Lessons from the Pros

Specialty Skills

Trading from Your Highest and Best “Orientation”

There it was, incredulously staring him in the face and he looked at it as though it were a flying pig.  Ted couldn’t believe that the price action had kept going up and had triggered his stop, taking him out of the trade.  It was on the YM E-mini and the long-term, intermediate and intraday trends were all down.  He had placed a limit order at the lower line of the 60 minute supply zone that he had uncovered, and his stop was placed 2 points above the upper line of the zone.  After realizing that he had just lost, he heard himself wonder out loud, “How did this happen? If only I hadn’t been distracted by the T.V., I could have seen that coming. This always happens to me!”  Ted was searching desperately for someone or something to blame.  He was in a “reactive” orientation, i.e., “The world is happening to me.”

Fred, who was in another city at that same time also playing the YM E-mini observed the same long-term, intermediate and intraday downward trends.  His style of trading matched Ted’s in strategy and he perceived the supply zone which had formed and the price action which was retracing to that zone.  Fred placed his stop 3 points above the upper line of the 60 minute zone, and got filled with a market order just as the price action pierced the lower line of the supply zone.  He asked himself what he needed to do, if anything, to protect his trade, which is the way he consistently approached his trades.  He too was stopped out soon after and again asked if there was anything he could have done to better execute this trade.   Fred also had the thought: “It’s all up to me, I can’t rely on anyone else.”  He was in a “creative” orientation, i.e., “I create my future.”

Joan took a deep breath and checked her emotional temperature before pulling the trigger on her trade.  She determined that she was relaxed and poised to resonate with the reality of the charts and allow the market to prove her analysis wrong.  She too had been looking at the YM E-mini and like Ted and Fred, realized that the long-term, intermediate and intraday trends were down, and that a supply zone had formed on the 60 minute chart.  She placed a bracket order which automatically placed her stop 5 ticks above the upper line of the zone as it executed her sell limit order, which was placed 2 ticks above the supply zone’s lower line.  Since the price action surged upward it had inevitably triggered her stop as well.  Joan immediately accepted the outcome and affirmed to move on to the next trade as soon as she placed a journal entry to ensure that she documented the trade.  She knew that the market could and would do anything, and she was single-minded about being at one with it and “dancing with the market – it moved and she followed.”   Joan was in an “interdependent orientation”, i.e., she saw herself as part of a greater whole which she fostered a kinship between her internal awareness and her external reality.

As you can see with these three orientations it is apparent that the “reaction orientation” does not serve your A-Game.  It is focused on all of the forces outside of you that can negatively impact upon you and your trade.  You are consistently looking for what can come your way to throw you off and about which to form an excuse or to blame if you don’t get the results that you pursued.  You are primarily defensive in your stance, always looking to determine what is going on with the markets and in life.  You “don’t want to be tricked again.”  The emotions associated with this orientation are anxiety, trepidation, dread and anger at thoughts of being trifled with by the markets and other people.  This type of orientation is often born out of life’s losses, disease, and trauma.  Additionally, this orientation has a doom and gloom point of reference that is unsupportive to being pro-active.

The “creative orientation” actually has elements of a positive direction.  This person moves through life asking: “What do I want to create?”  Instead of blaming the world, you ask how you caused your circumstances to happen, and what you need to do to change them.  You learn well and quickly from experience.  You have a leadership focus.  And yet, there’s something that is missing about the creative orientation.  It sets you apart from the community.  You see yourself as a loner and it becomes about “me.”  Some of the emotions associated with this orientation are guilt, stress, impatience, frustration and greed.  Fragmentation can be used to describe this fundamental assumption that you are separate from the world, and it is a fundamentally unfulfilling way of thinking.  This may be why, despite its worthwhile qualities, the creative orientation often leads to inner conflict and extreme self-centered behavior, which, even in the face of being supportive to your general trading, can undermine your other relationships.  And, if your other important relationships are not positive it will eventually affect your trades.

The “interdependent orientation” provides a personal and visceral sense that you are a part of a greater whole.  You value internal awareness and as well external reality.  You are much more apt to “accept” the things you cannot change just as you are to have the “courage” to change the things you can.  Although you recognize your integrity as a separate person, you also feel “a part of” the community.  The interdependent orientation realizes that you can’t command the larger system (the markets) any more that one cell can command a body.  This doesn’t mean that you cannot use the positive creative elements of your internal resources to get better results.  In this point let’s be clear, you want to be pro-active in using all that you have to go as far as you can.  The aim is to do your best while remaining accountable in all your actions while recognizing that you are a part of a greater whole and that what you do is important.  With this orientation you are better able to resonate with reality and be at one with the markets and as well your general environment.

Identify your orientation by becoming more aware of your internal issues and resources.  Ask yourself: What am I telling myself as I prepare to trade?  What are my assumptions about my trading process?  What are the connections in my life that impact upon my trading?  To what communities do I belong?  How can I best resonate with reality?  These are just a few of the questions that will increase your orientation awareness. This is part and parcel of building your A-Game and mastering your mental game.  You must be prepared physically, mentally and emotionally to do psychological battle in the trenches of the markets and get the results that you want.

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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