The greatest test of courage on the earth is to bear defeat without losing heart.
R. G. INGERSOLL
Being a successful trader also takes courage: the courage to try, the courage to fail, the courage to succeed, and the courage to keep on going when the going gets tough.
MICHAEL MARCUS
Common to the belief about courage in every culture is the firm resistance to pain, danger, or difficulty. Courage means dealing with the threat of loss of life, liberty, and property by accepting and dealing with fear. It is a very strong virtue, and is a positive character trait in all cultures. Courage allows us to still act reasonably in the face of fear. Courage is not dealing with the threat in the absence of fear. Courage is an emotion and has the power to affect bodily changes. In all cultures courage is a highly valued virtue. It is a strong virtue, and its antithesis is feara very strong vice. Since there is a never-ending battle between virtue and vices, courage and fear are engaged in an ongoing contest over which force is more powerful.
Courage can take on as many forms as the variety of the objects that inspired the fear. The courageous person has conquered fear; the coward is overcome by it. Courage implies knowledge of reasonable and unreasonable fears. It is courage that allows us to remain firm when confronted with difficult choices. People who are ignorant or out of control are incapable of courage, even though their actions may be daring.
Courage is related to the emotion of hope. It is through hope that we boldly attack and attempt to overcome the threat. Mental ability, bodily strength, previous experience, loyal friends, and even divine assistance are some of the things that make victory possible. Success or conquest strengthens hope and leads to courage. Courage is also related to what we love and value most. It is when our loves are threatenedlife, family, money, possessions, country, and religious beliefsthat our courage is aroused and strengthened. Traders constantly have their loves threatened by the market. Traders obtain victory through their mental abilities, previous experiences (reference), empowering beliefs, and perhaps even divine assistance. Courage in and by itself is neither moral nor immoral. However, since in many cases the emotion of courage involves the virtue of fortitude, courage is moral. Fortitude is the
boundary line between cowardice, which holds us back by fears that reason tells us could be overcome, and rashness, which is a reckless disregard for what should reasonably be feared. Courage is involved in the virtues that are part of fortitudemagnanimity, magnificence, patience, and perseverance. Those who lack courage have given in to a false belief in what true courage is. Many cowardly people will also have the following vices: rashness, presumption, egotistical ambition, vanity, pusillanimity, meanness, and stubbornness. The difficult choices of trading (or life) demand courage, especially when one outcome seems to preserve our equity, beliefs, and integrity
while the other outcome holds financial ruin, despair, being wrong, scorn and mockery, loss of friendship, ridicule, and even temporary ostracism.
Fortitude is a virtue that strengthens courage. Fortitude is a general and a specific virtue. As a general virtue, it must be firm and not readily subject to change. As a specific virtue, it gives the spirit firmness by controlling impulses from the conscious and unconscious mind. When you are confronted with a situation that requires courage, your spirit must remain firm so as to balance the fearful impulse and the foolhardy impulse. The virtue of fortitude
strengthens courage against the passion of fear and curbs the immoderate stirrings of foolish daring. Opposed to fortitude are the vices of cowardice and foolhardiness.
Endurance is the more difficult aspect of fortitude, and requires more courage, other things being equal. In attacking an evil object, we at least have some hope that we will overcome it, and hope that we will prove stronger than the threat. In endurance we submit to an evil that seems stronger than ourselves. Attacking an object in the face of danger usually occurs over a brief period of time, whereas endurance usually covers a long, continuous period of time.
Endurance in this context is not a mere passive submission to danger and suffering; it involves, more importantly, a strong action of the soul holding steadfastly to the good and refusing to yield to fear and pain.
Successful traders submit their will to the stronger will and dangers of the marketplace. In doing so, they are able to maintain their strength and resolve by the validity of their beliefs. Courage often is described as the ability of the mind to overcome fear. The greatest fear that any individual has is the loss of life. It is for this reason that when most people think of courage they think of a soldier or a martyr. Throughout history people have thought of courage in terms of a battle or of religious persecution. Every culture and religion has its generals, and its martyrs. People think of a great trader as possessing great courage because they perceive the trader as risking financial ruin by trading.
In most instances, courage is thought of in relation to fear. Most people do not consider that overcoming anxiety also requires courage. Anxiety and fear both originate from the same part of our psyche; however, they are not the same. Fear originates from a definite source, allowing our conscious mind to focus upon it. This means that fear can be faced, analyzed, attacked, and defeated. In acting upon fear, we participate in it. Courage can act upon fear because fear is an object, and therefore can be engaged. By contrast, anxiety cannot be engaged, since it has no objectour conscious mind is unable to focus upon it.
Fear and anxiety are different, but not separate. They exist within each other. Fear is being afraid of somethinga threat, a pain, the rejection or loss of something or somebody, the moment of dying. Anxiety is anticipating the threat, and the resultant possible implications. It is not the negativity itself of the threat that is frightening, but what we perceive it to mean. Our minds will always attempt to turn anxiety into fear, because fear can be met by courage. Courage is most often associated with combat. The battlefront is where humanity has been trained to look for and discover courage. Some traders equate trading with a constant ongoing battle, and expect to find courage. The courage to trade within your rules requires the fortitude to do what is right, no matter how uncomfortable you feel and no matter what your ego is telling you. Although the courage of an outstanding trader in the marketplace is not as dramatically evident as that of a warrior on the field of battle, it is no less exemplary. In many ways the Samurai warriors of Japan had many of the same beliefs as great traders today.
Traders always face a market that requires them to enter or exit when their emotions tell them to do otherwise. Courageous trading is a crucial element of your success. Possessing courage requires that you accept the responsibility for your profitable trades as well as the losing ones. It is far easier to say that the markets conspired to take your money away from you than it is to accept responsibility for the risk of trading.
You need to understand that even though you possess courage, you will still experience fear. Fear is a natural human emotion, and all traders experience it. It doesn't matter how much experience you have or don't have; everyone will get a visit from Mr. Fear. Outstanding traders will face it, get control of themselves, and obey the rules they developed; cowardly and novice traders will embrace the fear and fail to properly execute their trades.
When do you need courage? The natural answer is when you are fearful. However, do you think that courage might also be required to exit a winning trade? What vice would a trader with a "profitable trade" experience that would create fear? Courage will combat the greed that a trader with a winning trade experiences.
Courage will always counteract the power of fear. Fear results from thinking a multitude of different thoughts. Some of these thoughts are that the market will take your money, that you are leaving money on the table, that the pit just loves to run your stop, or that you have rotten luck. The way I like to see fear is that it is false evidence that appears real, and that by changing my perspective and trusting myself, there is nothing to be anxious about. Courage is the ability to do the right thing when you are naturally
afraid to take action. To understand the virtue of courage then we need to understand the vice of fear, and how it works.
Before you can start to experience the feeling of fear, several things must first take place in your mind. In order to feel fear, you must either be remembering a similar event in your past that resulted in pain or you must be anticipating how much this current event might hurt in the future. In other words, for your brain to experience the emotion of fear, your mind must be reliving an event in the past or anticipating an event in the future. In both cases mentally you are not in the present moment. Consequently it is impossible for you to see the market as it is.
Once your brain reenters the present moment, it is incapable of experiencing fear. This is because it must make decisions, and is too busy to be anywhere except in the present. Do you remember an event that you were dreading, but then the fear disappeared when it came for you to take action? For some of us it was combat in a war; for others it was making a public speech for the first time. Others may have been totally scared when asking their spouse to marry; still others may have dreaded some sort of examination. The point is that the day before the event we were all scared and afraid, because of our fear. However, when we had to go into action our fear miraculously disappeared.
What happened? Very simply our conscious mind was too busy taking care of the present moment to worry about what might happen in the future, or what happened in the past. The courage that we used to overcome the frightening events of the past is also vitally important to us as traders today. In fact, it is even more important to us as traders, because in most cases we are the only ones who know when our trading methodology indicates that we should enter, exit, or wait for a trade. If we fail to follow the trading methodology that we so laboriously researched, only we will know that our courage was not enough to overcome our fear. There is no audience to judge our courage or lack thereof while trading.
Let me ask you another question: What do you think most traders are afraid of? Many of you will say being wrong and losing money, or leaving money on the table. Some of you will also say that the real issue is that most traders are afraid of being emotionally or financially hurt by the market. I suspect that the core fear of most traders is that they are afraid of themselves!
At the root of all fear is that the trader may do something that results in a lot of pain. The vast majority of traders do not trust themselves to make valid decisions. It is far easier to purchase the advice of others than to do the work necessary to devise their own
methodology. The other major reason traders purchase the opinions of others is that when the trade fails to
generate a profit, they can blame the loss on someone else, thereby avoiding responsibility for the trade. This is one of the reasons there is such a huge market for trading programs and advisory services. What happens when the trading program fails to make a profit, or the advisory service writer gets the market direction wrong? The trader blames the vendor for the lousy trade! What happens if the trader decides to ignore the ''advice of others," trades on his or her own thoughts, and then has a losing trade? Yep, the trader blames the market. What
happens when the fill comes back, and it is different from expected? "Well, the pit took my money" is the most common response.
It is very easy to shift the blame to someone else; it is very difficult for most traders to accept responsibility for their own trades. It is even more difficult for traders to trust their own analysis and their decision to enter or exit the market. Why do you think the average trader finds it so hard to have the courage to trust his or her own actions? Because most traders base their decisions on an arbitrary trading methodology that they have no real faith in. The average trader still thinks that there is a holy grail that can somehow be bought.
When you have courage, you will be able to execute your trades with no fear or hesitation. When you have courage, you will be able to focus in the present moment, eliminating the fear of possible loss. You will also be able to trust your own analysis and actions.
How do you develop the increasing levels of courage to faithfully execute your trades? As you should know by now, courage is an emotional state that everyone values. Consequently our level of courage can be increased by changing or creating beliefs that affect courage and fortitude, using the techniques already mentioned. Since courage is something we value, it is controlled by the rules that we attach to it. In order to change or create empowering beliefs, we have to use empowering references. As we increase the amount of discipline we have while trading, we also increase the amount of courage available to us. By strengthening our virtues and starving our vices in order to develop an effective strategy that encompasses our own trading methodology, we will increase the amount of courage we experience.
Traders who have courage accept their fear as being false evidence that appears real. They accept that they could lose their assets. Implied in this acceptance is that they are well aware of when the risk they are exposing themselves to is acceptable or unacceptable. When traders act from a position of courage, they are behaving in accordance with their beliefs without fearmuch like a samurai warrior.
The reason the samurai warrior was so feared was that he had the courage to accept his own death, confidence in his abilities, and discipline to overcome his fear. In a lot of ways a highly successful trader today is like a samurai. Successful traders have to accept all the risk of trading, have total confidence in their abilities, and have the discipline to always overcome their fear.
How often do you think that some of the outstanding traders experience fear? How do you think they overcome this fear? Courage will always annihilate fear. The way you can increase your level of courage is by realizing how vitally critical it is to your ultimate
success. The next time you start to become fearful, realize that to control fear you must have the courage to focus on the present moment.
Courage is the fourth virtue that all excellent traders possess. All highly effective and successful people use courage in their personal and professional lives. You must have the courage to trust yourself to enter or exit a trade, to make mistakes, to control your ego, and to generate the faith that your outcome will be as you desire. Courage will fortify your
confidence, and courage will give you the discipline to master your internal representations of the marketplace.