Lessons from the Pros

Specialty Skills

In Order to Change Losing Behavior You Must Become Aware of the Cause

His trading account had been hemorrhaging for a long time. In fact, he was perilously close to blowing up another portfolio. On some days Donald would actually be in a trade that was winning but before it was all over he would either exit prematurely out of fear at break even or barely above. Or, he would stay in much too long and at those times he’d watch the price action reverse against him turning what was just a few moments before a substantially profitable trade into a loser.  Then of course, there were the total disaster days, where on impulse he would revenge trade invariably putting on too much size with no mechanical stop in order to make the big hit, only to fall disastrously deep in the hole due to ingesting way too much hopium  (that trader drug where you hope the price comes back).   Much of the time Donald felt fragmented, frustrated and frazzled by his results.  And, he kept kvetching that all he needed was a good indicator that would reveal the perfect set-up.  He would say to himself, “…those other traders are so lucky, why can’t that be me?”  He also blamed his situation on his wife not being supportive enough, the constant distractions that kept intruding on his trading day, and those instructors who never told him the “good stuff,” they always kept that to themselves.  Donald was in a deep dose of denial.  Yes, he was looking everywhere but the only place that matters…inside.

Donald, like so many other traders across the planet is allowing himself to be seduced by illusions.  And, if that weren’t enough he knows that he is in trouble but doesn’t have a clue as to what to do about it.  He knows something needs to change, but because he is looking outside of himself for the answers he is caught in a descending spiral of personal chaos.  He expects his results to somehow miraculously change despite the fact that he continues to do the same thing.  He lacks the willingness and the courage to take a long hard look at himself.  You can’t change what you can’t face…and you can’t face what you don’t know.  Traders like Donald find themselves in exasperation and pain on a continual basis partly because they don’t have a clue as to what is motivating the behavior that is driving the unwanted results, which of course is lost to them due to the fact that much of the time they don’t think those results have to do with them.  You see Donald and everyone else who is afflicted with this malady must first realize that their results are direct derivatives of the choices that they make and that blaming other people or outside circumstances is to relinquish accountability.  Change begins from the inside out, not the outside in and you must uncover the faulty programming, the issues, and the limiting beliefs before you can change them and in turn change your results.

Self-sabotage is another name for relentlessly working against your best interests, and in order to pull that bullet out of your foot you’ve got to increase your awareness of what is causing the chaos and pain.  One of the ways to become better acquainted with those deeply held myths that drive thoughts, emotions and behavior is to document the “internal data” of your trading using a Thought Journal.  Actually, most traders only track one form of data; that is, “mechanical data” (all the data associated with the markets, i.e., charts, indicators, news etc.).  Obviously, this type of data is very important.  But of equal importance is your internal data (your thoughts, emotions and behavior) that are often out of your awareness.  A Thought Journal is designed to identify what you were thinking, feeling and doing in a particular trade – especially if you broke your commitments.  It is different from your Trade Log, which is designed to track and document your mechanical data.  By tracking and documenting the internal information you will begin to uncover the drivers; i.e., the bad patterns and programming that motivate the behavior which greatly contributes to getting unwanted results.  Once you do this, you will gain insight into why you have no macro trade plan, or why you are putting on more size than is appropriate, or why you are not using mechanical stops – or moving the stops you have placed, or why you are violating any number of other trading rules.  Once you learn these underlying issues you will be in a much better position to do something about them.  But, one thing is for sure, unless and until you find out what they are, you cannot effectively address them.

Another reason why the thought journal is so critically important is that it promotes introspection and reflection into what is beneath the surface of your awareness.  Your mind is like an iceberg; only the tip is above the waterline.  The vast majority of the iceberg is underwater.  Actually, you are aware of only a small portion of what goes on in the brain and mind.  The other major percentage of what goes on is out of your awareness.   With time as you “pull back the layers of your mental onion” (pardon the mixing of metaphors) and go beneath the surface to discover other patterns, limiting beliefs and faulty unconscious conversations that will begin to emerge, you will gain invaluable knowledge about what is holding you back.  When they do emerge you will be in a position to use mental and emotional tools (for instance deep breathing, meditation and yoga) to one by one uproot, neutralize and in some cases replace those patterns, limiting beliefs and negative unconscious conversations.

Your A-Game is gravely important to your trading.  When you trade you must fire on all cylinders; you must access and activate your resources, strengths and mental weapons in the psychological warfare which is trading.  The trading trenches are not a place to vacillate and equivocate; you must be willing to demonstrate your ability to focus on what matters most in the trade.  You must be willing to plan your trade and trade your plan with complete follow-through of all of your rules…it is a commitment to excellence.  You must master your mental game.  We teach you how to use very powerful mental and emotional tools in the Mastering the Mental Game online and on-location course.  Ask your Online Trading Academy Educational Counselor for more information.  Also, get my book, “From Pain to Profit: Secrets of the Peak Performance Trader.”

Until next time…

Happy Trading,


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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