[this is expanded from a piece I originally penned in 2016. My efforts to aggregate pieces like this to my Substack page led me to expand upon the original piece; I then felt it had enough additions to merit "re-mirroring" it again here.]
The market’s solution to every problem you have is "take all your money."
If that doesn’t scare you a little, you haven’t been trading long enough.
Most traders think they blow up because they lack a great system. In reality, they blow up because they lack psychological armor. They make one bad trade. Then they chase another. Then they spiral.
The problem isn’t your system — the problem is how you react when things don’t go your way.
But one of the biggest enemies of traders (and maybe humanity in general) is not commonly recognized as such.
Most trading books or articles focus on either analytical/predictive systems or "trading rules in general" (while often emphasizing “lack of discipline” as the primary enemy).
But I’d offer that maybe the biggest enemy of traders often goes quietly unrecognized, as it slowly undermines our efforts: Boredom.
What’s the True Cause of Boredom?
Most people assume boredom happens when there’s nothing fun to do. But contrary to popular belief (especially among teens!), boredom has nothing to do with a lack of “fun” things to do.
Boredom comes about from a lack of productive things to do.
In my opinion, boredom is simply one of several symptoms that can develop from a feeling of general emptiness. And while that emptiness can be glossed over and temporarily hidden with frenzied "fun," it cannot be truly filled by vacuous activity.
That’s why we quickly grow bored again as soon as the fun stops: it doesn’t nourish us in any lasting manner, and certainly not in the way that truly productive accomplishments do.
Conversely, after a meaningful accomplishment, we can sit and rest for a while, feeling satisfied with a job well done. We can be doing “nothing,” but we are not bored — because the emptiness has been filled (at least partially) as our self-esteem has grown, our character has been enhanced, or some necessary task has been accomplished — or all of the above.
This is why "fun" works as a reward for productivity (after we're in the fulfilled mindset that accomplishment brings), but it fails when chased endlessly for its own sake. When fun is treated as an end in itself, the emptiness may retreat into the background momentarily, but it never truly disappears.
How Boredom Leads to Overtrading
The old expression “idle hands are the devil’s playground” almost captures the essence of the problem, but not quite. Because the problem isn’t “activity or lack thereof (i.e.- idleness)” — the core problem is that sometimes we can’t stand boredom, so we engage in activity purely for its own sake.
And sometimes “destructive activity” actually feels better than no activity at all (this is also a lesson politicians could stand to learn).
Many traders understand this dynamic, at least instinctively (whether or not they’ve ever put it into words). The problem isn’t that they’re too lazy to take action — the problem is that they can become addicted to trying to accomplish something productive.
And that leads to overtrading. It leads to forcing trades. It leads to bad decisions and, sometimes, to acts of outright desperation.
Is There a Solution?
Well, the solution may be to redefine our individual views of “productive” action.
But what do I mean by that?
Let’s start here: I’ve often preached that non-action can be just as important as action. If a trader has clear rules that prohibit action in certain situations, then they can derive a sense of accomplishment from merely showing the discipline to stick to their rules.
In other words, they can (seemingly paradoxically) obtain a feeling of accomplishment by doing “nothing” — because they have redefined “doing nothing” into SOMETHING. (In this case, not accepting entries that violate their rules becomes the “something” they’re doing.)
Yet this is easier said than done, because the market is always moving. So when one resists, say, a buy entry because it violates their rules… and then that (as Robert Frost might say) “Trade Not Taken” goes on to develop into what would have been a 1000% gain, it can and probably will feel like you did the wrong thing.
And that’s why this next section is key.
The Psychological Importance of Trading Rules
Everyone talks about how you need rules to maintain discipline, and that’s true — but you also need rules to defend yourself psychologically against the one (potential) enemy who knows your every hidden weakness: Yourself.
That may, in fact, be the most important aspect of trading rules.
Why?
