 Welcome back to the Trade Hacker Mindset. In this episode, I want to ask you the question, do you identify as a trader? Trading the markets can be difficult to master and seemingly just out of reach. Professional traders have a secret. Trading requires total mental and emotional control. It requires the Trade Hacker Mindset. All right, so let's jump into this discussion of whether you identify as a trader. And where this is coming from is, I want to continue on some of these concepts from the book, Atomic Habits by James Clear. The last couple episodes, we've been talking about these concepts, and I've got a couple more that are really powerful that I want to continue on. So let's talk about identifying as something and how that can help shape your habits. So as we've talked about in the last couple episodes, there's really nothing more powerful that can impact your life than improving your daily habits. Yet at the same time, you can have this desire, this goal to set these habits, but yet the same thing will be happening next year, or maybe even worse, right? A lot of times we start these new habits, we're motivated, we get going, but yet they only last a few days, and then after that, they start to become a nuance. We start these habits, and typically they last a few days, and then really they, a lot of times just after a few days start to become kind of a nuisance, right? Think about if you've ever tried to start a new exercise plan, or meditation, or journaling, or cooking, or whatever it is, you know, you're excited about it for the first day or two, and then it starts to become a little bit of a hassle, and eventually just fizzles out and you don't do it anymore. But once you have habits that are established, they seem to stick around forever, whether they're good habits or bad habits. You know, on the negative side, you know, sometimes some of our best intentions become hard to uphold, like eating healthy versus eating junk food, watching too much TV, procrastinating, smoking, whatever it might be, it works the same way on the negative habits. So changing our habits is challenging for a couple of reasons. Number one, we try to change the wrong thing, and then two, we try to change our habits in the wrong way. So our first mistake is that we try to change the wrong thing. So let's talk about the three layers of behavioral change. If you kind of picture this, and there's a graphic in the book, and if you picture it, it kind of looks like the target of a dartboard. So think about three different layers. The outer circle is the, you know, the biggest one that goes around. And then inside that, there's another layer. And then in the middle is that smaller circle. Think of that as like the bullseye. The bullseye in the middle, you could be, you could consider your identity. This is what you believe. Then the next layer outside of that is the process. And then the next layer outside of that is the outcome. So most people, when they try to change a behavior, or they try to create habits, it's based on an outcome. Okay, this level is concerned with changing your results. You know, maybe that's losing weight. Maybe that's publishing a book. Maybe that's earning a certain amount of money in your trading, winning a championship if you're on a sports team or something like that. It's some kind of outcome results based layer. The layer inside of that is the process. Okay, and we talked about, you know, understanding your process and focusing on your process over the outcome. And this is where it's, you're concerned about changing those habits and systems. So you're implementing a new routine at the gym or you're decluttering your desk for more organization or you're developing a meditation practice or you're working on your trading skills. And then that inner layer, that bullseye layer, if you're picturing the target that I mentioned, this is the deepest layer and this is changing your identity. This level is concerned with changing your beliefs, your worldview, your overall self image, the judgments about yourself, about others. So if you think about it like this, outcomes are what you want to get. Processes are about what you want to do to get that outcome and the identity is about what you actually believe. So a lot of people, we begin our process of trying to change our habits by focusing on what we want to achieve on that outcome. And this leads us to outcome-based habits. The alternative is to build identity-based habits. And with this approach, we start to focus on who we wish we would become. So in the book, the author gives an example of two people sitting outside of a restaurant resisting a cigarette. When offered a smoke, the first person says, no thanks, I'm trying to quit. Now, this seems like a reasonable response, right? That's good, they've resisted the cigarette. But the problem is this person still believes that they are a smoker who's trying to be somebody else. The second person declines by saying, no thanks, I'm not a smoker. So think about that, that's a pretty small difference, right? But the second one has decided that they are not a smoker. They do not identify as someone who smokes. Now, most of us, we don't even consider our identity change when we set out to improve on something. You know, if you want to lose weight, you say, I want to be skinny. You know, that's an outcome. And then you say, you know, I'll stick to this diet, then I'll be skinny. And that's the process. But you've got to get to the point where you are thinking about I am a healthy person. You are identifying as that person that you want to become. Because think about this, our behavior is incongruent with the self. If that's the case, it won't last, okay? You may want more money, but if your identity is someone who spends a lot and consumes rather than creates, then you'll continue to be pulled towards spending rather than earning. You may want to be healthier, but if you continue to prioritize comfort over accomplishment, then you'll be drawn to that relaxing rather than going to the gym or training. It's really hard to change your habits if you never change your underlying beliefs that have led to that past behavior. The ultimate form of motivation is when a habit becomes part of your identity. You know, it's one thing to say, I'm the type of person who wants this. It's very, it's something very different to say, I'm the type of person who is this. So you might start a habit because of motivation, but the only reason that you'll actually stick with that habit is if it becomes part of your identity. So when you're thinking about goals that you have or things that you wanna achieve, some examples would be the goal is not to read a book. The goal is to become a reader, okay? The goal is not to run a marathon. The goal is to become a runner. The goal is not to learn an instrument. The goal is to become a musician. I did a podcast a few weeks ago about learning to play the guitar. And that's one thing that I've really tried to start focusing on. I'm not just trying to learn to play the guitar, I'm actually a musician. And by the way, just an update, I've learned a couple songs now. I can actually play some real music that people can identify as an actual song. And guess what? That has motivated me and continued to make me play more and more and practice more and more. And so I know this firsthand. And when it comes to trading, the goal is not to learn a trading strategy. The goal is to become a trader. Now, like all aspects of habit formation, it's a double-edged sword, right? So when it comes to self-improvement and working on good habits, that works that way, but it works the same if you have bad habits or things that you're not good at and how that is attached to your identity as well. So for example, you might say, I'm always terrible with directions or I'm just not an organized person or I'm not a morning person or I'm bad at remembering people's names or I'm always late or I'm not good with technology or I'm not good with finances. I'm just not good at learning how to trade. You say these things that you think are fairly insignificant, but the reality is that's who you've identified as and it's really hard to break away from that if that's in your belief system. If you've repeated a story to yourself year after year, it's easy to slide into this mental framework that is fact. And the more deeply that a thought or action is tied to your identity, the more difficult it is to change it. And this could be a personal identity that you've created yourself or it could be the culture that you're born into. If you grow up in a culture that's always telling you you're a certain way, then you're just going to believe that and it's really hard to break out of that. So if you've surrounded yourself with people who say you're not smart enough to trade options, you're not smart enough to learn that. Why do you think that you can be smart enough to figure that out? If you're in that environment, if you have people talking to you like that, you're going to start talking to yourself like that. And so then when you start to learn or try to learn, you're going to have that in the back of your mind that I'll try this out, but I'm probably not smart enough to do it. So be real careful about what your, what the story is that you're telling yourself about what you can or cannot do. Because then what happens on a day to day basis, you might struggle with your habits because you get too busy or you get too tired or you get too overwhelmed or a bunch of other potential excuses. But the reality is with habits, it's about your self image that gets in the way. Those other little things about being too tired or too overwhelmed, those are just kind of excuses that feed into your overall identity of yourself. And for you to become the best version of yourself, it really requires you to continuously edit your beliefs and upgrade and expand your identity. So here's the cool part. If you have certain beliefs about yourself that you don't like, and the first step is to really become self aware of those thoughts, of those beliefs. And the good news is that your identity actually emerges out of your habits. You're not born with some preset beliefs. Even if you grew up in a culture or a society that hammered certain things into your brain that you started to believe them, every belief, including those about yourself is learned and conditioned through experience. So your habits are how you create your identity. And the more you repeat a habit, the more you repeat a behavior, this will start to reinforce your new identity. Whatever your identity is right now, you only believe it because you have proof of it. If you go to church every Sunday and you've done that for the last 20 years, that's your evidence to give you the identity if you wanna be considered religious, right? If you go to the gym, even if the weather's bad outside, you have evidence that you're committed to fitness. The more evidence that you have for a belief, the more strongly you will believe it. So a personal example, when I first started trading, I've mentioned this many times, the first 10 years of me trading, I was extremely inconsistent. I could make a bunch of money and I could lose it all. I could make some money, I could lose some money. It was like a roller coaster ride. And as I'm reading this book, I'm thinking back and thinking about how I identified as it related to trading. And the reality is I did not identify as a trader. I identified as somebody who was, I'll try this strategy, I'll try this strategy, oh, this one made some money, oh, this one lost some money. And I was constantly, it's the whole thing of just bouncing around from strategy to strategy because I didn't have any identity. I was just simply, I'll try this, I'll see what happens kind of thing. And if you were to ask people close to me, my friends, my family, about me, they certainly wouldn't have identified me as a trader either. And keep in mind, I mean, this took me over 10 years to become consistently profitable in trading. A lot of you can do it, especially hopefully with our guidance, can do it a lot quicker that we're taking traders successful in the matter of months instead of years, but it's still, it's not an overnight shift. You're not gonna snap your fingers and be able to change your identity. So think of it like this, every action that you take is a vote for the type of person that you wish to become. And if you're wished to become that type of person is strong enough, then those votes will continue to accumulate over and over and over again until you actually have enough evidence to think of yourself in that specific light. The most practical way to change who you are is to change what you do. Every time you write a page, you're a writer. Every time I practice my guitar, I'm a musician. Every time I work out, I'm an athlete. Every time I place a trade, I'm becoming a trader. So every time you do this behavior change, every time you succeed in fulfilling on this habit, it allows you to start trusting yourself. You start to believe that you can actually accomplish these things. I mean, I think about back when I very first started trading options, I mean, it was pretty overwhelming. I was overwhelmed with the jargon of the Greeks and Delta and Theta and Vega and what's this? Gamma, oh my gosh, what is that all about? But as I just did it a little bit each day, I started to learn it. Then I started to trust that, hey, I actually do understand this stuff. And these votes continue to mount up and this evidence that I could be a successful trader started to build. And even though it didn't seem like it because in the first 10 years, I was inconsistent from a P and L standpoint, all of that accumulated over those years to a point where it finally hit a breaking point and part of this became, because of my habits and my discipline and everything else that goes into it, but it all of a sudden all came together. So to build this new identity that you want to become, it requires this new evidence. So it really comes down to a simple two-step process. Number one, decide the type of person that you want to be. Do you want to be a professional trader? Do you want to just earn a little bit of side income from trading? You know, what is it? What is the actual type of person that you want to be? And then number two, prove it to yourself with small wins. You know, going back to my guitar example, I had to prove it to myself with small wins. First learning the chords. Now I'm playing a couple of songs. I'm still in the process of this and that's the cool part about this is that I'm still in the process of showing myself small improvements, small wins and the more I do it, I can just feel my confidence starting to gain as I become a guitar player, as I actually become a musician. Now from a trading standpoint, I have zero doubts in my mind. I already have the identity as a trader because I've been doing it so long and I've been successful for so long, but for you, learning to trade, it's the same thing. You've got to show yourself evidence to build this identity for yourself as a trader. Now, some people have a problem with this of trying to fit, well, and they're like, well, I don't know what type of person I want to be. Now we're talking about trading here on this podcast so I assume if you're listening that you want to be a successful trader, but if you're asking yourself, you know, what, I don't know the answer to that question, you can start with going back to the three layers of behavior, you can start with the results. So what is it that you want? Do you want to make a bunch of money trading? You know, I mean, is that your goal? And if that's the case, then you can work backwards to find out what type of person that it is that you want to be. You know, if you want to lose 50 pounds, that means the type of person that you want to be is a healthy person. So then once you have a handle on the type of person that you want to be, you can start to take these small steps to reinforce that desired identity. In the book, James Clear gives an example of a friend of his who lost over a hundred pounds by asking herself every day, what would a healthy person do? So if you can imagine all day long, this person is going through their day and they're asking in their self, what would a healthy person do? So when they go out to lunch, when they go to a restaurant, would I order this bacon double cheeseburger? Would a healthy person order a bacon double cheeseburger with fries, super-sized with a extra large Coca-Cola? Or would they order a salad and a water, right? I think we know the answer. Or, I mean, it could be as simple as, you know, would a healthy person take the stairs or would a healthy person take the elevator? So she figured if she could act like a healthy person long enough, eventually she would become that person and guess what, she was correct. Your identity change is the North Star of habit change. The question that you need to be asking yourself is are you becoming the type of person you want to become? The first step is not what or how, but who? And remember, your identity is not set in stone. You know, one thing that I've talked to people about, you know, there's certain people who will always take personality quizzes or take all these personality types. And I think that's a mistake. I mean, I think a lot of people, they'll take these and they'll think, okay, well, that's just the type of person I am. There's nothing I can do about, I'm just not an organized person or I'm just not a healthy person or I'm just not a smart person or whatever it is. They take these personality tests and it pigeonholes them into a specific way and they think that they can never do anything about it. The reality is that you have a choice in every moment. Your identity is not set in stone. So with that, decide the type of person you want to be. If you want to be a professional trader, that's the type of person that you want to be. And then you need to go out and you need to prove it to yourself with small wins. Now, small wins does not mean profitable trades. Small wins could mean learning the process, focusing on your discipline, controlling your emotions during trading, all the stuff that we talk about in this podcast every episode. When you discuss trading with a friend or a family member, are you going to say, yeah, I'm trying to trade the markets or are you gonna say, I'm in the process of becoming a personal trader, professional trader? Remember, saying who you are, you've gotta be careful that you're not exaggerating or lying too much. In other words, if you're not a professional trader, you can't just go around saying, well, I'm a professional trader because that's what I identify as. Don't do that, but you can say, I'm in the process of becoming a professional trader. Instead of, yeah, I'm trying out this trading thing or I'll just see what happens with this trading thing. If that's your identity, if that's what you're saying, then it's never going to happen. And I understand some of you are still learning some of the concepts and strategies around trading, but Tim Weiss, part of the team, just did a webinar the other night on his strategy, Red. And think about how he talks about, like he's not trying all these other different strategies. He's 100% focused on his Red strategy. He identifies as a professional trader who only trades Red. And that's the point that you have to get to. So I hope this was helpful. If you liked this episode, please go to Apple Podcasts and leave a rating or review that helps people find us. And as always, feel free to drop by our community at community.navigationtrading.com. I look forward to seeing you on the inside and we'll see you in the next episode.