In September 1947, Reader’s Digest published the following quote by Henry Ford; “Whether you think you can or you can’t, either way you are right.” This quote has become quite famous as it describes the essence of beliefs and how they impact every aspect of our lives. From health, to relationships, to business and finance, how you think fundamentally directs all that you do.

Of course, it follows that beliefs greatly affect your trading as well. Beliefs are simply thoughts that you accept as truth. You view them as non-negotiable, especially when they concern you; such as, beliefs about your worthiness, intelligence, attractiveness and/or your abilities – or lack thereof. You begin to form beliefs as soon as you begin to experience; and as you interpret experiences (emotionally, at first, and later around 5 or 6 years old, cognitively) you form the foundations of beliefs. They become the lenses through which you see the world; also known as programming and conditioning because these interpretive foundations are strengthened by repetition and often bear little resemblance to reality – as in limiting beliefs.

Limiting beliefs are irrational and negative beliefs that usually don’t coincide with facts, but you still hold on to them with an iron grip even though these learned limitations are mostly unconscious. They represent core beliefs, and the earlier they are formed the stronger they become. These internal structures develop the building blocks of your relationship to the world.

Consider a little girl, let’s call her Tammy, with a critical and shaming mother who throws negative epithets at every turn; for instance, calling the toddler stupid, idiot, clumsy, etc. These labels become ingrained in Tammy’s psyche as truth. She becomes tentative, shy, anxious and risk averse.

Fast forward, Tammy is 8 years old and in the 3rd grade. The teacher asks the class a question and Tammy thinks that she knows the answer. Although tentatively, she raises her hand and is called on by the teacher and gives what she thinks is the correct response. Unfortunately, Tammy is wrong, and the class erupts in laughter. Tammy feels humiliated, ashamed and immediately, although unconsciously, her ego, in an effort to protect her in the future, resolves never to volunteer again and forms a belief that she must be right at all times while concurrently forming a deep-seated fear of being wrong.