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Sunday, December 5, 2010

Principles of Leadership and Trading

Principles of Leadership and Trading ; I was participating in a meeting the other day and the speaker was talking about leadership. When I was thinking of leadership, it occurred to me that as traders, we own our business and we set its direction. We are leaders and how we run our business is very essential to our success.

As you might know, 90% of traders lose money. The challenge is how can we lead and run our business so we do not become part of these statistics?

One way is to understand the leadership principles and see how you are applying them to your own trading business. What are these principles?

1. Knowing why you are in the trading business

You can start by asking yourself:

o Why are you in the trading business?
o What was your initial attraction to trading?
o Are you thinking about it as a business or a hobby?
o Are you passionate about your trading?
o Does trading feel like a lot of work?
o What are your trading goals?
o Are you enjoying the journey or just focusing on the end result?
o What do you want to get out of trading?
+ Money
+ Excitement
+ Challenge
+ Power
+ Other things

o Imagine you got all of the things you wanted to get out of your trading business:
+ What do they mean to you?
+ How do you feel about them?
+ How do you feel about yourself?

When we know why we want something, it helps us to overcome challenges that we go through.

When you think of Tiger Woods, what comes to mind? For me, he is one of the most successful golfers. I believe he wants to be the best that he can be. This is so strong for him that he has a merciless routine. Rain and shine, he practices and tries to learn something new.

Because the reason he has is so strong for him, he is disciplined, he produces consistent results and has fun doing it. Is the reason you are in the trading business strong enough for you to give your business your full commitment?

2. Managing your energy

When we get up in the morning, we have a certain amount of energy. It is up to us to decide how we will use our energy and where we will focus it. So how do you manage your energy during the day?

o What activities energize you and what drains your energy?
o How do you sequence your activities?
o Do you try to do everything yourself, or do you focus on your strengths and delegate the rest?
o How do you deal with stress?
o How do you motivate yourself?
o Who do you surround yourself with?
o How do you manage your energy?
o How do you deal with the bad news or naysayers?
o How do you deal with emails, phone calls, IMs and other things that can distract you?
o Are you being productive or running out of time each day?

If you try to be everything to everyone, you get burned out.

You might have heard of the 80/20 rule - 20% of our efforts get 80% of our results. You can focus your energy on the efforts that get you the results, or let yourself get distracted. When you get distracted, you are very busy, however you do not produce the result that you want in the time frame that you want. The choice is yours.

3. Your perception

As we all know, we face challenges and speed bumps throughout our trading business. The important question is how do you deal with them? What meaning do you give them?

o When you lose:
+ How do you view it?
+ What meaning do you give it?
+ How do you feel about yourself?
+ Are you looking at the lessons?
o Do you let the bumps on the road stop you?
o Do you move forward despite challenges?

The way we look at things determines how we feel about it and how we can handle it.

For instance, if you look at your losses as being the end of the world or feel that everything is going against you or that you are stupid, then guess what? It will be harder for you to be successful at your business.

However, if you consider your losses as being the cost of doing business and an overhead for your business, then it is easier to accept and you can move on.

It is important to realize that it is about your perception and how you view it. You might have heard, "There is no reality only your perception"...

It is OK to have fear as long as it does not completely stop us. Take small steps.

4. People you surround yourself with

You might have heard, "You're the Average of the 5 People You Hang Out with Most." Friends have a way of influencing us.

I remember meeting a very nice couple during one of our vacations. We started talking and the husband was interested in trading. However, after over a year of studying, he had not pulled the trigger yet. He wanted to create some extra income, however he was afraid of losing. On top of that, his wife was saying, "We cannot afford to lose even one penny." As a result, he had not pulled the trigger.

Who do you surround yourself with? Are they:

o Encouraging you in your trading business?
o Believing in you?
o Opening doors for you?
o Successful?
o Someone you would do the same for?

It is important to choose who surrounds us and whose advice we take. Often, we surround ourselves with the people we like, rather than the people whose point of view we respect.

Do not allow others' fear to become the boundaries of your dreams...

5. Taking ownership of your trading business

Ask yourself, do you:

o Trust yourself?
o Have a point of view when you are trading?
o Take calculated risk?
o Take responsibility for your trading results?
o Take the opportunities that present themselves?
o Adapt to the changes in the market?
o Build flexibility in your trading business?

Many of us put a lot more value in others' opinions than our own. We tend to want to be safe than sorry. If we follow others, we do not have to take responsibility for our results. We can blame the advice, the markets or anything else.

One of the signs of great leaders is not that they do not make mistakes. It is that they handle the consequences and move on.

Plato says, "To risk nothing, is to risk everything."

To summarize, the 5 principles of leadership are :

1. Knowing why you are in the trading business
2. Managing your energy
3. Your perception
4. People you surround yourself with
5. Taking ownership of your trading business

Remember, the most important thing is not only to make decisions, but also to live with the consequences and be gentle with yourself. That is how we grow, learn and build trust in ourselves.

The trading business is a marathon and not a sprint. Here is to making trading success your habit. For the latest updates PRESS CTR + D or visit Stock Market news Today

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