In a recent podcast episode, Dan and Kyle discussed some struggles they had encountered during the previous week, and the importance of having someone to talk with about those struggles. A peer network is vital for accountability, exposure to other trader’s experiences, and emotional support. Over the last year, we have had some illuminating conversations on this subject with Rich Friesen, founder of Mind Muscles for Traders, and author of A Private Conversation with Money.
What is the importance of an accountability partner?
Without an honest assessment of trading behaviors, biases and desires, traders tend to repeat mistakes, fail to recognize the positive behaviors that support their trading strategies, and torture themselves with self-doubt. Rich taught us that the most fundamental thing you can do as a trader is “to start to accept the parts (of your mindset) that are currently in conflict, and move them into rapport with yourself and your future.”
Trader accountability truly starts with journaling. The most effective journals include every trade, the reasons and emotions behind the trade, and your physical sensations, emotions and thoughts (SET score) during the trade. Keeping a daily log of all trades provides a reference to help identify whether strategies are working, and journals about your emotional, intellectual, and physical states are useful in detecting behaviors that are in conflict with your plan. However, a journal does not offer the experience and emotional support that an accountability partner can.
An accountability partner can be a friend, a significant other, or a group, and can play many roles. Sometimes you need to hear that someone has had a similar experience, other times you may need a reminder of all the times your plan did work to allow you to take a broader look at the difference. Just having someone who can relate to your joys and frustrations makes trading a less lonely endeavor. A trusted accountability partner can be an important tool to identify how your biases and behaviors are affecting your trading, and help keep you honest with yourself.
How do other trader’s experiences help?
Exposure to other traders’ ideas, journals, strategies and stories helps everyone to understand that most traders experience similar challenges, and gives everyone an opportunity to learn. As we mention on our website, the most expensive education in stock trading is attained by making all of the mistakes yourself. The more you can learn from others successes and failures, the cheaper the education will be.
There is much to be gained by sharing your own trades, and explaining the rationale behind the ideas. A trade that in the moment looked like a sure thing might suddenly look less impressive once you start trying to explain the rationale. Another benefit is getting the perspective of another trader that you may not have considered, when looking at the same data. It’s important to remember that this is a game of probabilities, and just because the setup is great, the results may not match. Your accountability partner should help keep that perspective.
Would it surprise you to learn that the percentage of trades that are profitable for most successful traders is under 50 percent? Rich put it this way, “So, if we are looking at the P&L of a trade to determine our decision process, my gosh, I mean we’re going to be beating ourselves up every other trade.” It is beneficial to understand what other traders experience in order to set realistic goals, and to know that others struggle with similar challenges.
Why do traders need emotional support?
Let’s take a look at what might affect a trader’s behaviors. It could be a belief system about the world, a fight with a friend, or rooted in a trauma. Rich taught us the importance of identifying what is affecting your SET score and investigating the role it is playing in your trading decisions.
“No traders wake up in the morning and say, ‘Hmm, what I really want to do with my day is to be more aware of all the issues I have … and the behaviors that no longer serve me. Boy, that’s what I want to do today’.” Rich says, but identifying those issues and behaviors is key to refocusing on knowing that you have a strategy, and that one trade doesn’t matter because you win 50 percent of the time.
Unfortunately, Rich can’t support all of us himself, but traders can find emotional support within their communities. With honesty and peers who understand the struggles, you can take an opportunity to reset, be reminded of what does work and your accomplishments, and refocus on a more productive mindset.
Community is Key
We highly recommend that every trader find a trusted accountability partner or community. A good conversation about your trade or your week can work wonders for your attitude and confidence. For more insights into trading and trader psychology from Rich Friesen, download our playlist here.
We are very proud of our own growing Discord community, and invite anyone to join (always free!). If you find that our community is not the best fit for you, we hope that you will find one where you are supported and learning. And if you need someone to talk to, and don’t feel comfortable posting in a public forum, you are welcome to reach out via direct message through our Discord server or our social media accounts, or by email 2Bulls@financialineptitude.com.