Understanding The Stock Market & Trading

The Stock Market and financial trading is probably one of the most misunderstood mechanisms on the planet. Anyone you ask will have an opinion about it, but very few actually understand what it is or how it all works.

This is a real shame, because the stock market and the various trading instruments that exist today have lowered the barrier of entry to this field monumentally in recent years, and the stock market is now accessible to pretty much everyone.

There are lots of misconceptions about the stock market, and the people who use it as a trading tool, and so it’s important that we understand the basics to be able to dispel the myths and sort the good advice from the bullshit.

So, what is the stock market?

Well, the stock market is basically a place where people trade emotions. I say that, because although the nuts and bolts of the stock market are the stocks, commodities and currency markets on one side, and the myriad of investors, retail traders and financial institutions on the other, the values of those stocks are largely based upon people’s collective emotions at any given moment. This is what you’re seeing when you seeing price action moving on the candle charts; it’s a visual representation of the mean average of the presiding emotional sentiment in the market at any given time.

So the components of the stock market are simply:

  1. Company Stocks/Shares (Apple, Facebook, Google etc.)
  2. Commodities (Gold, Silver, Platinum, Oil etc.)
  3. Currencies (FOREX – Foreign Exchange)
  4. Indices (these are collections of companies and so their value is the mean average of the value of all the companies within the index – an example would be the FTSE100, which is comprised of 100 of the top blue chip companies in the UK at any given point in time)
  5. ETF’s (Exchange Traded Funds – these are funds that are a marketable security tracking an index, a commodity, bonds or a basket of assets like an index fund)
  6. Investors (companies and individuals of various sophistications buying and selling stocks and shares on the market)
  7. Financial Institutions (banks, funds, brokers, and traders buying and selling on the stock market)
  8. Retail Traders (everyone else trading stocks and shares on the market)

Looks a little complicated doesn’t it? Well, it’s really not.

In order to simplify, look at it this way – it is the same as buying and selling food at a street market where prices fluctuate over time, only in the stock market this happens at a much faster rate.

For those who take the time and make the effort to understand the mechanics of it, there is the potential for rich rewards where every day your money works for you, rather than you working for money. Financial freedom is attainable for each and every one of us, all we have to do is take the time, and make the effort, to learn the rules of the game.

It doesn’t matter if the stock market is in the middle of a strong bullish rally, or a crashing bearish descent – when you know the rules, you can make money either way.

Ever since I started learning about trading the stock market and investing I was confused as to why more people didn’t know about it, and why more people weren’t doing it. It seems to me like this is something that they should be teaching our kids in school, as it stands to return significantly more handsomely than any bank on your pot of savings – if you know what you’re doing.

And it’s really not that hard; the rules are simple – it’s having the discipline to stick to them rigidly that is the challenge for most.

I should tell you now that 90% of people who try to learn how to trade end up failing and wiping out their accounts, and this is somewhat responsible for why it has a bad name. I cannot stress enough that there is no such things as a risky trade or a risky investment – only risky traders and risky investors. Those people who don’t have the education, the cohesive plan or the experience in the markets to have the first clue about what their doing, and who are basically gambling their money on the stock market. This is why 90% of traders fail – it’s a lack of knowledge and understanding of the rules of the game.

Trading Instruments

There are various different instruments that are available to retail traders these days, all with slightly different mechanisms but all based around the same set of skills. If you can trade the stock market, then your skills should be transferable across spread betting, trading CFD’s and investing in physical stocks and shares.

The main different instruments are:

  1. CFD’s (Contracts for Difference) – these pretty much do what they say on the tin, and is the main instrument I am trading at the moment due to the versatility of the social trading platforms available. When you trade on platforms that operate on a contract for difference basis you do not own any of the underlying asset, and so do not benefit from any dividend payments. All you are doing when you open a position is taking out a contract with your chosen broker agreeing that if the price of the asset increases or decreases from a fixed entry price then either you pay your broker a set amount per pip of price movement (if the price moves against direction of your position – up or down), or your broker pays you. When you close the position, you close the contract and either ending up taking profits (if you guessed the direction of the market correctly) or closing out for a loss if you guessed incorrectly. One of the big advantages to trading instruments likes CFD’s and Spread Betting is that you can use leverage to increase your asset holding without needing to invest or tie up the total value of the asset invested. However, be warned, whereas this drastically increases your ability to make significant profits, it also drastically increases the likelihood of having a catastrophic loss that wipes out your account – proper risk management should be observed at all times when trading
  2. Spread Betting – this works in exactly the same way as CFD’s, and you’re trading the same stocks and commodities on the same charts, only the profits you make trading through this instrument are completely tax free. This is because it’s called Spread ‘Betting’ and so because it’s classed as ‘gambling’, any profits are not currently subject to UK tax. This makes it an excellent instrument for generating a residual or passive income. Both Spread Betting and CFD trading allows for very easy entry and exit from trades, powerful leverage if used correctly and guaranteed stop losses and take profits for protecting your trading equity. They both also allow for you to enter positions to profit when the markets are both falling (bearish) and rising (bullish), by either going short (selling) or long (buying)
  3. Investing in actual Stocks and Shares – this is where you actually own the underlying asset, whether that’s a share in a company or some sort of ETF. This process is subject to higher broker fees when buying and selling, and so is better suited for longer term swing trades or long term investments. This method only allows you to profit when the asset increases in value or through the repeat dividend payments – if you own shares in companies that pay dividends then you will generate a regular passive income that can be used to reinvest in more shares and add to the compounding of your wealth. The more shares you own, the more dividend you get paid, and so the compounded growth is never ending and grow like a snowball rolling down the Alps

Fundamental or Technical?

There are two different techniques when it comes to trading – fundamental analysis, and technical analysis.

Fundamental Analysis is where you look at the financial and economic data for a given asset and make your trading and investment decisions based on the results of what you find in that data. This could be company financial reports, earnings reports, or economic data such as inflation rates or political announcements. This would be the best method for discerning quality assets for long term investments, as it’s important to be able to have confidence in an investment over time by confirming that the asset in which you’re investing your hard earned money is financially sound.

Technical Analysis is where you look at the price action data on the charts. There are several different types of charts and many different methods of technical analysis, but you only need to master a few to be a successful trader – even mastering one method will return profitable results if you stick to the trading plan without deviation. This looks at historical price data on charts relating to different time frames from 1 minute up to weeks and months of price data per candle, and provides insightful information about likely areas, or zones, where the markets are likely to react from and change direction. This is where technical analysis provides numerous trading opportunities – in recognising patterns, and in understanding how the mechanics of the markets are structured.

Ultimately, you’ll probably end up favouring one over the other and this will govern how you build and execute your trading plan.

Trading Psychology

“Success is 20% mechanics, 80% psychology”

– Tony Robbins

Trading psychology is without a doubt the hardest part of trading to master. Never mind all the charts, terminology and financial data – mastering your mind, your discipline and your emotions trumps them all.

The effect a losing trade can have on our psychology can be profound, and for most is what leads to emotional trading that generates massive losses and even wipes out people’s entire trading accounts. Emotional trading is a big NO, and this is the single most important reason for having and using a detailed trading plan. Having a written plan that details exactly what your methods are, and specifies your researched and back tested criteria for entering and exiting trade positions, will remove the need to make any decisions when you have money on the line. It’s when you have money riding on an open position that your primal croc brain starts to fuck with you and allowing this to take over your thinking when trading is the beginning of the end for most traders.

You have to learn to be your own trading coach and mentor – or go out and find someone who can fulfil that role for you. The best resource I’ve come across so far that really helped me gain control of my psychology when trading and which has helped me to remove all emotional trading from my trades was the following book by Brett N. Steenbarger:

This book gave me all the tools I needed to understand the inner workings of my own psychology when it came to trading, and indeed gave me skills which transferred over into others areas of my life such as sport and business. A really excellent book, and highly recommend – in fact, it’s a must if you’re thinking of embarking on the journey of learning to become a financial trader. Without it, the risk of your emotions taking control and devastating your trading account is all too real.

The stock market, by it’s very nature, goes up and down in cycles. As I hope I’ve shown in this short blog, there are the vehicles available today that allow everyone with access to a computer, smart phone or tablet and an internet connection to trade on the financial markets. Most platforms come with free virtual trading accounts that allow you to trade the markets in the first instance with fake money. This provides the opportunity for gaining valuable experience in the stock market, watching and learning how it moves, and means you can try out new techniques, systems or adjustments to your trading plan without putting any of your hard earned capital at risk. Once you see that you are consistently generating profits over a period of several months, you can then begin trading with real equity with some degree of confidence that you know what you’re doing and have a trading system that is profitable when followed with discipline.

Everyone has the ability to be financially free by taking the time to learn this skill, and doing so is going to not only put your future in your hands, but also has the potential to return significantly on capital invested – more so than any bank or other financial institution is going to give you that’s for sure.

From Beginner to Trader

I will be running a ‘From Beginner to Trader’ course around the Oswestry/Welshpool area very soon for anyone who is interested in learning about how to trade the stock market using the instruments I’ve described in this blog. The course will take a complete beginner who knows nothing about the stock market and trading through learning the skills needed to become a profitable trader. Course material will be provided in a live training environment, and you will come away from the training session with:

  1. A solid understanding of the mechanics of how the stock market and it’s various instruments work and move
  2. A solid understand of both fundamental and technical analysis, and strategies for utilising both methods in your trading
  3. A tool box full of tried and tested technical indicators for providing high probability entry and exit points for your trades
  4. A trading plan for intra-day trading on the 5-minute time frame
  5. A trading plan for swing-day trading on the higher time frames (4 hour, daily, weekly)
  6. A trading plan for pattern trading according to price action and technical indicators, as well as a thorough understanding of what key support and resistance levels are and how to define them on your charts
  7. How to buy and sell assets tax free – both through leveraged instruments and through physical stocks and shares
  8. A road map for finding quality shares for longer term investment
  9. An understanding of the emerging crypto-currency markets and how to maximise trading profits trading these alternative currencies
  10. A risk management strategy that will stop you blowing your account and that will keep your trading equity protected by minimising your losses and maximising your profits
  11. An understanding of the importance of psychology in trading, and techniques for mastering your emotions when engaged in live trades

Financial freedom is the ultimate goal – to every day have the choice of what you do, where you do it, and who you do it with. No constraints, no limits, no worries.

The beautiful thing about that? That the more people there are in the World who have that level of freedom and choice in their lives, the more people there will be in the World who have the desire and capability to help everyone else up to that level.

I’d love to see you on my ‘From Beginner to Trader’ trading course as I know it will change the way you think about money, and it has the potential to change your life if you implement the lessons you will learn in the course. Please register your interest by completing the contact form below, and I’ll send you an e-mail with all the details including how to register:

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Learning How To Learn

“The capacity to learn is a gift; the ability to learn is a skill; the willingness to learn is a choice.”

– Brian Herbert

I am a firm believer that in this day and age, with the information highway quite literally at our fingertips, ignorance is a choice. No longer do we have the excuse of lack of resources by which to feed our minds, with the dawn of an intrinsically and globally connected human race. Got a question? Ask Google. You don’t even have to go to the library anymore – all you have to do is pull out your relatively tiny personal computer (your iPhone or android), tap the touch screen and within seconds the answer to your question appears on screen. In fact, thousands, if not millions of different answers or different versions of the answer appear on the screen! We are literally spoilt for choice.

It is for this reason that my mind is still baffled when I come across people who answer ‘I don’t know’ to a question without following it up with a Google search and discovery of the answer. How can these people be satisfied living in their ignorance? What on Earth possesses people to make the conscious choice to live in the darkness of ignorance when they have such limitless educational resources available to them? I’m still searching for the answer… maybe ignorance really is bliss. Regardless, mastery doesn’t come without a deep knowledge of a given subject, and mastery is what I’m all about. Learning, and constant never ending improvement is so important to me because of the unfathomably positive effect it has had on my life over the last few years, and continues to have to this day. There are few things more empowering than listening to an audio book on the way to work that teaches you something that you can implement in your life the second you arrive at work and start your day; instant added value, and I love adding value.

Learning is easy for some, and not so easy for others. One type of learning, say practical experience, is natural to one person, yet completely unnatural to someone who could be considered an academic.

“Everybody is a genius. But if you judge a fish on it’s ability to climb a tree, it will live it’s whole life believing that it is stupid.”

– Albert Einstein

The above quote from dear Albert is so true, and does an excellent job of highlighting the main issue with the educational institutions we have built to educate the generations that follow in our footsteps. All said and done, we’ve done a pretty shit job of catering for the widely diverse range of characters, skill sets and natural abilities and tendencies of our young. It’s a one size fits all approach to education, and it’s destroying the hearts and minds of young people the World over. They are told that if they fail in this ‘one size fits all’ system, then they will fail in life.

What a crock of shit.

My father left school with but two O-levels, and heaps of tenacity, drive and passion for electronics. He has built several businesses during his lifetime, including his most recent, The Studio People. Was it his two O-levels that facilitated such achievements? Doubtful. Was it his persistent drive, passion and tenacity? Absolutely. Perhaps we should shift the developmental focus of the next generation of thinkers and World leaders then to teaching those things that made my Dad successful, and indeed the same characteristics and attributes that resulted in the success of all the great entrepreneurs over the last few decades; Richard BransonElon Musk and Anthony Robbins to name but a few. It wasn’t GCSE’s or A-levels that got them to where they are today, it was their fiery passion fuelled tenacity, and as these men have demonstrated, it is these attributes that give them the power to go out and change the World as we know it.

Understanding why we need to perpetually educate ourselves and others, and understanding what to learn is one thing, but how to learn is something I haven’t seen covered a great deal and was something I struggled with in my earlier years of life. I never thought I was that bright, but I always seemed to have this uncanny ability to pick things up very quickly once my interest had been piqued. I often found myself frustrated though when I’d try to get into learning something new and would be left feeling like I was studying something that was written in a foreign language. I’d study a paper or read an exercise and one or two things would kind of make sense to me, but in the context of the whole, the information was nothing more than gibberish.

This experience left me feeling like I was of less than average intelligence, despite my ability to learn quickly and often discouraged me. Good job I’m a particularly tenacious individual, and that I don’t like to lose.

Self-knowledge and learning in general has been a massive part of my life over the last 3-4 years, and it’s opened doors for me in my life like you wouldn’t believe. I managed to figure out how I learn, and what the process and mechanism entails for me. I am very mechanical in my approach to things, and so I like to breaks things down into easily digestible pieces. I also love a challenge, so have no problem throwing myself in at the deep end of a completely new subject and seeing how I fare. The difference for me now is that I know it will be a challenge, and I’m expecting it. I have realised and accepted over the last few years that when I first start digging into a subject, I understand fuck all; but more importantly, I know that this is the first step to me understanding a bit, then a little and then a lot. Each of these steps in so important in the attainment of mastery in any skill or subject, and for me it was just a case of accepting that this is how I learn.

So, when I delving into something new, I know I have to find it stimulating and interesting. It has to challenge me, and it has to add some value to my life. I also know, and more importantly accept, that I won’t understand very much when I first start the learning process, and that even if I do understand the wealth of information I’m digesting, it is highly unlikely that I will retain a high percentage of it at first. These things that I once used to find demoralising and frustrating, have become part of the process of learning for me, and my acceptance of them as important parts of the puzzle to get me to where I want to be has been liberating and helps to keep me motivated and driven.

It might take several books, articles and conversations with experts before I start to grasp some of the basic concepts, but I trust in the fact that over time, so long as I stick at it and keep digesting information in my chosen field, that clarity and understanding will come. I’ve observed this process in my learning over many years now, and it is this self-observation that gives me the faith and confidence that, even though I feel like I’m getting nowhere to start with, I am building the foundations of knowledge in the subject before I can start to build the structure above of knowledge and understanding. As with building a house and looking upon the work from afar, you see nothing whilst the foundations are being dug and laid. It is only when the walls start to go up that you start to notice the progress and start to see the structure coming together before your eyes.

Don’t be afraid of laying the foundations, and don’t put yourself down because you’re ‘not getting it’. You won’t, at first, and that is the first and most important step to learning new skills and subjects. Knowing and accepting this is the best way to clear your mind so it is free from negativity and thus able to focus fully on the task at hand; being a better version of you through the attainment of knowledge.

Don’t be afraid of learning in different ways too; my MMA instructor once said to me that people learn in three different ways, and each of those ways will teach you things the others cannot. They are to be told/shown, to do, and to teach. You must learn a subject or skill through each of these mediums in order to achieve true mastery and a complete knowledge in any given interest. The teaching part usually comes last, because you need to be able to explain and demonstrate a skill yourself before you can possibly consider teaching it, yet you go into teaching prior to achieving mastery, because it is only through completing this third and final stage that you are taught the final lessons by way of seeing your existing knowledge in a new light, from a different angle/perspective. I’ve learned things about throwing basic kicks from teaching white belts that I could never have learned from being shown or actually performing them myself, though this is an element of the journey of growth and self-improvement that is often neglected by practitioners, and because they fail to embrace this ever such important part of the learning process, they never achieve true mastery. So, if you are a student of anything in life, remember that the very act of your teacher teaching is providing a lesson for them too – they are learning about the subject from a different perspective now, opening their minds to a deeper understanding of their subject/skill and putting them one step closer to mastery.

Everyone I know or have studied who has mastered something in their lives has taught others and realises this to be a key element of their own process of learning and self-discovery. This should serve to highlight the importance of ‘paying it back’ in life, and servitude to others, helping others be better versions of themselves, is the third and final step in the process of helping yourself. Everything is cyclical, everything is connected – service to others is so important. We owe it to ourselves to facilitate our attainment of mastery in our lives, we owe it to others to learn through their experiences what we were unable to learn through our own, and we owe it to the World and the generations that follow to ensure we have an army of masters in their respective fields to push the human race forward so that we, as a race, are perpetually committed to doing things better than we have previously done them. We have an obligation to ourselves and to our children to leave the World a better place than we found it – learning and teaching help us to bridge that gap.

Remember, we’re all geniuses; we just need to do the work to figure out what sort, and once found to pursue it with passion and tenacity. Together, we are changing the World – what part are you playing?

“We have a moral obligation to leave this World a better place than the World that we’ve found.”

– Tim McIlrath

What Black Belt Means to Me

“The martial arts are ultimately self-knowledge. A punch or a kick is not to knock the hell out of the guy in front, but to knock the hell out of your ego, your fear, or your hang-ups.”

– Bruce Lee

I began my training in the martial art of Tae Kwon Do in July 2013 – I remember it clearly, as the weekend I had planned to attend my first lesson was the weekend of the 2013 TAGB TKD World Championships. As a result, my first introductory lesson was the weekend after the big competition due to all the students and instructors attending the event. My instructor to be, Mr Martin Williams 6th Dan, told me about the event and that his club was closed that weekend due to their participation, but that I should come along and have a go the weekend after. I vividly remember thinking to myself at the time that there was no way I’d be competing, let alone be competing at the World Championships; the biggest event in the organisation.

I was very clear about my intentions going in; I wasn’t going to fight and I wasn’t going to compete. I was a complete pacifist at the time, and my motivation for wanting to give it a go was simply that it looked like fun and I thought I’d be good at it. In truth, the motivating factor that made me get up off my arse and find a club was that someone had posted a classic Bruce Lee video to my Facebook wall, and it inspired me to desire that level of greatness. It was a compilation of his different skills, from lighting matchsticks in mid air with nunchucks and his infamous 1-inch punch. From the moment I concluded my search for local clubs, bizarrely finding Mold to be my closest which is a good 45 minute drive from where I live, fate took control and the rest is history.

To say that Tae Kwon Do has changed my life would be an understatement of epic proportions. I met my soul mate through my club, and we now have two beautiful children together. It’s changed my whole outlook on, and approach to, life. It’s made me a better person in a multitude of ways, and for all the change it’s brought to my life I am truly grateful. Further to all that, it has provided me with a close knit circle of thoroughly decent human beings who are dedicated to helping raise each other up to higher and higher standards, with perpetual dedication, love and support. The people I have met through Tae Kwon Do are some of the most wonderful human beings on the planet, and I am privileged to call them my friends.

The most important thing that Tae Kwon Do has done for me that has been a catalyst for my personal growth has been to introduce me to myself. I know who I am better today than any prior point in my life. I know who I am, and more importantly I know the components of who I am. I know my fears and insecurities intimately, even as deeply as I know my capacity for love, compassion and servitude. I am rounded as a human being because of the deep level of self-knowledge my art has taught me. I know who I am in good times and bad times, I face adversity on a regular basis and that keeps me hungry and humble. I have such a profound level of respect for the people around me, and I  have a deep level of understanding of vastly different types of people and cultures as a result of the principals behind the punches and kicks I’ve been drilling for the last 3.5 years. As with the words of Bruce Lee in the quote at the start of this blog, the opponent is not the man stood across the ring – it’s the man within.

This is a concept my parents and some of my colleagues struggle to understand. Unless you have engaged in some form of martial art, it’s unlikely you’ve come across the life lessons that teach what is required to understand this. One of my favourite quotes is, ‘adversity introduces a man to himself’, and in my opinion, this couldn’t be more concise or more profound. The truth behind this one statement has the power to shatter your world as you know it… only for it to be reborn like the phoenix from the ashes. You know that people you talk to don’t get it when they say things like, ‘so you like fighting’ or ‘you just like beating people up’ – nothing could be further from the truth. A more accurate appraisal would be that I thrive in testing my level of skill and knowledge in a high risk environment because I know that to fail is to learn, and learning is the only way transmute the current version of myself into something better. I am testing my nerve every time I make myself step into the ring – I am facing my fear and my insecurities with that one simple, defying act. I am fueling the fire of confidence and knowledge of self by relentlessly feeding it my fears, my ego and my insecurities.

This coming April in 2017 marks a penultimate point in my journey to self-knowledge as a man and as a martial artist. This April, I grade for my Black Belt. For most, the minimum amount of time it takes to achieve this is 4 years, largely dependant on how much effort you put in and how often you grade. I have been driven to succeed since day one. Following my first class, I would go home and practise the most basic movements for hours at home to try and get the techniques down for my next lesson so I could turn up ready to learn more. I entered my first competition at yellow belt in October 2013, and came away with two gold trophies for my efforts. So much for never competing…

Today, 3.5 years later, I sit here a current World Champion and British Champion, along with several other titles from regional and national competitions across the country. I am lucky enough to have shelves (yes, plural!) filled with trophies and medals from my last 3 years of competition. I am honoured and privileged to have been taught by some of the best Tae Kwon Do practitioners in the World, often training with or under World and National Champions. The people I have trained with and under the instruction of, have helped me immeasurably to become the man I am today; instructors, students and competitors alike. They have provided the proving ground on which I was able to test myself against the best in the business, and the quality instruction that has guided me along the right path when I have wandered wayward. Everyone around me inspires me, filling me with gratitude; that is a truly beautiful place to be.

Now, I’ve seen a lot of people get their Black Belts over the last 3.5 years, and it’s been a wonderful vicarious experience for me to watch and be a part of their individual journey’s – as they have been, and continue to be, a part of mine. Becoming a black belt means different things to different people. For some it is just something they want for display – like a trophy that they can point to to prove how amazing they are. For others, it is a deeply symbolic achievement that says more about the person within than it necessarily says about their ability to kick people in the face.

For me, being a Black Belt comes with a high level of responsibility to respect and serve those around you; whether you like them or not. It is the difference between existing on a meandering and random trajectory through life, and living with purpose and meaning. It is a reminder that I need to do better tomorrow, regardless of how well I thought I did today. It is my commitment to serve and to make a positive difference in the lives of all who pass through my life. It is commitment to constant and never ending improvement, to mastery and excellence. It is my reminder to never give up, and to see the lesson in everything. It is my heart wrapped around my waist, it is the symbol of passion and purpose that I wear with pride and humility. It is the balance of my calm and my rage, my love and my hate – we are all composed of yin and yang, and it is balancing the two that delivers us to self-knowledge and acceptance of who we are and what we have. It reminds me to be grateful every single day – for the beautiful people in my life, for my health and for the important lessons life teaches us; be they easy or hard. I do not prey for an easier life, I work hard to ensure I have the ability and skills to endure a challenging one as I know that it is through challenge that we grow to become greater versions of ourselves. It is a symbol signifying a deep level of self-knowledge, and of understanding that bridges the chasms between our joys and our fears.

For me, being a Black Belt has nothing to do with the colour, the material or being able to kick people in the face. It represents integrity, perseverance, respect, self-control and courtesy. It represents never giving up, even when you feel like there is no way out, and nowhere to go. It is a deep level of strength more powerful than any muscle could ever be, yet it is as soft as a feather. It is the ability to mould to fit any challenge, and the knowledge that everything in life happens for a reason – each experience a package of lessons ready to be learned.

Yet, despite all this, I know that getting my Black Belt is just the end of the beginning. Like learning to drive and getting your licence, the real learning happens out on the road on your own after you’ve passed your test. That is when you find out what you’re made of.

My journey in Tae Kwon Do and in life has only just begun.

Don’t Be So Hard On Yourself

As some of you will know, I have become deeply interested in trading the stock market via instruments like CFD’s and Spread Betting over the last couple of months. Whilst I am still achieving mixed results in terms of my overall profit and loss, one of the most challenging and interesting aspects of trading is the psychology. It is actually the hardest thing to master, and I believe this is true for most things in life. Holding your position on a trade that’s moving against you without giving in to your fear of losing money, or of diminishing any paper profits you might have made on that particular position, takes some serious self control.

I have engaged in trading courses, YouTube videos and books to help me improve on my knowledge of the stock market and how to trade with a consistently profitable system, but one of the books I’m listening to at the moment has really made me think. It’s a book on trading psychology, and aims to enable the reader to become their own trading coach. You can see more information about this book by clicking the following link:

The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist (Wiley Trading)

I was listening on my way to Tae Kwon Do training last night, and a very poignant lesson caught my attention and made me think. When trading, as with most things we do in life, we tend to have a running commentary of self talk as we run through our day. That self talk can either be positive or negative depending on our mental state at the time. One thing that tends to be particularly debilitating is negative self talk. Whether you’re berating yourself for missing a turning when driving to work which could potentially make you late, or in the case of the book, have entered into a bad position which results in a losing trade. The observation the author makes in the book is that this self talk tends to be very harsh, and so he suggests the following exercise; pay attention to the self talk going on in your head – observe the mental tone, the language used and the things you are berating yourself for. Now, having observed this negative chatter in some detail, reframe. This is a simple exercise whereby you imagine that instead of saying those things to yourself, a friend or colleague is saying them to you.

For example, you might say something like the following to yourself having missed a crucial turn off to get you to work on time:

“I can’t believe I missed that turning, I’m such an idiot! I drive this way every day and I can’t even get that right! I’m going to be late for work now, and it’s all because I couldn’t even pay attention to my surroundings. I’m going to get in trouble for being late, and be behind on my work because of my stupidity. Nice one.”

Now, this may seem like perfectly normal self talk that occurs when you make a mistake in life, but I think we can all agree that this level of negativity, even in the form of self talk, is far from healthy; it puts us into a totally unresourceful state and we are only at our best when we are in a positive and resourceful state. However, now let’s reframe this situation and imagine that it is your friend who is in the car with you who is saying this to you:

“I can’t believe you missed the turn, you’re such an idiot! You drive this way every day and you still can’t get it right! You’re going to be late for work now and it’s all your fault because you aren’t even capable of paying attention to what’s going on around you. You’re going to be in so much trouble for being late, and you’ll be behind on your work because of your stupidity. Nice one.”

When you flip the roles like this, and imagine a friend or someone close to you saying to you the things you say to yourself, you would be disgusted with the way they had spoken to you and treated you. They’re supposed to be your friend, so why are they putting you down like that? So, the question is this; if you wouldn’t tolerate being spoken to or treated in that way by the people you know, then why do you tolerate it from yourself?

Truth be told, if you have good friends and surround yourself with good people who truly add value to your life, they would never treat you that way. You shouldn’t either! Instead, your friend or colleague would tell you not to worry about it, it was a simple and easy mistake to make and if you’re late you can just say you got stuck in an unexpected bout of traffic. Your boss won’t mind, he’s a decent person, and everyone makes mistakes. It’s early in the morning, and no one is at their best first thing. Don’t sweat it!

A big difference, as I’m sure you’ll agree. Which would you prefer to hear from your friends or colleagues? Decide now, that if that’s the standard you have set for how others treat you, then you should have the same standard for the way you treat yourself. Another way of looking at it would be to ask yourself what you would say to a friend in a similar situation to that which you find yourself, and that which triggered the negative self talk. Observe the differences between what you had been saying to yourself and what you would say to your friend in the same situation; then change your internal dialogue to match what you would say to your friend. There is no good reason to treat yourself worse than you treat those around you, so level the paying field and give yourself the respect you deserve.

Don’t be so hard on yourself! Try the exercise above the next time you face a challenge in your life and you notice your own negative self talk – engage in the role play, and ask yourself if you would accept or tolerate being treated or spoken to in that way by others. If the answer is no, then you shouldn’t be treating yourself that way either.

Everyone makes mistakes in life, it’s a big part of how we learn and grow, but instead of putting ourselves down when we do, we should instead be picking ourselves up, dusting off the dirt and refocusing with determination and positivity. Easier said than done – I know – but nothing worth having in life comes easy, and reframing like this will make a massive difference in your ability to face and deal with adversity in life.

Have a beautiful day everyone – be kind to yourselves, and give yourselves the credit you deserve in both the good times, and the challenging times.