Home Advanced Psychology and trading The Beliefs of a Successful Trader and Why They are Imperative

The Beliefs of a Successful Trader and Why They are Imperative


If you want to be a successful trader, then you must have beliefs similar to a successful trader. But what is a belief? A simple statement such as “The chair is brown” is a belief. Let’s take another statement, which is “I don’t deserve these easy profits”. That is also a belief, but a massive difference exists in both of these statements. The difference lies in the level of significance of both the beliefs. The purpose of this article is to help you understand the importance of belief hierarchy and to determine the level at which the problem arises.

Logical levels of beliefs

If beliefs were organised in the form of logical levels, the following hierarchy would exist. According to Robert Dilts, it would consist of environment, behaviour, capability, value, identity and spiritual. It is represented in a pyramid structure. Each level in the pyramid contains beliefs that are deeper and stronger than the beliefs on the previous level. The pyramid does not tell the number of beliefs at each level. There are more environmental beliefs than spiritual beliefs.

Environmental belief

This type of belief is concerned with external factors of a person and external control. An example of environmental belief is when you say “There exists a trading system which will make money in the markets”.  Notice that a sound trading system is an external factor. This is the level of belief where people pay most attention to. It is the highest level of the organisation. They are not said to have a permanent impact on a person’s thinking or behaviour. Hence, changes at this level are easy to make and put them into use.

Behaviour belief

This category is very much related to one’s behaviour. More precisely to a specific behaviour. An example of this belief would be “I lost money while trading Crude Oil using that trading system”. The behaviour level is the most objective level. Not many traders suffer from behaviour problems. Most of them face problems that are deeper in the level of organisation.

Capability belief

A Capability belief has to do with beliefs related to skills and abilities. It gives you a direction. For example, when you say “I can’t risk doing anything that is dangerous”, it would automatically filter out many directions for you. Whereas when you say something like “I like to trade only Indices”, will shape which direction you will go. Beliefs at this level contain the words like “can” or “cannot” or they generalise into these phrases.

Value belief

At this level, you pay attention to what is important. Beliefs at this level give a lot of motivation to traders. The generalised phrase at this level is “is important”. There can be conflicts at this level. People like to protect their values and thoughts. Conflicts exist between the first and third level of belief in the above hierarchy. Thus, it requires conflict resolution. When conflicts are resolved, stress levels are low. Stress management can also assist you to control stress.

Identity belief

The identity level recognises your own self. It shows what you think about yourself. Your goals matter in this belief. Beliefs in this level can be phrased as “I am, or I feel’. Example statements are “I am useless when it comes to trading’ and “I am a skilled trader”. Personal problems occur at this level. When you come across such issues often in trading then think about important people in your life. They could be your mother, father or a childhood friend. At the same time, you should learn to forgive yourself; else you carry the burden with you. When you try to solve personal issues, you go through significant life changes.

Spiritual belief

Spiritual belief comes from religion. If you are a religious person, then you are bound to have spirituality in you. Some beliefs might support you and some not. This might improve your self-esteem and promote trading skills. Some of the spiritual beliefs might be “The universe is perfect, and everything happens for a reason” or “When you die, that’s it-you dead”. The complexity of beliefs decreases as you move from environmental to spiritual ones. Thus, beliefs can be thought of an inverted pyramid with few on the bottom and many cans at the top.

Changing your beliefs

Beliefs control you and your actions. When you change your beliefs, you totally change the way you look at the world. Changing them is simple. You can change a belief by following the below-given procedure:

  1. Recognise your belief first.
  2. Is this belief your own belief, or is it given to you by someone else?
  3. Ask yourself, what good the belief is doing to you. Is the belief limiting you in any way? You will find some interesting results if you look inside yourself deeply.
  4. Why do you want to disapprove some beliefs? Why are you keeping some beliefs with yourself?
  5. Replace the disapproved belief with another belief that is useful to you.
  6. Are your emotions attached to your beliefs? If yes, you will have to separate your emotions from beliefs and work towards it.

This simple six-step procedure is very useful, and you can start it right now.

Final words

You now understand how beliefs follow a hierarchy and how some beliefs are not useful to you. Serious problems and trading issues tend to affect trading performance. This should be addressed in terms of beliefs. People usually avoid thinking about the impact of belief on one’s life. They prefer to make changes to superficial rather than identity beliefs. They concentrate on finding a better trading system. You should know your own self first and be honest to yourself.


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