The secret to living is giving – Tony Robbins
Let’s pause our usual trading education routine for a moment. I’d also ask you to pause your quest for trading profits for a moment. If you’re still struggling to break-even; if you’re still struggling to find a viable way to confront the market; if you seem to have psychological barriers…have you ever thought that they might not be trading-related at all?
Let me ask you this:
- if you’re currently a profitable trader, what are you doing with your trading profits?
- if you’re still an aspiring trader, what do you intend to do with your trading profits?
Many thought leaders, business & sports coaches, and even long-lasting market wizards have all spoken about the mental and physical benefits of altruistic donations, ergo “giving back”. I’ve experienced these benefits as well: tendentially, the more I give, the more I receive.
Evidence Favours Giving Back
There is a wealth of evidence, in the form of academic papers and studies, that demonstrates how giving to others, without expecting anything in return, enhances levels of happiness and therefore helps the mind and body to function better. There are many ways to “give”:
- from giving money to charity
- helping a stranger dig his car out of the snow
- delivering the shopping for an elderly stranger to his/her house
- donating old clothing
- donating old toys to children’s hospitals
Sure, donating money to charity also allows people to receive tax breaks; donating may alter your social status; but the real reason for donating is the enhancement in well-being. But how does giving back make us happier and hence, better traders?
- Wang and Graddy (2008) suggest that happy people are both more emotionally capable to help others and have more optimistic personalities, fostering charitable giving behavior.
- At the most basic level, functional magnetic resonance imaging (fMRI) evidence shows that giving money to charity leads to similar brain activity in regions implicated in the experience of pleasure and reward.
- This goes for children as wel as adults: Rosenhan, Underwood, and Moore (1974) randomly assigned second and third graders to positive or negative mood conditions by having them reminisce about appropriate memories. To strengthen the mood induction, children were asked to talk about these memories and then think about them once again. Children were then allowed to have some candy from a treasure chest (self gratification) and also give money to other students if they wished (altruistic behavior). While both happy and sad children ate more candy than those in the control condition, only happy children gave more money away to classmates.
- In his book Why Good Things Happen to Good People, Stephen Post reports that giving to others has been shown to increase health benefits in people with chronic illness, including HIV and multiple sclerosis.
What Giving has to do with Trading
I can’t offer academic papers or proof of this myself, so this is just my own personal experience and the experience of others I have coached.
Trading is an articulate form of gambling. Any observable edge manifests itself over the course of many trades but in the short-term, uncertainty prevails and it can be emotionally impairing to sit through drawdowns or maintain a steadfast faith in the system whilst going through the normal equity swings that the market inflicts on us all.
I’ve found that the more a trader is “connected” to his trading results, the worse he will perform. We’ve spoken about this before on the blog. I have observed, amongst my own coaching students and even upon myself, that people who trade only for themselves – for the money, the social status, the fancy cars – have a much harder time managing their emotions whilst trading. Tendentially this makes them:
- hunt for trades (as opposed to waiting for trades to setup)
- cut profits quickly (as opposed to letting the market deal you in & out)
- overtrade (as opposed to being patient and having no trouble letting a few trades slip through the net)
- always look for ways to “not lose” or “win” (as opposed to being relaxed with the natural ups & downs).
Instead, I’ve helped people that were on the board of a charity; that have adopted at a distance many children; that have ventured to third world countries to plant trees; that love to create pieces of artwork to give away. These people are the ones that have less problems holding onto trades, being patient, and focusing on the process.
In brief, I have witnessed first hand how people that give back a part of their income (and it really doesn’t matter how much, so long as you “feel good” about it) obtain the benefits of gratitude. It seems to me that the awareness of “more important things” than trading, helps them deal with uncertainty better. Also, being calmer and having a positive attitude helps them overcome difficulties more easily.
Over to You
Focusing on the money, investing all our time and energy in our trading endeavours isolates us and screws up our perception of the world. Trading profits rarely come to people who only live to trade. We need to turn out focus outwards and remember that our life has much more meaning than just the p&l we can generate. This may be pushing it, but I think your life matters most to others, because everyone needs help in some way or another. And you can make a difference if you keep your eyes open.
If you do so, you will also reap the benefits of giving back. Tony Robbins puts it this way: focusing on the needs of others has a way of motivating you to do more than you thought possible. You feel the benefits immediately. You become more productive. You find creative solutions to problems. You find strength when you’re exhausted. That’s because life supports that which improves the quality of life. When we contribute to our community, we become part of something that is bigger than ourselves.
So if you’re stuck in a rut with your trading, don’t dig deeper into the problem. Instead, detach yourself and seek a way to help others that truely resonates with you. Your mind and body will reap the benefits andthe new awareness will definitely help you.
Stated in another way: don’t trade for yourself. Trade because you like it. Trade because you want to be in the position to give back more than you can right now. That’s what I’ve done – and it works for me!
About the Author
Justin is a Forex trader and Coach. He is co-owner of www.fxrenew.com, a provider of Forex signals from ex-bank and hedge fund traders (get a free trial), or get FREE access to the Advanced Forex Course for Smart Traders. If you like his writing you can subscribe to the newsletter for free.