming successful at trading means risking a lot of time and money into mastering the skillset. Launching a successful business involves the same type of risks.
Going to college and working a corporate job doesn’t involve much risk, but there is significantly less reward than stock trading or scaling a successful business. You see the end result of a successful person, but you rarely see or hear about the struggle and grind he or she had to go through to get there.
Society, especially the media, will often portray successful people as to where they are as the result of luck, knowing the right people, being in the right place in the right time, and born with exceptional talent. But the reality is that behind every success story is deliberate action and risk. Arnold Palmer put it perfectly: “The harder I practice, the luckier I get.”
Most people look at the end result but don’t acknowledge the process that it took to get there. When you look back at the end of your life when you were old, you will NEVER regret taking risks. The stories you always hear from people in their 70’s and 80’s are about some risk they took. Or more often, sadly, it will be lamenting risks they didn’t take.
Taking personal responsibility for all the results in life will allow you to find success in all areas of your life, not just trading and entrepreneurship. You will be able to take your health and fitness to new heights. You will improve your relationships with your loved ones. You will feel more satisfied with everything you accomplish because you know that YOU are the one who made it happen.
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