We often become conditioned by our experiences to ‘fear’ or avoid certain things and to gravitate to, or favor other things. The process of conditioning occurs deep within us, and sometimes conditioning occurs with such subtlety, that we may be unaware of the effects of our environment (or situations) on our behavior and perception.

Without opening a deep discussion on the processes of classical or operant conditioning, I did want to communicate one brief thought regarding what we seek and what we avoid in trading.

As traders, we are motivated to make profits in the market – in a sense, we want money. However, a lot of traders are motivated by different things, and money might not be the prime directive for some traders.

In focus, some traders who have suffered outsized losses, or have been ‘traumatized’ by one or more trading losses, their prime motivation – if they continue trading – can shift to “avoiding losses” in their trading performance/behavior.

What might be the ‘off-balance’ motivators for a ‘fear based’ or traumatized trader?

Prime Motivator: Loss Avoidance
Prime Avoidance: Losses (or uncertainty)
Neutral Motivator: Missing Opportunities (rationalized by “at least I didn’t lose money”)

What should be the balance of motivators – in terms of profits and losses – for a proper trader:

Prime Motivator: Profits
Prime Avoidance: Missing Opportunity (not taking a trade when it is perceived)
Neutral Motivator: Losses (they may ‘hurt’ but traders must not be ‘thrown off game’ because of them)

The above list is by no means ‘all inclusive’. However, it can serve as a starting point for examining ourselves and what motivates us in the market. Beyond positive motivation, it can help us see what negatively motivates us, or what we ‘fear the most’ in trading. A proper trader should “fear” missing perceived opportunities, or failing to execute trades based on his or her tested system.

It’s not an easy process for a ’scared’ trader to condition himself or herself from fearing losses to fearing missed opportunities, and from being motivated from avoiding losses to seeking profits above all.

There are many resources that address the same line of thought: “Scared money doesn’t win.” In the markets, successful traders take risk, and they may often feel uncomfortable with this risk. However, risk-taking in the face of uncertainty, and doing so with confidence and a solid structure, is often the hallmark of a successful trader (among other qualities).