Lessons from the Pros

Specialty Skills

Are you Trading Congruently or are you Conflicted?

Have you ever violated your trading rules? Or, have you ever broken a trading promise to yourself? I would venture that you have been at that fork-in-the-road of your trading more than a few times, where you had to choose between a rule violation – that is, going to the left, or going right and keeping your highest and best trader handling your account. What is it that worms its way into your system, takes you hostage and causes you to do things that are in direct contradiction to what you know is best for you? The thing that actually drives the bad behavior is an emotion, like fear or greed. The emotion is generated by a thought, like a limiting or irrational belief.  For instance, “If I have another loss that means I’m going to lose all of my money!” On the other hand, another part of you is saying, “Calm down, don’t even think about moving that stop, you must follow your rules.” Now, ask yourself, when these types of thoughts or urges have descended upon you what have you done? That’s right, in more cases than not you caved and moved the stop, chased the trade, prematurely exited or in some other way violated the rule that a few moments before you begged yourself to follow.

So, what is also in play when you are at the crossroads of following your rules or crashing and burning is conflict. The conflict stems from the part of you that is vested in implementing all of your rules and keeping all of your commitments and the part of you that believes that if you don’t move that stop there will be irreparable harm to your account. Conflict is when your system is at cross purposes with itself. When this happens your system has become frustrated, frazzled and fragmented and conflict is geared up and wreaking havoc on your execution. Conflict causes you to do something that a few moments before you swore that you wouldn’t. Your purpose, beliefs, values, identity and behaviors have become complicated.

Being in alignment can be described as thinking, feeling and doing in a way that resonates with the reality of the charts and optimizes all of your resources. Alignment is founded on a belief system that maximizes supportive positive beliefs and minimizes limiting beliefs. Becoming distracted and fragmented are negative in and of themselves; but when you are in the trading process these negatives compound other deficits and exacerbate any ill thoughts or feelings that you might experience. When you are conflicted your ego is telling you one thing while your rational self is attempting to argue for what is right. That ego-voice might have been telling you, “Don’t mind that plan, you can move that stop if you want to!” Another point of contention is when your values become challenges as in “keeping commitments and promises” you become tolerant of rule violations and other lapses of judgment.

When you think, feel, say and do in a way that is congruent you have internal and external consistency perceived by others as sincerity or authenticity. You are in sync, balanced, centered and grounded. It is having integrity and ‘walking your talk.’ It is like the moving parts of an engine, if integrity and alignment are compromised in that machine, even in minute ways, you’re not going to reach your objective due to internal friction or going off course. On the other hand, when alignment is true all parts are moving towards the same goal and in the same direction with precision.

Free Trading WorkshopThere are many parts that are involved in alignment. Some of the more important parts are:

  • Purpose
  • Beliefs
  • Values
  • Identity
  • Behavior

Purpose is of vital importance as you identify the reason why you are in pursuit of any goal, objective or desire. You must be able to answer the “why” question. A compelling reason will not only move, but catapult you to achievement.

Beliefs must be in alignment in order to support your purpose. It doesn’t matter much how compelling your reason is for trading if you don’t have strong positive beliefs underpinning your why.

Values are also crucial. Personal principles and values are similar but not the same. Personal principles are what you “want” to live by. Values are how you are living. Once you identify a personal principle and incorporate it into your life by committing to it as a behavioral standard, then you transition to holding it as a value.

Identity, or how you define yourself, must also be aligned. For most people it will be important to first figure out who that person in the mirror is; meaning in the morning, when things get stressed, when things are going well or when you’ve just put on an oversized position. The trick is to identify the person you’d like to be and begin to incorporate courageous change into your daily routine to activate the strong, healthy parts of you towards being that person. When you are able to do this, you are on your way to becoming, step by step, the person you aspire to be.

Behaviors are the test of alignment. In other words, are you doing what you said you were going to do, like keeping commitments? Are you practicing appropriate money management and position sizing? When you have losses are you able to accept the reality and move on? Are you journaling and logging your trades? What you do speaks volumes about who you are. Alignment also relates to how you are conducting yourself in other parts of your life. Are you expecting more from others than you are willing to give yourself? Are you keeping your promises? Are you exhibiting courage? Align yourself and your trading for consistent success. You are an organic machine, and you work best when all of you is working in the same direction and on the same goals.

This is what 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.

Joyful Trading,

Dr. Woody Johnson – wjohnson@tradingacademy.com

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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