Belief vs. Conviction

The Chinese symbol for Conviction, Faith, Persuasion.

Have you ever had the wind knocked out of you? Its not a pleasant experience if you never have. Any one who has played sports has had this happen. Land on a ball, get hit, land too hard on your back on the ground and all of a sudden despite every effort of your mind and shocked body, you can’t take in a breath. And most of the time, the long slow exhale that is happening comes out as an uncontrollable groan or moan. Needless to say, its uncomfortable.

Well that happened to me the other day. Not physically but mentally. I won’t get into the details but lets just say I was brought face to face with the reality of some things in trading regarding my performance that I have been secretly unhappy with, and I was forced to deal with it. And ever since, my head has been in one of those groaning exhales  trying to suck in the next breath.

Ultimately, the whole thing boils down to belief vs. conviction. So whats the difference and why does it matter? The more I think about it, the more I realize there is a very important distinction between them. Beliefs are flippant and unsubstantiated. Convictions are something that I believe that you would have to pry from my cold dead hand. Beliefs come and go and are easily swayed. Convictions are at the core and are forged through life’s lessons and let downs, its’s triumphs and trophies. Convictions shape your beliefs. Not the other way around.

There is a lot of talk about belief in religion which I find quite convenient because as we have just described, beliefs are easily swayed and can be changed with little consequence. The Bible says “faith (belief) is the evidence of things hoped for, the CONVICTION of things not seen.” We can not approach things from the standpoint of belief alone, its all founded in our convictions.

Below is a clip of Will Smith interviews. The 4 min mark is where what I am going to talk about is but the whole video is pretty good.


So, are we as traders building a wall or putting bricks together one at a time? I  use the brick wall example from the video above because I think it illustrates the difference between belief and conviction very well. Its all in how we approach it. If I or he were to approach building that wall with belief, then he would see the wall and think that the wall will naturally build itself over time without any concentrated effort. If I just show up today, some amount of the wall will be built and over some period of time the wall will be finished. 9 times out of ten the wall doesn’t get built. Maybe 10 out of 10 but I guarantee that the one time the wall does get built, conviction took over as the motivation somewhere in the middle of the process. So how do I build the wall with conviction then? Is it to get angry at the beginning and talk alot about how Im going to do this and how good I am at laying bricks and this is going to be easy? No. That’s just talk, and self belief. Conviction is quiet and steady. One brick at a time, placing it perfectly, is conviction.

The truth is, I can’t be committed to “the wall”, the end product. The wall is real but the amount of time and effort and energy that goes into the wall is abstract and unknown at the beginning so that means that once the “entire wall” isn’t coming together as quickly as planned, you can rationalize walking away. But, if you commit to each brick, the wall WILL happen. Its inevitable.

I haven’t been committing to the bricks. I want a wall, but the bricks and time and mortar and energy and lack of progress are killing my vision of a wall.

So, it’s time to take a step back.

Let me explain this in trading terms. The wall is the goal. Its the trading acct that allows for freedom from the “job”. It’s abstract. It is undefined. Its some belief of an already successful me that has the money and the skills and has made it. To show up to my trade station every day and expect to see the wall is suicide. This is the “belief” that I am a trader. The “conviction” of being a trader is focusing only on the next brick, the next trade. Can I perfect this trade. And then try again on the next one. And then before you know it, that abstract wall is a reality. Its mastery.

I was discussing this with a fellow trader today, this idea of conviction and I asked this question: why is it so hard to find conviction in our trades? To have conviction that every trade I take is one of those bricks that I can place perfectly. Why does it feel like most traders approach every trade with a belief that it will work out, and not a conviction that this is the right decision.

I want to show the other side of the coin from my post last week on leverage. I argued last week that leverage kills most accounts. Well there is another way. What if we were so convicted about the success of our trades, our ability to place the brick, that we could leverage the hell out of it and made outlandish returns? I’ve seen that done as well. In fact I said last week that all of the most successful traders I know use low leverage. That was a bit of lie. There is one trader I know that uses all of his leverage and has absolute conviction every time he takes a trade and has murdered the market this year. He sets out to set the perfect brick that day and has conviction that he knows how to do that. Trading that way on belief will kill you. So I guess what I’m saying is that maybe there are times that just trading with lower leverage is a sign of trading from belief, not conviction.

Shove off anything that isn’t a brick in your wall. Find conviction in why you push the button every time.

I am on a quest to define my conviction. No more guessing. No more hopes and beliefs that everything will probably turn out ok at some point. Only stone solid conviction on every action, and then make it pay off, and then repeat.

“Stop reciting theory, and just hit your target”




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