Lessons from the Pros

Specialty Skills

Trading With a Laser Precision Focus to Cut Through the Noise

Debra’s heart jumped almost in the same manner as the green blast-off candle that kept rising on the 5 minute chart. It was on the NQ E-mini Futures, and she was dying to get in on what looked to her to be a sure thing. In fact, she heard herself saying, “This has money written all over it.” Debra had been waiting, patiently at first, for a long opportunity.  She was certain that the price action would go up today because she had heard the pundits on CNBC that morning give what to her was positive news, and as well she had read something similar on Bloomberg.  She had been waiting for over 3 hours and now the boredom and impatience were beginning to gnaw at her like a junkyard dog with an old bone.  She did not have a trade plan and the set-ups that she traded had not come up today, but she was “overdue” she thought.  Trading over the last few weeks had been disastrous, and she was anxious to have a profitable play.  But, something wasn’t quite right; she could also hear another, very faint part of herself say, “Debra, you don’t have a trade plan and this trade is not a part of your normal set-up – so you shouldn’t take this trade.”  But by now Debra was way too caught up in the loud roar of the pretty green candlesticks to hear the pleading voice in her head.  So, Debra barreled ahead as if she were in a trance … all she could see was a sea of green luring her, seducing her, singing to her in a siren song.  To make matters worse, she increased her size in order, as she put it, to go for the big win.  And, sure enough, when she placed her order and got filled, the price action hit a significant supply level and began to plummet.  She wasn’t fazed initially; she just moved her stop and continued to hold her illusion to her chest like a failed poker hand.  The price continued to fall and when she couldn’t take it anymore she liquidated her position.  She took a major hit on that trade and what made her sick to her stomach was the knowledge that she had bought the high of the day.  She had allowed the “noise” of the internal voices and the external talking heads to drown out the advice of her A-Game trader.  She had succumbed to executing on a course of action that held only heartache and pain on the shore of this trade.   She was out of alignment and paid a heavy price for the internal conflict.

Noise happens all the time, even to seasoned traders; but, the difference between successful traders and the unsuccessful ones is that disciplined traders remain aligned in body, mind and emotions to access and activate internal resources that help them to stay in the now and focused on what matters most in the trade.  When you are out of alignment, you are prone to distorted judgment and distracted thinking – the noise.  Now, it is not easy to remain fully available, in the moment for the moment, fully present and in the now of the trade.  You must be ever vigilant, that is, self-aware and keeping all of your “parts” working in the same direction and on the same goals.  Otherwise, you are most likely going to be conflicted as some parts of you will be attracted as Debra was to the glitter of green that presents as a “fake-out” to the novice trader; and some parts may be confused; while other parts (those that are connected to your A-Game) will attempt to sift through the morass of misrepresented data and provide some sound advice.  Fully available means that you are using your strengths, all of them, to prepare, analyze process and execute the trade according to your trade plan, your strategies and your rules.  Being in the moment means that you are not unduly concerned about what happened a few moments, a few hours, a few days ago or any past event because it is not relevant to what you are doing right now.  In the moment also means that you are not future oriented either, that is, using your thought energy to hope, pray or otherwise kvetch about what the trade “might” do.  And, fully present means that you are not thinking about what your spouse, children, or boss is doing or what is going on in the news.  In the now means just that, … you are in this moment resonating with the reality of the charts and the price action.

Alignment is when you think, feel, do and talk in a way that is congruent – meaning that you have internal and external consistency.  It can also be termed moving in tandem with self, in sync and balanced, also centered and grounded.  Alignment can also be described as having integrity and ‘walking your talk’.  Alignment is critically important to trading or anything that involves performance, for like a wheel alignment, or the alignment of the moving parts of an engine, if integrity and configuration are compromised, even in minute ways, the machine or system will not perform well and eventually will break down.  On the other hand, when alignment is true, optimal performance is all but guaranteed.  All parts are moving in the same direction and towards the same goal with precision.

In order to gain alignment you must first become aware of your thoughts, beliefs, values, emotions, identity, and behavior to name a few.  These are especially important components that make up the “self.”  Awareness is gained through introspection and self-reflection.   Also, by writing down your thoughts and emotions you’ll begin to “pull back the layers of the onion” and little by little you will become more aware of your unconscious limiting beliefs, unconscious conversations (yes, you have conversations with yourself that you aren’t aware of) and deep core values.  Once you become aware of your “issues,” the thoughts and limiting beliefs and values that drive behaviors that produce unwanted results, you can then begin to change them.  You can’t change what you can’t face and you can’t face what you don’t know.  So, awareness is required to uncover the faulty data in the subconscious so that you can make changes, and with this awareness you can begin to think, feel, and do in ways that are working together.

One of the tools that serve your awareness is a Thought Journal.  It is similar to your Trade Log in that you document the “internal data” that went into the execution of your trade.  See, there are two kinds of trade execution data.  The “mechanical data” is all the information that has to do with the markets, that is, indicators, price action, news, etc.  The “internal data” is everything inside of you that was responsible for pulling the trigger…in other words, your thoughts and emotions.  Most traders only document the mechanical data because that is the easiest and less messy to track.

Dealing with thoughts and emotions is difficult for many and they would rather not have to fuss with them.  But, if you want to be a disciplined trader getting the results that you want rather than the results you’re currently getting, then you must document and track your internal data; and focus your attention on your intention.  In Mastering the Mental Game XLT and On-location courses we show you how to employ the Thought Journal, what questions to ask, and when to use it.  We also teach you how to identify, root out, and “change” your issues that have been documented in your Thought Journal.  In this way you are building your A-Game one level at a time.  Soon you’ll be trading like the disciplined trader with a laser precision.  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

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.