Greed. Envy. Gluttony. Sloth. Wrath. Lust. Pride… the seven deadly sins. According to ethics, these are the transgressions standing in the way of spiritual progress and purity. In reality though the seven deadly sins represent the dangers of both excess and defect which in modern times can be applied to virtually every aspect of life.
These cardinal vices often play out in the financial markets, leading traders to spiritual ruin or even bankruptcy. For this reason, it’s important to understand how these sins impact our trading behavior. It’s even more critical to identify the root causes of these transgressions so that we can replace them with virtues.
In this series, we take a look at the seven deadly sins of financial trading and how you can overcome them to improve your trading mindset.
The deadly sin of sloth can be described in various ways, but essentially it refers to laziness. In the real world this can culminate in sitting in your chair wistfully reflecting on things you could be doing but not actually making them happen. The defect of laziness is often what stands in the way of success not just in the financial markets, but in every facet of life. In the world of finance, laziness is reflected in a trader’s unwillingness to work for his or her goals. These are the same traders that easily fall for get-rick-quick schemes or end up buying a robot “expert advisor” that promises to execute all their trades for them. In other words, they want to make money without actually having to work for it.
Scammers and multi-level marketers know there are a lot of people out there who fit this description. As they say, there’s a sucker born every minute.
Unless you’re already a millionaire who can live off your bank account interest, you will have to work for every penny you earn. This is especially true in the complex and fast moving world of financial trading where you will have to juggle conflicting signals, economic data and your own emotions. This environment does not encourage sloth. Lazy traders simply need not apply.
Warren Buffett, who is widely regarded as the most successful value investor of all time, spends the vast majority of his time reading. When asked about how he’s so knowledgeable, Buffett picked up a stock of paper and said,
“Read 500 pages like this everyday. That’s how knowledge builds up, like compound interest.”
Your path to success may not entail reading 500 pages a day but what’s important is that you become a proactive trader that is capable of responding to the unique challenges and opportunities the market offers. Successful traders are the complete opposite of lazy. They do their research, analyze the market, study past performance and know the market inside out before entering into a position. They also tend to specialize in a particular industry or segment of the market. They refine their strategy through constant trial and error, and learn from their mistakes. They also keep a score card of their win/loss record so that they can benchmark their future success.
The good news is overcoming sloth doesn’t have to be difficult. Nobody is telling you to go from zero to hero right away. Deciding to be proactive is the first step to combating laziness; understanding that you get out of life exactly what you put into it is the mindset needed to overcome this dreadful side effect of the human condition.
Equally as important is your ability to stay motivated in both good times and bad. This means keeping your foot on the accelerator even after you’ve achieved your initial milestones. If you’re a financial trader, staying motivated should be easy if you are passionate about what you are doing.
Another easy way to overcome laziness is to read about the markets each day. Successful traders do this anyway. So rather than taking advice from some hot shot forex marketer trying to sell you an expert advisor, focus instead on the economic calendar. Visit financial news websites and learn about the latest developments in the market. In other words, feed your brain! The more you feed it, the more it will reward you with trade ideas later on.
Laziness is a complex problem in the world. Unfortunately, all of the self-help programs in the world won’t help us overcome it unless we are motivated and passionate about what we do. If this doesn’t describe you, consider re-evaluating your goals. It’s a lot better to take a break from the markets than to develop lazy trading habits that end up costing you in the long run.
- Don’t expect to make money without working for it
- Focus on your education and development
- Set small but achievable goals
Source Sam Bourgi- Financial Markets Writer
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