A Traders “Dollar Threshold” 

There has been this strange re-occurrence that I have seen over the 18 years of coaching common to many traders that I felt I should discuss and make you aware of. 

I don’t have a clinical term for it, I just call it the “Dollar Threshold” and it can happen at anytime in one’s trading career. It has no boundaries and is not isolated to less experienced traders. This same situation has happened with traders having many years of experience and even at high levels of trading experience. 

So “what is it?”  It’s when a trader hits a dollar amount in profitability and the game seems to change.  Like a glass ceiling they can’t get through. Their trading goes off for no apparent reason and even sometimes it feels like self-sabotage in each trade. There are many losses one after another, all as a result of hitting this mysterious level of profitability. Usually it’s a higher dollar amount than was ever reached before. 

Let me give you an example to make this clearer.  Joe was a business man (names have been changed to protect the innocent) who built a successful company and than was bought out for millions of dollars.  More money than Joe had ever seen before. 

Next he decided to get into trading and began to learn and trade with an account of 50k.  He did really well and worked the account up to 80k in a very short time, a born trader. Then he experienced many losing trades bringing the account down to 30K. A big loss for anyone but Joe now had millions and so he refunded the account back up to 50K and started trading again. 

After a month or so the same thing happened he worked the account up to 80K and it was bizarre, again the losing streak hit with over trading and increasing size and losing again working the account back down to 30 K.  Again Joe refunded the account back up to 50K.

That’s when he called me.  Our conversation went something like this: “I really need your help please, I don’t know what’s happening. I know I can trade well I worked the account up to 80k two times but each time I get there something weird happens and I lose and go back down to 30K, refund and start all over again.  What is wrong with me? I feel like I am going crazy” 

Joe had hit his dollar threshold, which is clearly 80K. Maybe when Joe worked for himself that’s the amount he paid himself. It is a number that he has locked in his mind and one his mind reacts strongly to. 

Joe is NOT unique. I have had many traders new and experienced run into the same pattern with the only difference being their personal “dollar threshold” being different. This number causes the down turn and change in their trading. Sometimes its 30k, or 150k or 1M but whatever the amount for the individual the same thing happens they just can’t seem to breakthrough their personal “dollar threshold”. 

First let’s look at why this happens and then let’s discuss what a trader can do to fix it. My belief is that when this happens the trader is hitting the dollar amount that he placed on himself as “his value” or what he is worth.  It may have nothing to do with the reality of the situation it’s just what he feels he’s worth in his sub-conscience.  So when they get to that amount and attempt to go higher their brain says no we shouldn’t go there, we don’t deserve it and so lets get back to reality and lose so we get back to where we should be and the losing streak happens.

Sometimes it can be reinforced from a religious belief that making money is a bad thing and for bad people because it’s greedy. Years of conditioning put the thought into the sub-conscience and the brain reacts on it. It appears to be a comfort level that the brain seems to seek and when the dollar amount comes near it gets uncomfortable. 

But there is good news it CAN be managed and the number can be stretched to bigger and bigger levels of success. 

First, I also believe that traders are very special people because they all have the potential to make great wealth.  That with that wealth they can first help themselves second their families and third their communities.  They can give back greatly and make a difference.  Most that I know that have achieved this level of success, do give back and have done some amazing things but you very rarely hear about them, just know they are there. 

So first is to switch to the belief that making money is OK.  Remember repetition is the mother of skill and to put a new belief in the mind, so you do it by, reading something over and over till the mind finally it will accept it. Take one piece of paper and fill in the blank: It’s great to make money because. …. Fill the page one answer per line and re-read it daily. 

Now once that’s done we have to work on the trading.  One way I have found that works great is what we did with Joe’s situation.  You see the 50K was also an important level for Joe.  It was level that he felt comfortable with but also one where his trading was became disciplined.  

So I told Joe when he gets the account back up to 80K he should remove 30K and put it somewhere else. Maybe in another trading account or savings account, any place but the account he was trading in.  

After 2 months I received a call from Joe and could tell in his voice he was thrilled.  He said: Guess what?  I made 63k this month and I took out 30K and 33k and put it into my saving account and I am starting again.  That technique really works, I don’t understand it but I will keep doing it. He also asked me if his dollar threshold will ever get bigger. I said it already has …….you have stretched it now 3k when you transferred the 33k, he said Oh yeah, I did. 

With time the threshold expands and gets bigger as the trader gains more confidence and the brain starts to recognize it’s OK when it moves beyond the threshold number. 

All too often, as traders, we think of our greatest goals in trading, hitting the million dollar mark and when we actually get close to it the brain starts to back off. 

I had a high-end trader who had this happen and his dollar threshold was 700k he wanted to get to the million but was stuck at the 700k.  Finally with some adjustments he too broke through and his new number now is 3M as he has hit 2.5M at the last update. 

So anything is possible and we all have the opportunity to do some amazing things just be aware that the “dollar threshold” exists and be aware that it can be changed with a simple trick of the mind-set. 

Remember: The mind doesn’t distinguish between what’s real or not real it ONLY knows what you tell it.  Good things IN will translate into good things OUT.  Be careful of what you think. 

So until next time ……..great trading!