Lessons from the Pros

Specialty Skills

Don’t Allow Your Trading to Become Hijacked

Trading is one of the most difficult endeavors on the planet and it’s not because it is rocket science.  It is difficult because of the emotions that become activated as soon as the price action goes against you.  In fact, some traders become anxious as soon as they open their platforms or as soon as they hear the opening bell.  They have been conditioned to anticipate that something bad is about to happen; that they are more-than-likely going to lose by virtue of just opening a trade.  This is called a perception of threat. When your system perceives a (physical, mental, emotional or financial) threat, whether real or imagined, it goes into stress mode; otherwise called “fight or flight.”  This physiological phenomenon is automatic and a holdover from prehistoric cave dwelling days where it ramped up the system to fight or flee in order to keep from being a sack lunch for a saber toothed tiger.  As soon as you sense danger the limbic system of your mid-brain says, “warning – imminent attack, be very afraid.”  Immediately brain chemicals like adrenalin, cortisol, and dopamine are released causing the heart to beat faster, the respiration rate to increase, blood to be rerouted from the extremities into the large muscles, the pupils to dilate and a number of other physiological changes that take place in a matter of milliseconds.  At this point you are primed to chase that trade, move that stop, exit a trade prematurely or violate some other rule that short term helps reduce your anxiety but is not in your best interests.  In other words, you become emotionally hijacked by your own brain.  Actually, whenever you place an order to trade you put your hard earned capital at risk; and the risk factor by definition means that you are threatened with loss.  However, thankfully, not everyone responds to taking risk as a perception of threat.  This is why it seems as though your issues are insurmountable and, despite your best efforts, you can’t seem to stop doing those things that a few moments before you said you weren’t going to do.

Free WorkshopWhen the perception of threat hijacks your system, you need to use mental and emotional tools to counteract and interrupt the bad patterns of thinking, feeling and doing that are in fact what cause you to get the results that you don’t want.  Trading is all in your head.  It is for this reason that it requires mental and emotional tools.  If you don’t have these tools it’s like driving without a steering wheel; you’ll not only lose your way; you will crash and burn without them.

Here is a tool that will help; “thought monitoring.”  Many threats are perceived because of underlying and often subconscious limiting beliefs and biases such as; “I’m no good at this.” As soon as you “see” something that in any way appears to confirm that belief your system becomes hijacked and emerging bad patterns of thinking, feeling and doing take over.  For example, you enter a trade and place a hard stop.  Soon after getting filled the price action begins to slink toward your stop.  Immediately anxiety, fear and panic set in and you feel overwhelmed by the strong urge (that gets stronger the closer the price action gets to your stop) to move the stop.  You tell yourself that you are not going to move that stop under any circumstances.  Then, moments later, you…move the stop.  Now, for a moment you actually feel better; but only for a moment.  Soon after that you feel disappointed in yourself for violating your rule and not keeping your commitment.  Now, if you do in fact lose in that trade, which is often the case, you’ll feel even worse.

When you detect that you are feeling anxious, fearful, angry or any other negative emotion or uncomfortable feeling, like butterflies in your stomach or tension in your head, immediately ask yourself; “What must I be telling myself or believing to feel this way?”  If you do this repeatedly and develop the habit, you will begin to increase your awareness of subconscious negative thoughts and limiting, irrational beliefs that create the perceptions and ultimately drive the behaviors that reap undesirable results.  Additionally, you will begin to interrupt the emerging bad patterns before they can completely hijack you, allowing you to replace these bad patterns (habits) with good ones…one trade at a time.

The above is only one of many ways to support your ability to keep your brain/mind system in-line and stop the hijacking from stealing your desired results.  It’s of vital importance that you attain and maintain a fierce focus on what matters most in the trade; and this is supported by interrupting bad patterns of thinking, feeling and doing by identifying limiting beliefs and neutralizing them.  This is how you begin to develop your A-Game.  This is what we teach in “Mastering the Mental Game” Online and On-location courses.  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.

Join over 170,000 Lessons from the Pros readers. Get new articles delivered to your inbox weekly.