Thursday Trader's Tip: Maslow's Pyramid
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Welcome to Thursday Trader's Tip—the free edition of The High-Performing Trader newsletter. Each issue presents to-the-point trading psychology advice that can be read in under 5 min.
This week's post is about Maslow’s hierarchy of needs.
Maslow's hierarchy is a psychological theory that categorizes human needs into a pyramid structure, as seen in the image below. As we move up the hierarchy, it becomes more challenging to fulfill our needs due to interpersonal and environmental obstacles.
This pyramid serves as a helpful reminder of the essential needs for optimal trading performance. Let's explore each category and its impact on trading.
Physiological needs
Starting at the bottom, physiological needs are the foundation. This is accurate since many trading mistakes stem from a lack of basic needs like sleep, food, and emotional well-being. The trader tends to underrate them, but self-awareness skills become useless without these essentials—your brain chemistry works against you for good decision-making.
Safety needs
Moving up, we have safety needs. These are met by family and society, including schools, businesses, and medical care. It's about emotional and financial security, law and order, freedom from fear, social stability, property, health, and well-being. A clear example impacting a trader is when financial worries create fear and intense pressure on the trader's performance.
Love and Belonging needs
Getting into the love and belonging needs. This is all about our emotional need for relationships, connections, and being part of a group. Even though it might not seem directly linked to trading because of its isolated nature, loneliness, for example, can gradually deteriorate your well-being, affecting your trading performance in return.
Esteem needs
Moving on to the fourth level, we have esteem needs, encompassing self-worth, accomplishment, and respect. These needs are divided into two categories:
Esteem for oneself—dignity, achievement, mastery, independence
The desire for reputation or respect from others—status, prestige
Many people pursue a profession or hobby to gain recognition, fostering a sense of contribution or value. Imbalances in this category of needs lead to low self-esteem or an inferiority complex. Some traders begin trading with the goal of fulfilling these needs, but problems arise when it overshadows good trading performance. For those who lacked acceptance in their childhood, there's a heightened need to prove their worth.
Self-actualization needs
Finally, the pinnacle in Maslow's hierarchy, is the self-actualization needs. This is about unlocking your full potential, achieving self-fulfillment, and pursuing personal growth. Some people never get to fulfill these needs; they get stuck trying to satisfy recognition and self-esteem from the previous layer. Self-actualization involves the desire to accomplish everything one is capable of, with a spiritual aspect involved. Trading issues can arise when a trader lacks a clear purpose and inner connection with their "why."
When you're operating at your fullest potential in all aspects of your life, good trading performance is no longer a fight you’re trying to win but a natural consequence of your lifestyle.
Prioritize your basic needs, remove fear and pressure, surround yourself with healthy relationships, live by your standards, and continue fostering inner connection.
Happy trading,
Sara
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Thank you Sara, needed this today! 😃