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Identifying Your Motivation for Trading
"Discover how to identify your true motivation for trading and why understanding your reasons is key to long-term success in the financial markets."
Wikilix Team
Educational Content Team
When individuals first begin their trading journey, the vast majority focus their minds on the numbers—the charts, the profits, the strategies—and everything else involved. However, hidden behind all the technical analysis is the more important question of the "why" of trading. If you lack clarity on your motivation, you quickly become susceptible to the pitfalls of overtrading, trading under emotional stress, and chasing unrealistic goals.
The reason for clarity of motivation is not just for self-reflection; motivation underpins the Discipline that you will follow through on your trading, the consistency in your plans of action, and ultimately helps shape what your long-term success will look like in the trading sphere. In this post, we strive to relay just how important it is to consider what your real reasons are for trading and how they can mold the course of your trading journey in profound ways.
Trading is not just the application of skills and strategies, but is a mental application. If you have strong motivation, it determines how you will respond to stress, how disciplined you will be during a long losing streak, and how patient you will be in waiting for opportunities to arise. Without motivation, you will be more susceptible to quitting when faced with challenges. In contrast, when properly motivated, you will have the drive to persevere through setbacks and stay focused on your long-term goals.
Many traders are driven by the desire to achieve financial freedom. The idea of being able to replace a 9-to-5 job and trade for a living is exciting. However, financial independence takes time, Discipline, and expected reality.
A subset of traders may be motivated to grow wealth over time. This is often viewed through a long-term investment medium, with rational risk control as a partner to this motivation.
For a group of traders, the market is. The challenge of analyzing data, identifying trends, or predicting movement serves as a motivator that can supersede financial incentives.
Having the ability to operate from virtually anywhere in the world and choose your own schedule is another strong motivator. Many are drawn to the lifestyle of trading because of the freedom it provides, but it takes Discipline to manage that freedom properly.
Trading can also be a path to personal development. It encompasses many practical lessons that teach patience, emotional management, and persistence. For some traders, those lessons alone can be enough motivation without consideration of the financial aspect.
Your trading style should correlate with your motivation. For example:
• If your motivation is financial freedom, you will likely consider building a strategy that focuses on consistency and obtaining a steady return on your investment — a trader's primary job.
• If you already love studying the markets, market analysis, and forecasting movement, you may be inclined to styles of trading that are more active — a day trader or scalper, for example.
• If your focus is on building wealth as a wealth manager, swing trading would likely be more suitable for a more extended timeframe of considering holding the asset for a greater length of time (typically days to weeks), or position trading, where you have that same asset for weeks to months.
Ultimately, aligning your "why" with your "how" can lead you to work on strategies and engage in daily trading that align with your ultimate goals and desires.
Motivation without manageable expectations can be counterproductive. For example, if you expect to double your trading account every month, it will not take long before you become disappointed and deflated from the excitement. Instead, consider setting reasonable quarterly goals to strive toward — many traders underestimate or fail to recognize that steady, modest trading is sustainable. In fact, the more realistic your expectations are, the less likely you will feel burned out or prone to giving up on trading.
1. Ask yourself the question, "Why?" again and again - Try to drill down beyond the surface explanation of your motivation. Are you motivated by money, or is it some feeling of freedom, security, or pride?
2. Think About Your Values - What are the values that you cherish? Is it autonomy, knowledge, personal growth, or leaving a legacy? Often, our values give us a clue to our ultimate motivators.
3. Write It Down - Once you have decided on your motivation, put it into words. A verbal statement will help remind you through the toughest of times.
4. Check back regularly - As motivation evolves or changes, you should re-evaluate to remain connected and aligned with our values or motivation.
Even the most consistent traders say that motivation will dwindle and decline under challenging situations. To stay motivated, we can always:
• Reminder yourself of your "why".
• Keeps a "trading journal" to report what you learned and what your progress is.
• Celebrate small successes along the way!
• Engage yourself in supportive communities.
After all, motivation is like fuel; it needs to be replenished regularly to keep on moving.
Motivation gets you started, Discipline gets you through the surprise corvette on your journey. Successful trading is not about whether you are committed to progress or how strong your motivation is on a particular day. Strong traders have systems with follow-through; they create routines, follow trading plans, and manage their risk systematically and consistently. This allows them to stay in full motion, even when motivation may not be present, as Discipline directs their path.
• Identifying motivation versus greed - Wanting money fast is a possible motivator; however, it is not sustainable in your overall success as a trader, motivating and habitual.
• Copying someone else's reasons as your own - Your motivation has to be yours and expressed in your mannerisms.
• Do not close your eyes to emotional triggers - sometimes we have motivations not fully known to ourselves that can cloud any common rationale.
Identifying our motivation and recognizing triggers will ensure that you are not only aware of your process but also maintain genuine and productive motivation.
Ultimately, trading is about so much more than profit and loss…. It is getting to know yourself. Being able to articulate your motivation for trading clearly can provide us with clarity, the ability to respond with resilience, and a direction for what you want as a result of trading. Ultimately, it will anchor you when markets are unkind or you don't recognize the feeling of hunger, and should compel you to remain accountable to your improved self-awareness and motivation as you continue on your journey towards the outcome.
Whether your motivation is to make money, you are passionate about the industry, or to expand your learning and personal growth, both for your skill set and psychological capital, or self-discovery, what matters most is that it is your motivation. Defining your "why" will ultimately make your journey's "how" feel more palpable and lengthen your timeframe.
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14 min
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Intermediate
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