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For a trader, if Heaven is making a great deal of money in the markets, and Hell is losing it, then Purgatory is the nearly endless state of barely making enough to survive or even worse, breaking even.  By these definitions, if you ask most traders where they are in their work, they will tell you that they are in Purgatory.

 

Like Dante’s sorrowful souls, traders are in Limbo as penance for some major trading transgressions as well as some minor ones.  Some of the major transgressions could be:

 

1.    Not having a good model for trading

2.    Not having a completed business plan

3.    Breaking the rules of the business plan and the trading model

4.    Not being consistent in following your money management rules

5.    Not handling psychological issues that keep you from following your model and business plan

 

These transgressions are major enough that if left unaddressed, a trader would be lucky to be able to remain in Purgatory for even a short period of time.

 

Here are some transgressions that are minor enough that a trader could possibly bump up against Heaven, but never quite reach it:

 

1.    Not realizing that a trading technique being used does not have the potential to perform any better than it is currently

2.    Not recognizing adjustments that need to be made for a technique to be feasible

3.    Not balancing all areas of life to support trading and healthy living

4.    Not handling psychological issues that keep you from reaching each next level of success

 

The difference between being really successful in the markets and just breaking even is a function of having made the right choices at the right time, as Dante’s lost souls found at their Reckoning.  Good intentions are not enough since the road to Hell is paved with them.  Goals and desire are not enough either.  Neither is great intelligence, experience, or skill.  These are necessary, but will not make the difference.

 

What makes the difference is taking positive action to create a solid foundation.  That foundation is a plan, a working model, a set of rules, and a campaign for repairing psychological weaknesses.  To put these actions into motion, you must have the one thing that even Dante would recognize as the great divider between Heaven and Hell—Self-Discipline!  Self-discipline is what a trader needs to tackle the hard things to:

 

·         Avoid temptations

·         Stay the course

·         Acknowledge the problems and challenges

·         Deal with change

·         Trade stability for excitement

·         Look at the big picture and long-term goals rather than the small picture and immediate gratification 

 

Otherwise, a trader will find himself eking out a living or worse, just breaking even, which will leave him wondering why he is working so hard and enjoying it so little.

 

By Adrienne Toghraie - Adrienne Toghraie is the founder of  Trading on Target and is the author of multiple books on trading and the psychology of trading. She is considered an expert in the financial community for coaching traders, brokers, and investors to their next level of success.