Lessons from the Pros

Specialty Skills

Your Mental State: Where Trading Power Shows Up or Blows Up

I’ve often talked about the importance of the mental state.  Your mind and brain work to some degree like hardware and software in a computer, without either it would be difficult to impossible for the computer to function…and that’s where the analogy breaks down.  The brain/mind is so much more sophisticated than that.  In fact, suffice-it-to-say that the sheer number of things that the brain/mind can do without direction from the conscious mind is staggering. The brain is the hub for maintaining the viability of a system with trillions of connections, inciting the system to action in protecting against microscopic and gigantic invaders, coordinating the organs, ensuring that the heart is beating and the lungs are breathing. In addition, to maintaining the hardware, the brain also regulates the software, emotion.

Profile of a head with computer system for a brain

Now, the mindset or the state of the individual, which includes thought, mood, emotion and disposition, come together as the thermostat or regulator that ultimately determines how the system will respond in a given situation.  Let’s consider the guy who is in a trade and has just experienced a small profit; however it is not even remotely close to his target.  That trader might be saying, ‘I haven’t had a profit since Lassie was a pup and I am going to take this profit.’  It is likely that, not pulling in a profit for an extended period would be wreaking havoc on his emotions, causing him to feel inadequate, sad, frustrated, frazzled, confused and fragmented.  Due to the situation that is beginning to descend around him like a cold wet heavy blanket, the corresponding state of mind might be distraught, distracted, irritable, highly anxious and fearful. This state of mind would be unprepared and ill-equipped to go toe-to-toe with his own bad patterns of thinking, feeling and doing.

As a result of the state and not the situation, the trader’s decision making becomes increasingly impaired because their state is greatly compromising the trader’s ability to coherently and critically evaluate the variables.  If the trader’s judgement has been reduced, then the information that comes to him is filtered through a faulty lens and is therefore bad information that will cost the trader a lot, and not just the loss of profit; but as well doing something else that works against the interests of the trade.  So, your state is often the final, and sometimes the only, thing standing between you and keeping your A-Game at the platform.  It is imperative that you become aware of this and begin to create a fail-safe protocol for the trade.

Free Trading WorkshopSo, you see, there are so many variables and residual situations that can and do leave a trader totally unprepared when they begin to ruminate about long held limiting and irrational beliefs that fly in the face of logic and self-management.  One way to affect change is to train your brain towards greater objectivity, clarity and accuracy in identifying chart and market movements. By deliberately choosing to pay attention and track your progress or lack-thereof through documenting the mechanical and internal aspects of the trade over time, you will become more aware of the minutia of items that affect your state; for example, relationships, work, family, recent stress challenges, illness, accidents, etc.

When you begin to take stock of your physical, mental and emotional environment, you will begin to scan for issues that are flagrantly positioned to be in the way of your trade. You are aiming to work yourself out of this onslaught of negative forces that ease forth from not only your trading environment, but as mentioned in the above, the forces emanating from your core beliefs, biases, faulty values and destructive proclivities. This is a process known as introspection, self-reflection and appreciative inquiry. It is a position that aims to maximize focused attention, being in the now, tracking errant emotions and aligning body, mind and emotions to go in the same direction and for the same goals.

You can’t change what you can’t face and you can’t face what you don’t know! It is so easy for stuff to get out of control and blow up in your face.  It has happed to just about every high achieving trader that I know; so remain steadfast, diligent and vigilant in your process of transforming yourself into a lean, mean, trading machine!  This is what we teach in Mastering the Mental Game online and on-location courses.  Ask you representative for more information; and get my book From Pain to Profit: Secrets of the Peak Performance Trader.


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.