Many of the self-help and psychology books I’ve recently read delve into the topic of ego, either directly or indirectly. They usually have at least one chapter or a significant portion of the book dedicated to understanding how to work around our egos. So, what exactly is ego? When I ask my friends for the definition, they usually conjure up images of historical figures with massive egos.
To me, ego is simply the perception you have of yourself. That’s it. This perception can be positive, negative, or somewhere in between. You might see yourself as a go-getter who overcomes challenges, or you might see yourself as someone who always seems to get the short end of the stick and is destined to lose the next challenge. It all depends on how you view the world and, in turn, yourself.
This definition opens the door to two distinctly different ways of seeing yourself: the Diva or the Doormat. The Diva is like a peacock, all puffed up and celebrating their own beauty, brains, or cleverness. The Diva sees themselves as the cream of the crop, whether that’s warranted or not. On the other hand, the Doormat sees themselves as lesser, not as good, not as deserving, and intrinsically inferior to others.
The Diva lives in an alternate reality of their own making, where they are the superstar rocker in their own life’s movie. Failures or setbacks are due to others and the outside world, not the Diva’s ego. The Diva internalizes the outside world and makes everything about themselves, which is never really the case. The Doormat also lives in an alternate reality, but believes themselves to be the problem or always in second place. The Doormat may internalize the outside world and translate it into a full-blown victim’s mindset. Both are operating from an egotistical selfishness of “I, Me, Mine,” (egotistical selfishness, right George?) just with slightly different slants in their ego.
Are you operating from the perspective of the Diva or the Doormat? It’s possible to be a mix of both, with some people displaying one more prominently than the other depending on the situation. For instance, you may act like a Diva in the workplace but a total Doormat in your domestic relationship. However, neither mask truly reflects who you are. Both are perceptions that your ego has adopted, and they may not reflect reality as it truly exists.
It gets interesting when your inner Diva or Doormat shows up and makes trades for you. Is your ego so prideful that it blinds you from what is really happening in the market? An out-of-control Diva could cause you to blame external factors such as the markets, the current president, or the FED when you take losses. You might tell yourself that you lost because you had a cold or didn’t get enough sleep, instead of accepting responsibility. You have your head in the sand, and if you let the Diva continue, one day your account will be blown, and you’ll wonder how you got there. The Diva is truly blind, so be extremely cautious of this destructive and ignorant bravado.
On the flip side, a Doormat may defeat themselves by being openly self-defeating. They may believe that any and all losses are their fault and that they deserved them. The Doormat might rationalize external events as problems brought on by their own existence. Low self-esteem and a poor self-perception are big symptoms here. Losses are heavy for these traders, and wins are joyless. Losses can be a reflection of their self-worth, and they can become a self-fulfilling prophecy. Worry, tentativeness, and fear are common for the Doormat too.
So, how do we combat this ego as traders? First, become honest and mindful of yourself. Ask yourself some questions. Which trait(s) do you display while trading? Are you more of a Diva or a Doormat, and why? Get to the roots and ask “why?” repeatedly. Divas need to work on being more down to earth, truthful, and realistic. They can’t continue living in a fantasy world, or that fantasy will come crashing down. Doormats need to work on building value for themselves independent of the markets and their trading outcomes. They should work on building up their own self-value and self-esteem. Both Divas and Doormats need to accept total responsibility for the outcomes and reality of their trading.
With the Diva, we need to bring them back to reality. With the Doormat, we need to build and boost them up. As traders, we need to be very self-aware of where our ego falls on this scale. Are you on a winning streak, and your proud Diva ego is crowing loudly? That’s a yellow flag. Or do you feel like you are withering away with every loss? That’s a warning that the lowly self-loathing Doormat has you beaten down and will continue to drive you to nowhere.
As traders, our ego is truly our enemy, but in this case, it can be our warning signal that our mindsets are either too high in the clouds or way down in the dumps. Neither is a good place to be. We want to be balanced and emotionally even-keeled. If your ego is whispering in your ear that you are either the best or the worst in the world, know that neither is true. Get real and tune up your inner awareness radar because that good ol’ ego is starting up again!
Two great books with helpful info on ego. Credit: The Financial Mindset Fix by Joyce Marter and Ego is the Enemy by Ryan Holiday.
