Some trading psychology – our perceptions of limitation
If you’ve been following the news about Rajesh Gill (or read my blog post about him the other day) and how he was awarded £20 million from his broker MF Global.. the thing that struck me was how he was able to turn £7,000 into £7 million in two years!
I kept on thinking about this since my last post.. the rate of return seems impossible but yet, he was able to achieve it. For most traders, or learning traders, we are taught that in order to be a successful trader, we need to think about our risk management. This usually involves betting 1%-5% of our account on anyone trade at a time. This obviously limits the losses on the account but also limits any profit potential… if you can get over 60% of your trades correct, then you’re account will grow and if you are a great trader, you’ll be able to return 50%-100% a year! A successful mainstream fund in comparison on average returns 20-30% a year.
So how is that Mr Gill completely annilhates these returns? If someone can make 100% a year and then 100% the following year, which is 400% in 2 years most other people think there’s some sort of scam happening somewhere. However, Rajesh Gill returns 100,000%!!!
The reason why most people don’t think it’s possible to return 100% a year is because of what is set by industry or by the norm… and as a result, this becomes the top level of success.
Just to bring you to a real life example. For centuries, it was thought that it was not possible to break the 4 minute mile (that’s running a mile in 4 minutes for those not sure what I’m talking about). In fact, some top scientists thought that the body would ‘explode’ if the human body went this fast!
Then, in 1954, Roger Bannister did it. That same year, 37 also managed to break it. The following year, 300 people did so.
Amazing isn’t it? For such a long length of time people didn’t think it was possible and never pushed themselves to succeed. Once proven that it was possible.. so many people were able to do it!
It’s the same with trading. Once you’ve mastered yourself as a trader, don’t aim for 100% return.. you’re already limiting yourself. Visualise and aim for unlimited returns… that’s what Rajesh Gill probably does and look what he has achieved in such a short space of time!