INTRODUCTION: Hello Traders. The article below is useful for all areas of human endeavors (including trading). Please read it to discover a great secret today. Read between the lines and see how the facts revealed here aptly apply to trading.

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There are, broadly speaking, two ways to see the world and these have a great influence on how successful you become.

The first is what psychologists call the “external locus of control,” and the second is the “internal locus of control.”

You see… as the world around you changes, you can either attribute success and failure to things you have control over, or to forces outside your influence.

And which orientation you choose has a huge bearing on your long-term success.

This concept dates back to the 1960s with Julian Rotter’s investigation into how people’s behaviours and attitudes affected the outcomes of their lives.

Locus of control describes what individuals perceive about the underlying main causes of events in his/her life.


Put more simply:

Are you the pilot of your life or you just a passenger?

Do you believe that your destiny is controlled by you or by external forces (such as fate, the government, your boss, the system or others)?

Here’s how Charles Duhigg—the author of the book Smarter Faster Better describes locus of control:

“Locus of control has been a major topic of study within psychology since the 1950s. Researchers have found that people with an internal locus of control tend to praise or blame themselves for success or failure, rather than assigning responsibility to things outside their influence. A student with a strong internal locus of control, for instance, will attribute good grades to hard work, rather than natural smarts. A salesman with an internal locus of control will blame a lost sale on his own lack of hustle, rather than bad fortune.

“‘Internal locus of control has been linked with academic success, higher self motivation and social maturity, lower incidences of stress and depression, and longer life span,’ a team of psychologists wrote in the journal Problems and Perspectives in Management in 2012. People with an internal locus of control tend to earn more money, have more friends, stay married longer, and report greater professional success and satisfaction”



What is an external locus of control?

Well, we all know those people.

In fact, sometimes we are those people.

Nothing is ever their fault. There is always an excuse. The world is out to get them, life is unfair.

Duhigg describes it as follows:

“…Having an external locus of control—believing that your life is primarily influenced by events outside your control—’is correlated with higher levels of stress, [often]because an individual perceives the situation as beyond his or her coping abilities,’ the team of psychologists wrote” (24).


The benefits of an Internal Locus of Control

In general, people with an internal locus of control:

Engage in activities that will improve their situation.
Emphasize striving for achievement.
Work hard to develop their knowledge, skills and abilities.
Are inquisitive, and try to figure out why things turned out the way they did.
Take note of information that they can use to create positive outcomes in the future.
Have a more participative management style.


The bottom line:

We aren’t born with an unalterable locus of control, so it is critical to keep an eye on in ourselves so we can improve the way we look at the world.

Sure, bad things happen to us.

But rather than dwelling on them, it’s better to find a useful belief about them and move on.

It’s important to remove the idea that your life is dictated by forces outside of your control.

Of course, to one degree or another, it is. But there is plenty that we can control. You can create your own luck through study, hard work and perseverance.

It’s often said that you become a blend of the five people you hang out with the most.

This is important to keep in mind. Associate with positive people who believe they are in control of their own lives. Their beliefs and energy will rub off on you. And then yours will rub off on them.

It becomes a very powerful and positive feedback loop!



Author: Michael Yardney (a guest blogger at: Tradinggame.com.au)

Author’s profile: Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.




PS: 4 useful trading quotes are also added below:


“There is a wise saying which came into being primarily since the advent of mechanical trading systems, and it goes something like this: "Your system will stop working when someone else builds his system based on your system." Can you see the truth in that? It is because of that reality that it is best to scout around for what may be working recently, and why it is a waste of time to backtest a system or method to see if it has worked for the last 10 years. You can't trade history you are forced to trade the present in an attempt to take advantage of the future.” – Joe Ross


“I’m not worried about being stingy, trying to get every last pip out of a trade; I want out of my position if the trade is going the wrong way! Do you want to be stingy or do you want to be OUT??” - Rick Wright


“A winner has the ability to find positive values from the most negative circumstances. This is the first reason why only emotionally healthy people can assume risks, they are able to rise above the superficial negative circumstances, discover trading opportunities and take decisive trading actions based on the current market conditions.” – Andy Jordan


“You have no control over whether you will win or lose – but you have enormous influence over the beliefs that drive the performance of your trading process. This is the new “Winning Nature” that bridges the gap between controlling outcome (which is impossible) and controlling your process (which you can do repeatedly). This leads to the calm, patient mind need for successful trading.” - Rande Howell


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