This is something I’ve only recently came across. And I think it makes good sense so it is something I have embraced. Psychology plays a really big part in how well any individual does, and words have an impact, so if using the right words can have a beneficial impact on psychology then results should improve.
What sort of words am I talking about then?
Mainly negative ones of course. And switching them to something else, or completely removing them.
I use the word ‘expense’, instead of ‘loss’. This is because some trades will go in my favor, others will go against me, it is inevitable, nobody can have a 100% success rate. But I don’t see it as losing, it is an inevitable expense. Much like a retail shop knows it’s business rates, rent, heating and staff are inevitable, they can’t avoid them.
As I posted recently on the famous quotes page; “In the stock market you can only win if you’re ready to lose”. You have to accept it is inevitable that some positions will not go in the wanted direction. However I would prefer that quote to read;
“You can only win if you accept there will be expenses along the way.”
This shows how a simple change of words can make a difference, effectively the two sentences mean identical things, yet the second one feels better.
This one isn’t actually a negative word, but I don’t like using it. I try to avoid using the word ‘perfect’. I have very high standards, but I’m not going to try and enter a trade right on the lowest pip if I am going long. And equally I am not going to exit on the highest pip. The perfect trade doesn’t really exist. I would much rather execute my setup to a very high standard and let what will be will be. And if I try and get every trade, and everything perfect then it is going to mentally exhaust me!
Other words you could do are changing ‘win’ to something like ‘gain’, or even ‘income’. This may help you not get overly excited about a win, much like not getting upset about an expense. The general theme is trying to keep everything fairly neutral and your emotions on a fairly even level. If it all becomes about winning, losing, perfection, disaster, violent conditions and the like then your behavior could become erratic without you noticing because of your emotions.
Is it only words, how about other things?
I also remove pound signs from my documents. If you are able to look after the pips, then the pounds will take care of themselves. It is easy to get too hung up on looking at the pound sign, especially if you go on a run of a few trades which don’t work out, you look at your balance and it can feel like it has taken a big dent, we’ve all done it along the journey! But if you look at the pips, with consistent trading you should probably have it all back in a reasonable time frame provided sound money management is in place.
On this topic it is also good to be surrounded by happy pictures in your office, and light colour schemes. Once again these can affect your psychology. But I intend to cover that in a separate post in the future (got to keep some content ideas stashed away for a rainy day!)
To conclude. Can words really alter trading behavior? I have no conclusive evidence so I can’t say for sure. I have implemented it recently in my trading documents and will see what happens. But what I do know for sure is: do you want to be hearing, reading and thinking about the word ‘loss’ every hour of the day? I don’t, and that is why I recommend watching your mouth and using words carefully in your plans, diary and day-to-day routine.