Lessons from the Pros

Specialty Skills

Where Are Your Trading Performance Standards

What a beautiful day! The sun is shining, a cool breeze is wafting through the air and you are trading with utter confidence and self-assurance. You feel these supportive emotions even though you have lost a couple of trades already. You say to yourself, “Losing is a part of the trading game and I get more disappointed, gloomy and dejected when I don’t keep my commitments.” You know that it is much more important to maintain your plan and all of your rules than to win in any one trade. And, that goes for a trade where you have increased your risk exponentially and are inappropriately facing a substantial drawdown; but you don’t turn into a devil-may-care impulsive trader with the potential for blowing-up an account in one trade. Your trading performance is important to you and you have set your operating standards high. You deliberately and methodically take advantage of the set-ups; and you design how you are going to manage each trade once you have initiated it.

You are measuring and drawing a demand zone in, let’s say, the NQ. You are a little anxious which you know can affect your trading performance, so you use the tool “Stop-Challenge-Choose”, an elegant technique for interrupting an emerging bad pattern of thinking, feeling and doing which, of course, is the precursor of the results that you get. In it you are specifically questioning thoughts and beliefs behind feeling, for example, “anxious” – an event because it got your attention. You also ask, “What is the objective reality?” And, as well, “What is an alternative interpretation of the event?” After going through the SCC tool, you feel more aligned in body, mind and emotions in order to go in the same direction and for the same goals. You are in the “Now” of the trade; and you are moving forward step-by-step remaining on task, on target and on top of what you must do at each juncture of the trade. You know as well that it is critical to reduce the noise in the trade. In other words, you are ensuring that distorted judgement often caused by distracted thinking is not making a mess of your trading performance. Just then a CNBC talking head shares the news of a recent spike in a particular economic report and intimates that this could continue to affect the markets. Rather than react and do something that is not in the interests of your A-Game, you stay the course with the realization that it is much better to remain on course rather than being influenced by the herd.

Free Trading WorkshopThe above is a description of a purposeful trader, a trader who approaches each trade as a separate item that requires him to key into his vision, (the internal picture of the successful trade) which is an outgrowth of his purpose. This is where the trader has identified the “what-matters-most” in his life and connected it to the “what-matters-most” in the trade. When you do this, you are necessarily assigning the passionate energy of what makes your heart sing (family, friends &/or service) to the trading process. This is very powerful stuff for enhancing your trading performance. Trading is, among other things, a matter of “energy management”. Your internal state of mind creates the conditions under which you make choices and take action. This state of mind is based on the energy of thought and emotion. If the energy is going in the “wrong” direction, away from the results you want, this “inertia”, your internal resistance to remaining outside of the comfort zone due to the normal urge to get back in the comfort zone, will cause you to continue in that direction. At the fork in the road, that place where you must make a decision, you’ll choose the “left”, go over the metaphorical cliff only to crash and burn, in all likelihood.

The inertia is doing what you’ve always done given similar circumstances; so you get a result that is identical to the one you’ve always gotten. Hence, what is crucial to ensuring that you are managing your energy (thoughts and emotions) is that you deliberately and by design structure each behavior out of a carefully constructed pattern of powerful and positive beliefs about you and your abilities; using those beliefs to form the basis of potent conscious thoughts which create strong optimistic emotions that then drive the behaviors that are most likely to produce those good trade results. Now, “good results” don’t necessarily mean that you’ll always make a profit. In this context, good results mean that you are trading with a raised standard of conduct and performance. It means that you are aiming to “always” skill build in your trades by trading your plan, following all of your rules and keeping all of your commitments. This operational or performance standard sets the tone for making that standard a habit. This habit is the consequence of methodically and deliberately moving forward through a repeated routine of sequential steps designed to create an intentional “default” behavior. This is where you have “reprogrammed” your body, mind and emotions to work for you rather than against you.

This approach is how you’ll want to consistently and with intention set your trading performance standards, high enough to inspire as you aspire to actualize your full trading potential…every day. If you are consistently failing to construct pertinent plans, follow the plan you’ve made, follow your rules and/or keep commitments then your performance standards are too low and you’ll want to raise those standards. This is done by identifying what you are telling yourself or believing, especially after experiencing an uncomfortable emotion like fear, greed, apathy, doubt, worry or anger, to name a few. Then use your journal to document those beliefs, biases, values, mind movies and attitudes that create the emotions which drive the behaviors that produce those unwanted results; and start changing them, one thought or belief at a time. 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.