It’s a well-known fact that people who only use cash or debit cards will spend less money each month than they would if they were using a credit card.
Well, from a psychological perspective, when you have a credit card in your wallet all month with a $10,000 credit limit, you are a lot more likely to buy something that you can’t really afford, than if you were just using cash.
It’s because when the money isn’t real, you don’t feel the pain until later.
A credit card is not real money; it is not cash. So, it messes with you psychologically since there is a disconnected feeling between you and the money you are spending. When you are unattached to the money you are spending, you are much more likely to spend a lot more of it.
Now, how does this relate to trading you might ask?
With your trading account, you are looking at digits on a computer screen, not real, tangible money.
It’s similar to using a credit card or chips at a casino in that there is no tangible ‘money feeling’.
Human beings simply behave differently when they are using real legal tender notes they can touch and smell, that is to say, they act more responsibly and logically.
In regards to giving your profits back to the market, well, it all begins with this feeling of being unattached to the money in your trading account.
When you have a winning trade, it’s natural to feel like the market ‘gave’ the money to you, but that it wasn’t yours to begin with, since again, there’s no tangible money exchange happening. Thus, you have little emotional attachment to the profits that you just made on that last trade.
This is one part of trading where having no emotional attachment is actually a bad thing.
You want to feel like that money you just made is yours.
You need to feel like it is yours if you want to hang on to it.
It IS yours!
What is stopping you from withdrawing most of your trading profits from your account each month?
I guarantee you holding that freshly made 1k, 10k or 20k in your hands will make you a lot more defensive of it than if you just left it in your trading account.