Lessons from the Pros

Specialty Skills

What You Are Thinking Can Cause You to Win or to Lose

It was a cause for celebration, though to the casual unaware observer there didn’t seem to be much to be happy about. But Saundra knew better. Yes, the trade was stopped out for a small loss and there had been a number of them. In the past Saundra would have all but freaked out while telling herself that she wasn’t very good at trading as her confidence would drop like a barrel over Niagara Falls.  That was before when she was overly consumed by thoughts of making profit on each trade rather than thinking about what mattered most in the trading process.  That was before when she would succumb to impulsive urges prompted by fear and greed that were driven by doom and gloom thinking causing her to do things like move her stops or other rule violations.  That was before she finally got it that having a macro trade plan and explicit follow-through were critically essential.  In other words, that was before Saundra had become convinced that consistent success in trading was not as much about winning in any one trade but more about process mastery.  Process mastery is identifying a high probability trade based upon a proven strategy, having an effective behavioral routine established, using a feedback process to measure, verify and document the veracity of the strategy and habituating that system in order to develop capacity for skill building.  She didn’t realize it at the time but once the light bulb turned on for her she began to recognize the importance of what she had learned, which was, you must put all of your thought focus on what matters most, otherwise you are fragmenting your energy and efforts all of which are required by the trading process.

The Internal Data tools and concepts (those that help you to think, feel and do in your best interests) used by consistently successful traders don’t really vary that much.  Of course, the Mechanical Data (strategies and market instruments) can vary considerably; but planning your trades and trading your plan has to do with mental and emotional tools that help you to maintain a tight rein on your thought process.  Your thoughts are where your trade begins, not in the charts.  In other words through your thinking and analysis you’ll determine the order flow and whether or not the price action is moving with regard to supply and demand zones in a way that spells “high probability opportunity.”  Until and unless you make that connection between the charts and your thinking a trade does not exist for you…it may exist for another trader, but not for you.   Let’s look at it another way, even if the price action is for instance retesting a supply zone after a wide imbalance on the 60 minute chart, and you are telling yourself that the price action is going to break above this resistance; along with negative thoughts about your trading skills, then you my friend will not see the short opportunity. You will only see the illusion initiated by your bias, and you’ll also find yourself fighting the noise brought on by the thoughts associated with the limiting beliefs about your abilities. The conflict inside you would obscure the charts and take away the clarity.  So, to be able to monitor your internal dialogue is an internal data skill you’ll want to develop and master.

You might ask, “How do I monitor my thoughts?”  “I have a lot of them and they seem to have a life of their own!”   Well, it can seem that way, but try this:  Right now, stop reading and take your attention into your thoughts. What are they at this moment?  Very good; now whenever you are either doing nothing in particular or as you are about to engage in an important task like preparing for and entering a trade, just stop…and pay attention to what’s going on in your head.  This is called being “self-aware.”  If you continue this process for 30 to 60 days you’ll develop a habit of paying attention to what is going on inside of you.  In other words monitoring your thoughts can help lead you in “managing” your thoughts and if you can manage your thoughts in real time you can plug into your internal coach.  Wouldn’t it be great to have someone sitting next to you when you are trading who knew you intimately, who knew as much about trading as you, who was proactive and positive and who not only would ask the right question at the right time, but be your cheerleader telling you how, “you must, can and will follow each and every rule this time?”  “Losses are just a part of trading and they will help protect your capital.”  And, “You are an excellent trader with patience enough to wait for the high probability trade and when you see it you will execute it.”  Your internal coach can be just as powerful as having a trading coach sitting next to you.  Now, some of you might be saying, “Hey, I tell myself not to violate my rules all the time, and I still end up doing something boneheaded!”  These circumstances often play out when unmonitored and out-of-awareness thoughts are not only conflicting with your best self aims; they also hold intensity because you are not only in conflict but outside of your comfort zone and trying desperately to get back in.  This conflicted position neutralizes any positive efforts from telling yourself not to move that stop because you are out of alignment and actually working against yourself.  When you intentionally monitor you thinking, you are also actively attempting to discover any limiting belief or contrary thought which may be unconscious.  When you discover the faulty thinking you are closer to alignment in body, mind and emotions where your parts are working together rather than at odds.

Your thinking sets the stage for your results.  In order to change your results you must begin with your thinking.  This is the beginning of bringing your A-Game to the platform.  That is why it is so important to identify the thoughts that are not serving your best interests.  This is what we teach in Mastering the Mental Game Online and On-location.  Ask your Online Trading Academy Educational Counselor for more information.  Also, get my book, “From Pain to Profit: Secrets of the Peak Performance Trader.”

Joyful 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.