Downsides of Performance Mindset

Trader's Mindset

Dec 30

Trading psychologist and coaches often heavily promote and invest in the notion that a performance mindset and focus is what will lead to trading success. However, I have learned about myself and seen that other highly motivated traders are just as likely to lose because of a performance mindset– if that motivation is not carefully and properly channeled.

If I had to be brutally honest, one of the main reasons I have not abandoned the idea of discretionary trading is that the flow state that comes from great trading is just highly compelling. The drive to master is essential for new traders. However, that strong motivation can also lead to making irrational decisions which eventually lead to losses.

I do not see many trading psychologist talking about how performance mindset can just as easily cause losses. Although, I think elite traders like Mark Melnick understand it very well. You see trading is essentially a limited resources game because every trader has a limited amount of time, psychological fortitude, and capital.

A brief diversion, I practiced Brazilian jiu-jitsu for a few months. And, what I learned was that a fighter only has, at most, two hands and two feet and everything about jiu-jitsuis is based around that. If a fighter is holding another fighter with his right hand then he cannot also strike with it at the same time nor can his opponent nor can he choke with it.

You see traders crave both the flow state that comes from understanding and being in tune with markets and trading profits. While it is true that profits derive from the flow state. It is also just as true that losses can also just as easily result from too much desire to achieve that state when the opportunity set is not there.

Elite trading is not simply the ability to obtain the flow state and trade well. Elite trading is the result of maximizing the profits from that state while minimizing the losses from trying to attain it and redirecting the energies that cause those losses into other productive activities. Elite traders find ways to develop, motivate, and energize their activities while preserving and maximizing all of their resources.

About the Author

The author is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact the author at