Lessons from the Pros

Specialty Skills

Control Your “Rep” and Stick To Your Trading Plan

Has this ever happened to you?  You’ve just ended your trading session by closing your last trade.  You then look over your 6 or 7 trades to determine how well you did; but what you see sends shivers down your spine.  There in front of you is trade after trade where you have violated rule after rule with loss after loss and the carnage is stunning.  As you think about how this happened it is as though a fog had settled around you and a phantom hand had reached down and taken control of your mouse.  That phantom hand belongs to your rep.  If you ever become aware that he/she is trading your account, then fire him/her right away.  He won’t stick to your trading plan and you do not want this guy anywhere near your account.  He is the ego driven part of you.  The part that has no issues, never is out of line, knows everything all the time and is … a “sham.”

Free Trading WorkshopActually, the rep is a very fearful, distracted and hubris laden part of you that is easily activated when you become caught up in emerging bad patterns of thinking, feeling and doing that take you further and further outside of your comfort zone.  Now, the comfort zone is where many traders live.  They are easily knocked out of the comfort zone and the further they are from it the greater the negative emotions and the more likely they are to be taken hostage by the rep.  You see, the rep is an outgrowth of your ego created defense mechanisms.  These mechanisms are designed to protect you from the pain of humiliation, shame and emotionally difficult states.  States that are often tied to events and limiting/irrational beliefs/biases that act like an over-zealous security guard making sure that you are not put in a painful position again; which of course is highly unlikely.  The thing is that being uncomfortable is so often directly related to an event or situation which by definition is challenging to your sense of self, your equilibrium, your self-esteem and your confidence.  This is what causes otherwise very knowledgeable and capable traders to abandon rules and breech commitments which in turn completely unravels the ability to maintain focus on what matters most.  Self-discipline becomes a thing of the past given this scenario; and when that happens, the system implodes careening the trader into an abyss of impulsive moves, erratic entries and misguided analysis in which they do everything but follow their trading plan.

So, what to do when you find yourself being taken over by your negative and irrational thinking, feeling and doing (otherwise known as the rep)?  There are a number of ways to arm yourself against such an onslaught; here are a few.  Monitor your thinking in order to identify destructive and debilitating thoughts that severely distract you from the appointed objectives.  When you have discovered that your thinking is moving down that damaging path, stop moving and change your thought direction by changing the negative thought into a positive one.  For example, if you become aware of the thought, “I should move my stop because I don’t want to lose…that would mean that I am a bad trader;” change it to something like “…losses are a cost of trading and my trading skill is a reflection of my ability implement my trading plan, follow my rules and keep my commitments.”   Secondly, manage your emotional state by using very simple deep breathing tools which engage the parasympathetic nervous system and induce greater relaxation and calm in order to refocus on what matters most.  Thirdly, use appreciative inquiry to gently question yourself with regard to any inaccurate assumptions or faulty conclusions surrounding the trade.  Finally, document your self-reflection questions in order to, over time, begin to identify issues and bad patterns that are getting between you and the results that you want.  What gets measured gets improved.

The above are just a few of a long list of tools and techniques to keep your “rep” confined and from wreaking havoc in your trading process.  It is imperative to bring and keep your highest and best trader to the platform in order to trade in the interests of your highest and best self.  This is the type of support that we teach in “Mastering the Mental Game” Online, On-location and XLT 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.