Welcome back to our discussion on Napoleon Hill’s work The Law of Success in 16 Lessons.

If you’re just joining us or would like a refresher on the Laws of Success, they are:

1. A Definite Chief Aim
2. Self-Confidence
3. Habit of Saving
4. Initiative and Leadership
5. Imagination
6. Enthusiasm
7. Self-Control
8. The Habit of Doing More Than Paid For
9. Pleasing Personality
10. Accurate Thinking
11. Concentration
12. Cooperation
13. Profiting by Failure
14. Tolerance
15. Practising the Golden Rule

In this article, I’ll be discussing the fourth Law, which is Initiative and Leadership. The Laws of Success were designed to complement each other, so by this stage of the process you would be expected to have a Definite Chief Aim at the very least, so that you know what you’re going after. Let’s say that your goal is to create an additional income stream of $10,000 per month from trading. Sit with that figure for a moment – how would that feel? If an extra $10,000 per month doesn’t inspire you, make it $20,000 or $50,000 or $100,000 a month!

Don’t worry if you can’t see HOW you are going to make the money just yet. Your job is not to make $10,000 per month today, it is to get profitable, even if that’s only $10 per month. Once you are consistently profitable as a trader, it is very easy to scale up by adding zeros to your trades. $10 a month can become $100 a month, then $1,000 a month, etc.  Scalability is one of the many advantages of trading! But you need to get profitable first.

In this lesson, Napoleon Hill says that your Definite Chief Aim must be ACTIVE, not passive. He says “A definite aim will never be anything else than a mere wish unless you become a person of initiative and aggressively and persistently pursue that aim until it has been fulfilled”, so we need to always be on the lookout for steps (small or large) that we can do to move us closer to fulfilling that aim each day. In order to be a person of initiative, Hill says you need to develop self-confidence, which was the second of the Laws of Success. Of course the Habit of Saving, which I discussed in the last article, also develops self-confidence, not to mention discipline.

Initiative and Leadership are both important for us as traders. Hill defines initiative as “that exceedingly rare quality that prompts – nay, impels – a person to do that which ought to be done without being told to do it.” There are many great opportunities for making money in the financial markets each month and each year – but no-one goes around handing them out for free. If you want them, you need to take the initiative to go and find them.

One of the things that appealed to me most about trading (aside from the money and free time!) was that I would be my own boss. I could work on my own terms, choosing what to do and when, and I wouldn’t have to answer to anybody! Not having a boss is one of the best and worst things about trading. New traders who are disciplined (I certainly wasn’t!) can learn to trade, and then follow routines for finding, taking and managing trades. However, traders without discipline tend to have a hard time.

Trading requires you to show up and work. It doesn’t require you to work long, 80 or 100 hour weeks, like some jobs, but you do need to put some effort in. If you don’t put effort in, you won’t make any money. In some jobs, lazy employees can show up and put in a bare minimum effort and still take home their salary. In trading, the best case scenario is that lazy traders don’t make money. In most cases, they’re likely to lose money. This is where having a boss sometimes has some benefits – it protects us from our own human weaknesses.

So that’s a key takeaway point for those who are either trading now, or would like to become traders: you need to have the discipline and initiative to do things like learning to trade, finding trades and taking trades, without being told or forced to do it.

In the second half of the lesson, Hill talks about Leadership, describing qualities such as ‘self-sacrifice’, which is something all traders require in the beginning as they learn their craft, as well as courage, which is certainly needed in trading, particularly when you’ve just had three losing trades in a row and it’s hard to take the next one. However, I believe that the number one leadership quality relating to traders highlighted in the book is that of decision-making. Hill says “one of the major requisites for leadership is the power of quick and firm decisions”.

David Bowden, the founder of Safety in the Market, said that traders “need to be able to make a decision in the time it takes for a match to burn”. The reason for this is that markets can move quickly. They don’t always move quickly, but we need to be prepared to act immediately in case they do, otherwise we’ll find ourselves on the sidelines, watching “the one that got away.” Traders need to be ready to make decisions for entering potential trades, making changes to open trades, and, at times, closing trades.

From time to time, students will tell me that they have trouble making trading decisions. They’re not sure whether to take a particular trade, they’re not sure if they should move their stop loss, and they’re not sure if they should exit a trade, perhaps a losing trade or even a winning trade that may have more to run. When we discuss the issue, the reason for their inability to make a decision usually comes down to one of two things: they are either over-trading (trading too many positions or trading a position that is too large for their capital, which raises emotions and makes it hard to think clearly) or they haven’t done enough work to verify their techniques or setups, so they don’t have the confidence in those setups. Luckily, both of these problems are easily rectified by study, back-testing, and the discipline of sticking to your trading plan.

I believe that traders aren’t born, they are made. Those who take the initiative to do some study, learn how markets work, and then develop and test trading strategies will usually go on to find success in the markets. Those are the traders who find what works, put it into a trading plan, and then follow that trading plan. To learn a powerful, one page trading plan that our traders use, check out the Active Trader Program Online Training.

A great philosopher once said that “Initiative is the pass-key that opens the door to opportunity”. How will you use initiative today to bring your Definite Chief Aim one step closer?

Action items:

• What is something that you know you need to do but keep putting off? Take the initiative to make a plan for it’s completion. If it can be done in one session, do it now. If not, write out a plan using small steps or chunks and complete that first chunk today!
• For traders: what is something that you know you want or need to do but have not yet done? Perhaps it is a market that you wish to analyse, or a chapter of your course that you need to go and revisit. Make a decision to get it done today!