Rule #3: Know Thyself

Trading Rules Series

Hi Everyone! I hope August is treating you well and everyone had a fantastic holiday. Thank you for following us. I appreciate the support and feedback.

Personal Psychology has become a hot topic in the trading space in the last few years, and undoubtedly it's essential. That is why Know Thyself is Rule 3! However, I have observed that Personal Psychology is touted as "your" only barrier to making money in markets! This is a fallacy, and two rules are more important:

1. Making Money Wins the Game

2. Position Sizing Pays, Not Your Ideas

To make money in markets, you must know the game's rules first! Tactics need to be developed. Until you realize you have a strategy that can make money, meaning you have the knowledge to extract returns, psychology will not drastically improve your trading. This is why I like Jared Tendler's book and how he frames the problem as "The Mental Game of Trading." There are two games at play:

1. The Markets

2. Your Mind

They overlap and can significantly affect each other. Tactics and psychology need to be viewed individually to come to the proper diagnosis of return leakage.

With that in mind, Section 1 of my business plan is all personal psychology related. Knowing Thyself, the person deep within that speaks without invitation, is vital to discover, grow, and learn to listen to. He's the guy making most of your daily decisions, so it is best to get to know him and keep him healthy. I will provide a list of resources at the end of this Substack!

Here is my outline; some of the questions are very deep:

Whys, Purpose, Mission, and Feelings Behind Dream Life

1. Mission Statement

   1. 100-Year-Old You

   2. Define what it means to be a person of the utmost character

2. Top 10 Values (The Presence I want to carry)

3. Personality Type

   1. Myers Briggs

   2. Van Tharp Trader Type

   3. etc. (Any Work)

4. Strengths and Resources List

5. Major Challenges List

6. How to Leverage Strengths and Minimize/Outsource/Improve Weakness

Dream Life (Be Honest!)

1. Spiritually

2. Relationally

3. Work

4. Play/Rest

5. Physically

Belief Assessment

1. Life Frame

   1. Why are we here?

   2. What is the meaning or purpose of life?

   3. What is the relationship between the individual and others?

   4. Where do family, country, and the rest of the world fit in?

   5. What is good, and what is evil?

   6. Is there a higher power, God, or something transcendent, and if so, what impact does this have on your life?

   7. What is the role of joy, sorrow, justice, love, peace, and strife in life?

2. Work Frame

   1. Why work?

   2. What's work for?

   3. What does work mean?

   4. How does it relate to the individual, others, and society?

   5. What defines good, worthwhile work?

   6. What does money have to do with work?

   7. What do experience, growth, and fulfillment have to do with work?

Trading/Business/Life Edges

1. Age

2. Relationships

   1. Personal

   2. Business

3. Monthly Burn Rate (Life Expenses)

4. etc.

Resources

1. Job, Proverbs, Psalms, Ecclesiastes, and Song of Songs

2. The Almanack of Naval Ravikant (Can get it free!)

3. The Mental Game of Trading by Jared Tendler

4. Designing Your Life by Bill Burnett and Dave Evans (#1 Course at Stanford)

5. Own the Day, Own Your Life by Aubrey Marcus

6. Trading Beyond the Matrix by Dr. Van Tharp

7. No More Mr. Nice Guy!