Lessons from the Pros

Specialty Skills

You’ve got to Keep at it and Withstand the Tough Times to be Successful

I just finished teaching an Extended Learning Track (XLT) class on the importance of documenting your trading. It was called “Awareness and Reprogramming.” One of the students complained that documenting was something that they did not enjoy and that it was therefore difficult to follow-through with. Actually, most endeavors that are of value involve tasks that are not in and of themselves enjoyable. But they must be done regardless if you want to be good at it. Trading is no different. Measuring and documenting your trading is absolutely critical to becoming successful. But, this article is not about documenting; it’s about being persistent in doing those things that despite being distasteful you do it anyway. Additionally, it’s about perseverance; that is, having the endurance to continue despite set-backs, issues and fatigue. Consider the following vignette:

Robert sighed when he saw the damage. It was a deep sigh due to the fact that this loss represented his fifth in a row. He had been trading the ES E-Mini during a particularly volatile time in the markets. He had identified a strong supply zone on the hourly chart and when he dropped down to the 5 minute chart he thought he saw confirmation of the supply zone there as well. He had quickly put together a plan to short with a 3:1 reward to risk ratio and placed his stop 2 points above the upper limit of the zone. When he entered the trade the price action immediately began to head south. Robert felt a surge of excitement, even though he privately realized that he did not want to get emotionally attached to this trade. Then, the price action began to retrace. Robert took a deep breath and reminded himself that the price action must breathe as well. But, he watched in dismay as it kept rising closer to his stop. He felt a strong almost overpowering urge to move his stop. After all, he told himself, hadn’t he lost enough!

Just then, even before he could have moved it, the candle spiked and hit his stop. To make matters worse, as he cursed under his breath, the green of the candle turned red and promptly plummeted. Over the next several minutes he watched angrily as the price action hit his target. Robert again felt a rising urge, almost a craving to jump back in to “revenge” against all the losses he had experienced. He was angry, frustrated and frazzled. Then, he stopped and took another deep breath standing up from his seat. After taking another couple of breaths and shaking and stretching his body, he asked himself a question. He inquired, “What must I be telling myself or believing to feel this anger and frustration?” He waited for a moment and heard from inside as if it were audible, “I can’t lose this many times in a row – that means that I’m a lousy trader!” Then he asked another question, “What is the objective reality?” Well, he thought, the reality is that this happens when trading and it has no negative meaning to my execution.

Actually, he went on to identify an alternative interpretation; he said, “I have traded well, the markets will do what they will do and I must remain focused on what is important … planning my trades, trading my plans and following my rules. After asking and identifying the answers to these questions he took a moment as he had done before to document the information. This is how he had discovered the negative patterns over time of thinking, feeling and doing. He also took a moment to access his purpose and vision for trading, which further supported him in doing what was in the interest of his A-Game. Then he chose a response, which was to let go of the urge to revenge trade; and in fact during the last couple of minutes as he had gone through the exercise, the energy surrounding the urge had gone down quite a bit.

trading strength

Robert had been persistent in remaining in the now in order to have the presence of mind to use the mental/emotional tools he had been taught. He had created consistency in his practice of the tools as well and he had built capacity for strength and endurance against the distracting emotions which were pressing him to get some relief from the discomfort of the urge by giving in to it. Due to the his diligence, he had effectively increased his comfort zone and was able to tolerate the anger and frustration long enough to reach in his tool belt and use the techniques. This process also helped him to persevere in this tough time despite feeling emotions that in the past had led him to violate his rules.

Robert’s example illustrates the importance of persistence and perseverance to disciplined trading success. The undisciplined are driven by quick fixes and impulsive schemes, and they are at the mercy of greed and fear. As soon as the tick goes against them, they panic, and their minds are no longer focused on what the charts are showing. They see only what the distortion in their perceptions will allow. They are easy quitters when the going gets tough. They are continually complaining about the market or their losses but seldom do anything constructive about it. Successful achievers stick to their vision despite setbacks. They don’t give up when met with hardships. Successful achievers are relentless and stubborn. They succeed against all odds, and when they are discouraged, they draw inspiration and motivation from their sensory-rich vision along with other tools to support them in remaining focused on what matters most.

Nothing worth having is captured and mastered overnight. It takes time and energy. You need to develop the dogged determination and the endurance to go the distance and become a winner. The drive to persist and persevere is fueled by the initial vision. The closer you get to the goal of process mastery, the stronger the belief and the clearer the vision, the more real it becomes. As you continue this relationship and strive to achieve, the vision fuels the goal of process mastery (rule based planning and trading); and the goal of process mastery fuels the vision. With each tiny, private victory, you are developing more capacity for going to the next level of play. Like training for the marathon, it is achieved through a process of consistently building endurance and strength to go to the next level of achievement. Between the vision and the goal, this revolving course of action acts like a nuclear reactor and puts into motion a self-perpetuating spiral of vision, belief, emotion and reality. This self-perpetuating spiral will change your life from the inside out. This is what motivates men and women to achieve greatness. Greatness is spawned by the development of an inner obsession with honoring commitments and consistent follow-through. Greatness lies in the understanding that it is not focusing on the win but mastering the fundamentals and consistent plan implementation that leads to the win. Greatness is in your grasp—you can program yourself for success with the right combination that unlocks the power of intention. Success is where opportunity meets preparation. Persistence here refers to the single-minded determination that each and every trade must follow all rules. It is an unyielding focus on habitually planning every single action in the markets, and the building of a greater and greater capacity for winning—and winning is defined as religiously keeping your commitments.

Persistence and Perseverance are part and parcel of the A-Game and they must be carefully and consistently developed in order that they are strong enough when needed. Mastering your mental game cannot take place without these energy transformers. This is what we teach in the “Mastering the Mental Game” XLT, Online and On-location courses. 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

Dr. Woody Johnson


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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