Lessons from the Pros

Specialty Skills

Awareness is on the “What Matters Most” List

You may have realized that when you get a trade “result” it stems from three variables and how they interplay with one another.  The first variable is thought.  Thoughts are things and they are comprised of a number of components; for instance, internal pictures, beliefs, biases and values.  Do you remember this saying, “The thought is father to the deed?” Anything and everything that you do will begin with a thought.  Thoughts prompt and initiate the second variable, emotions like determination, inspiration, passion, fear, greed, anger, anxiety and doubt to name a few.  When these emotions have been activated they “drive” the third variable behaviors like preparing, planning, trade execution, rule violations and premature exits.  So, when you get results and they are not what you wanted, especially if you get the same results over and over, you must start changing the variables that went into that result; that is, your thoughts, emotions and behaviors.  However, it’s difficult to the point of impossible to change or modify any of those variables if you are unaware of them.  Actually, about 95%, give or take a few percentage points in either direction, of everything that goes on in your brain and mind is out of your awareness.  This means that there are droves of results that you have no knowledge of what went into getting them.  You’ve got to identify what is motivating these variables in order to start changing those results.  You’ve got to monitor your thinking, feeling and doing so that you discover the faulty patterns, programs and habits that are causing you to do things that you’ve said you wouldn’t and to not do those things that you said you would.  Let’s consider the following situation:

Ivy could feel the anxiety build as though it were tea in a pot that was about to boil.  She looked at the Chart of the ES E-mini with a mixture of dread and depression.  She had identified an upward intermediate trend on the daily chart, which was continuing on the intraday 60 minute in a rally-base-drop configuration.  She had identified a demand zone and was looking for the price action to pull back into that zone.  She placed a stop just below the lower demand zone line.  Her limit order to buy had been filled on the 5 minute chart and she had been in the trade for a few minutes when the price action turned and was heading back into the zone – right for her stop.  The dread she felt had been prompted by the closeness of the price action to taking her out and the depression came from her thoughts surrounding the fact that she had already experienced 3 losses that day.  Ivy was way outside of her comfort zone.  The anxiety was rising and as well the dread and depression was being fueled by her internal running commentary regarding what she perceived as her failures and that she was about to lose again.  She wanted desperately to relieve the tension created by what she was telling herself about the price action and what another loss would “mean” about her trading abilities.  Just then she placed her hand on the mouse getting ready to move her stop.  She came perilously close to doing just that when she had a “moment of awareness.”  She had learned the phrase “Remember Ma” which triggered her to pause and ask herself several questions in order to bring her back into the moment, so that she could focus on what mattered most in the trade; i.e., trading her plan and following her rules.

Trading Memeory

This type of scenario plays itself out thousands if not millions of times each trading day across the planet; traders who have good market knowledge, a good plan, and good money management but fail to keep their commitments and follow-through with the plan.  They become so uncomfortable with flaring emotions like fear, anger, anxiety, greed, and self-doubt; that traders inadvertently and often unconsciously do something that turns out to be a rule violation.  This rule violation, whether, chasing, doubling down or moving a stop etc., is a relief seeking behavior and becomes the precursor to a bad pattern or has already turned into a habit.  This is when it is critically important to activate a “moment of awareness” as Ivy did.  It can mean the difference between maintaining your cool with subsequent follow-through of your plan, and disaster- which is exactly what you’ll incur if you violate your plan and rules.  The key is to aim to remain in the moment, for the moment, fully available and fully present at all times.  Of course, that is difficult, especially if you are new to the concept.  Actually, you can practice at any time; the trick is getting yourself to practice it when you need it most – at those times in the trade when emotions are starting to storm.  What you can do is “Remember Ma” which is a little mnemonic that can help you by triggering the exercise of pausing and asking yourself:

1.       What is happening right now?

a.      What am I doing?

b.      What am I feeling?

c.      What am I thinking?

Then ask a second primary question:

2.       What do I want right now?

In other words, ask yourself what results are you really trading to achieve?  Often just the act of asking the question will prompt you to redirect your behavior from being driven by an unconscious pattern to being results oriented.  This can lead to a third question:

3.      What am I doing right now to prevent me from getting the results I truly want?

Then you can make a choice, all you need to do is say the phrase to yourself, “I choose…”

4.       At that point, take a deep breath and move toward the result that you want by choosing a behavior that represents your A-Game.

This exercise (Remember Ma) involves changing the focus of your attention so that it is on the intention of the A-Game.  The intention of your A-Game is clear; it is, to master the process of trading as a rule based, plan following trader at all times.  Unfortunately, so many traders are trading and going through life by default.  This means that they are operating and behaving based upon old programs that are out of their awareness; i.e., in their unconscious.  These programmed patterns of thinking and doing are motivated by limiting beliefs (also mostly unconscious) about their self-worth, intelligence, character, etc.  So, when you are pushed outside of your comfort zone by your own unconscious thoughts and emotions based on the meaning you attribute to what you see, then you begin to reach for the temporary relief…chasing, doubling down, moving stops, etc.  This is when you most want to use “Remember Ma” in order to interrupt the bad pattern and get into the moment of the trade so that you can resonate with reality and what matters most in the trade.  This and other tools, techniques and concepts are what we teach in “Mastering the Mental Game” On-line, On-location and XLT courses .  You must trade with your best when you are in the markets; nothing less will provide you with consistent winning results (where winning is defined as planning your trades, trading your plan and following all of your rules religiously).  Your mental game is critical.  Trading is a 90 – 95% mental/emotional game.  Your performance is not based on anything physical; it is all mental hence mental and emotional tools are required to keep the A-Game at your platform.  Ask your Online Trading Academy representative for more information.  Also, get my book, “From Pain to Profit: Secrets of the Peak Performance Trader.” 

Happy Trading,

Dr. Woody Johnson


DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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