There are so many aspects of the conversation regarding trading and your ability to become consistently successful. Your self-discipline or the lack thereof, is such a large function of identifying what must be done and then unequivocally doing it. But, alas therein lies the rub. Many of you who are reading this know exactly what must be done; it’s just that you can’t consistently do it. In other words, there are changes that you must make in your approach to the trading process. Actually, you may have identified several substantial behavioral modifications that are necessary for you to make and you are having a heck of a time turning that corner. So, let’s chew on it for a while and see what we can identify to assist you in navigating the turn-around that you so badly need.
Of course, we would be best served to begin at the beginning. If you want to change your behavior, you must first change your thinking and since much of your thinking is driven by your unconscious, you must become aware of your underlying self-sabotaging beliefs that drive thinking, emotions and behavior. Trading is arguably the most difficult financial endeavor that you may ever be faced with; why? Because money is at the heart of the buy/sell adversarial position, and with every tick while in a trade you are either gaining or losing money. But, it goes beyond that. Money is not only the cornerstone of this planetary system, it is also a major component in your identity. If you are winning money, you often feel euphoric, confident, smart and quite attractive! On the contrary, if you are losing your self-concept may be more akin to waking up from a bad dream only to realize that you were on stage in front of a gazillion people in your underwear. Let’s face it, that wouldn’t be a pretty sight for most of us. You’d feel impotent, incompetent, and humiliated. The fact of the matter is that when you go to the market you invariably are expressing yourself; whether you want to, try to or feel a need to, it doesn’t matter, you will express and expose yourself. And, when expressing yourself your behavior is tied much of the time to unconscious beliefs. Actually, when you are in the markets, every blemish, weakness and character flaw in your personality will be challenged, called out and tested. So, you see, that metaphor about being on stage in your underwear is not so far-fetched. Now, that doesn’t mean that the markets are doing that to you. On the contrary, the markets have no intention for you – even though you may have often wondered how the markets knew that you just placed a long trade and how they chose that exact moment to reverse! Also, there are no rewards, punishments, pain or risk in the markets, only consequences. You provide all the risk. And, with changing yourself, you must provide all the ingredients for that as well.
You can’t change what you can’t face and you can’t face what you don’t know. Awareness is a big key. The more aware you are of your underlying self-sabotaging beliefs the more you can position yourself to begin to address these issues – one at a time. Now, you might be asking; how do I do that? How do I become more aware of those often irrational, negative and limiting beliefs; especially if many of them are unconscious? Good question! You become aware by simply asking questions of yourself, and by introspection and more importantly by personal observation as you are going through market observation. By checking yourself and checking the market you’ll begin to gain an awareness of why you have no Trade Plan or are failing to follow the one you have. Or why you are not using a trade log or thought journal. And, Why you are continuing to do things that you say you must stop doing; or failing to do those very things that you say you must do. Once you identify the underlying self-sabotaging data, you can begin to deal with them…one issue at a time.
So, trading is a journey in self-discovery, and you must begin to pull back the layers of your unconscious onion, one at a time to begin to realize and recognize what is motivating you to behavior that is producing results that you don’t want. There are essentially two kinds of data with respect to trading. Many traders miss this fact and therefore miss a very important set of variables that impact heavily upon their trading. One type of data is mechanical data, which are everything that have to do with the markets; those being, news, technical analysis, instruments, indicators, etc. Theses data are external to you. The next type of data are internal data, which are everything that have to do with your thoughts, emotions and behavior; in other words the T+E+B=R equation which impacts upon every outcome that you get. You must manage this equation in order to manage your results.
Trading is a 90-95% mental and emotional game. Either you are preparing, analyzing, processing or executing while trading; all of which require mental and emotional tools. If you don’t have mental and emotional tools that’s like driving without a steering wheel; you will not only lose your way but crash and burn without it. And, you can’t steer if you are driving blindfolded. You must become aware of what is between you and keeping commitments with consistent follow-through. In “Mastering the Mental Game” we teach you tools and techniques to put the steering into your trading while helping you to remove the blindfolds as well in order for your journey to be a joyful and self-fulfilling one. Remember, if you are unwilling or unable to confront those bad patterns of thinking, feeling and doing you can’t change them. For more information on “Mastering the Mental Game” On-location and Online classes ask your Online Trading Academy representative for more information. Also, get my book, “From Pain to Profit: Secrets of the Peak Performance Trader.
Dr. Woody Johnson