Tuesday, August 3, 2010

How to motivate yourself

The inspiration for this post comes from a book by Patrick Forsyth, How to Motivate People (Kogan Page, 2000, 2010), written for business managers. Considering that the independent trader wears two hats--he is both a manager and that manager’s one-person execution team, I thought it might be instructive to look at the topic of motivation from the vantage point of the manager.

Forsyth defines the key management tasks as planning, recruitment, organizing, training, motivation, and control. The independent trader in his role as manager obviously doesn’t have to worry about recruitment; for better or worse he’s stuck with himself. But he has to carry out all the other tasks. And motivation is one of his key responsibilities. How does he keep himself motivated?

Forsyth turns to the classic work of Frederick Herzberg and his two-factor theory of job satisfaction. Herzberg divided conditions that affect performance into two categories: “hygiene” factors and motivator factors. Hygiene factors are required to avoid job dissatisfaction; motivator factors are necessary for job satisfaction. Among hygiene factors are working conditions, status, and perhaps most surprisingly salary. Motivators are achievement, recognition, the work itself, responsibility, advancement, and growth.

If Herzberg’s theory is valid, what are some takeaways for you, the independent trader? First, the amount of money you make trading is not itself a motivator, although you have to achieve an acceptable income level to avoid job dissatisfaction.

Second, you are unlikely to receive recognition for your trading prowess from the outside world because, quite frankly, nobody wants to hear about your triumphs. But you as manager can recognize the achievements of you the trader, perhaps with some rewards along the way for outstanding performance—something between an employee of the month plaque and a down payment on a Rolls.

Third, you as manager must keep encouraging you the trader to keep growing and advancing as a trader, perhaps even to take on new responsibilities. For instance, if you’re doing a good job trading one instrument, perhaps you might expand to another.

I’m sure you can come up with other ways that your managerial side can motivate your employee side; these are just some quick thoughts.

In the final analysis, of course, if you don’t find the work itself a motivating factor you’re sunk as a trader. Unlike flipping hamburgers or working on an assembly line, trading is a “love it or leave it” kind of job.

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