TRADING DISCIPLINE: Have separate accounts

Broadly speaking, there are three types of mindsets in the market:

• investors, who spend time considering inner workings of a company and generally have a longer time horizon;
• gamblers, who try to get rich quickly and become emotionally tied to their positions; and
• traders, who use mechanics to maximize the ratio of daily P/L to risk.

An individual may have inclinations towards multiple mindsets at a time, but in my opinion, mixing mindsets leads to muddying one's motivations for each position. For example, when mixing motivations, an investor may decide to sell calls against their position to free up cash in order to YOLO a 0DTE. A possible outcome is that this person has compromised their position's tax status (realizing previously unrealized gains) for a failed lottery ticket.

If you have the inclination for multiple of these mindsets, please do your best to isolate them from one another. Cordon each into their own P/L items, if for no other reason than it allows you to evaluate your relative success in each arena.

I have a passive long-term account, an active long-term account (for stock picking based on fundamental analysis), a speculative account, and my trading account. This is essential for anyone who deals with FOMO, like me. Some may feel like their personal investment strategy is indicted when they see Redditors with 200% YTD gains. Having separate accounts, where you are able to assess your performance utilizing each mindset, will give you personal reassurance that your current strategies and allocations are well founded.

In a sense, treat each account like its own investment vehicle. You are multiple hedge fund CEO's, as well as the CFO of your personal finances. You as the CFO get to decide which CEO has the best outlook and strategies. It is imperative to keep these roles as separate as is psychologically feasible. It will allow you to make the most sound decisions both within the market and with your personal finances.