If it weren’t already clear, trading requires a high degree of concentration. Especially as a day trader, the market can move in literally a blink of the eye. As a coach, some of the simplest answers for a trader’s performance have been to turn off the phone, shut down the email, and put a do not disturb sign on the office door. Early in my own trading career, it took several loosing trades and a few words with my spouse to understand that I can’t be a part of a discussion about dinner when I’m looking at charts.
If that didn’t already convince you, an article by Joanne Cantor, PhD, gives us even more evidence that our multi-tasking society has no place in the trading world. Don’t Speak ‘Til You See the Whites of Their Eyes talks about the limited capacity of our brain to do a number of tasks at the same time. When we’re engaged in the market and risking money in the process, that capacity becomes even more taxed.
Followers of my blog will know that I’m a big believer that trading has more to do with the decision process than any indicators of the market. Ultimately, we need to be happy with the decisions we are making regardless of the financial outcome. So to help traders be happier with their trading results, I came across an article from the Finerminds Team that inspired me to come up with my own list of 15 things we should give up to be happier traders.
Trading is one of the most challenging and stressful activities know to man. Yet there are those among us that are drawn to it like moths to a flame. The decisions we make in the market are of our own making and hence our responsibility. Being conscious about our choices and reasons for trading are some of the things we can do individually to become better traders. To foster conscious choices, here are 15 things to eliminate from our trading routine for happier trades.
1. Give up the need to be right. Being ‘right’ is a well know human attribute. Unfortunately, the market doesn’t care if we are right. The market is only concerned with what the market does. How many times have we hung onto a trade well past the point of common sense only so that we can be proved ‘right?’ This is not the rationale mind talking buy rather our egos. A number of well know traders have said, “do you want to be right or do you want to be profitable?” Getting out of our own way is often the first decision to more profitable trades. Which leads me to the next point.
2. Give up your need to control. There are only 2 things we have control over as a trader; 1) how much money we’re placing on a trade and 2) our expectations of the results. After the trade has been placed, we are at the mercy of the market. The best of trading plans can be laid asunder by the capricious nature of the market. Control is something that we have very little of as we engage with the market.
3. Give up on blame. I speak to a lot of traders that are very quick to blame something else for their results. An indicator, a platform, an advisory service, a broker are just a few of the areas of that take the responsibility for trading results. Own the results you are getting. The beginning of improved performance starts with taking charge of the decisions we are making, acknowledging the flaws in those decisions and putting a strategy in place to address those flaws.
4. Give up your defeating self-talk. What is your state of mind when you sit in front of your computer to trade? What is the chatter that is going on in your head as you execute trades? Are you defeating yourself before you even get started? Our minds are incredibly powerful tools, if we use them for correctly.
5. Give up your limiting beliefs. What we believe has a great deal to do with our success as a trader. Limiting beliefs often show themselves in words like can’t, would have, should have, could have. Being aware of this talk is a first step in the awareness of our responsibility of the decisions we’re making.
“A belief is not an idea held by the mind, it an idea that holds the mind.” Elly Roselle
More to come.
This interesting article came to my attention from one of my clients . There must be something in the air because this topic has come up in a couple of different places. I want to thank Stephen Crane for sharing this article with me.
The topic is the subject of many conversations I have with my clients. The conversations usually begins something like ‘trading is not about the money, its about the trade.’ That sparks a lot of conversation around the purpose of money and how do we use it in our trading. Money is a way of measuring our trading results but shouldn’t be a goal of our trading. If we focus on making better trading decisions, the money will follow. But focus on making money, what ever the motivation, is a recipe for losing money in the market.
My previous posting on money management is a different way of looking at how we should look at managing the money of a trade. So this article is yet another reason to have a new way of thinking about the money in our trades.
Here is the article, Forget About the Money, Focus on the Price Action. I hope you enjoy. I look forward to your thoughts.
As I’ve often said, it’s not what you use but how you use it. Your psychology, emotional state of mind and the way you feel have a greater impact on your trading results than any indicator you can put on your charts. The ability to understand your state of mind is vital to your success as a trader. To gain a handle on that understanding, there are hundreds of techniques to help you with that process. What I’d like to share with you are a couple of things that I’ve used in the past and have proven helpful for myself and clients.
This posting was inspired by an article that I saw in Psychology Today entitled Buy Sell or Hold: The Right Decision in 5 Minutes. Anything that can put me in the right frame of mind in 5 minutes is worth looking a glance. Dr. Block proposes a simple way of clearing your mind about a particular stock and therefore creating a mindset where you can make a better trading decision. Even though he talks about this technique in the context of stock market, I can see application in other financial markets.
The other technique I’d like to share is something I’ve done for years which is call Morning Pages. I learned about Morning Pages from a book by Julia Cameron called The Artist Way. Don’t let the title of the book deceive you. I have spoken about trading being more of an art form than a science. So this shouldn’t be a surprise.
Basically, Morning Pages are stream of conscious writing. How it works is you get a standard 8X11 notebook and every morning before you start your day, you write what ever pops into your mind for 3 full pages. This typically takes about 30 minutes. There is no editing of your thoughts. Grammar, spelling, punctuation do not matter. The idea is to get whatever is in your mind down on paper. Over a period of time, this exercise is designed to tap into that small voice in the back of your head that has remarkable insight into what is going on in the world.
If you would like some clarification on Morning Pages, send me an email.
After a busy week of trading and coaching, I thought a diversion might be nice on a Saturday morning. A diversion but still something worthwhile to see.
Many of you know that I made my living as a musician before getting involved with trading and coaching. I’ve written about my experience as a musician and the skills I learned that were incorporated into my trading. What I really like about a live performance is the energy that is generated by players, the ensemble and the audience. Pat Metheny’s Minuano (Six Eight) is one of the best examples of that energy.
Crank your speakers. This is worth it. Enjoy!
Here are the last 4 items from the series.
11. Give up your excuses. This relates back to point 3. Excuses are another way of placing the power of your decisions onto to someone or something else. Who’s making these decisions? Is someone one going to take the credit for a trade gone well? Beginning to understand your trading results starts with an honest evaluation of our decisions. These are hard decisions. If it were easy, we would have a higher success rate then 10%. Stop making excuses for your results. Use your results as information to make better decisions. They aren’t good or bad. Just information.
12. Give up the past.
13. Give up your expectations. These two concepts need to be presented together, because they are two sides of the same coin. Trading is about the present. The here and now. What happened in with the past trade is over and done. Your results are your results. They are neither good nor bad. The next trade hasn’t happened and therefore has no bearing on the present. You might reach that target and then again you might not. All that matters is what you are seeing, right now and what you are going to do about it, right now. The more focused you can be about what is happening in the present, the happier you will be with your results. This leads me to the most important give up.
14. Give up your attachment to results. Trading is not about the money. Let me repeat that: Trading is not about the money. Money is the result of our trading decisions. Money is an indicator of where we need to make improvements in our trading decisions process. If we are losing money, where are we losing? What adjustments do we need to make to loose less? If we’re profitable, what can we do to consistently be profitable? What adjustments do we need to make to enter the market at the right time? To exit at the right moment? What changes do we need to make to our perceptions, expectations, cognitive process to be happier with our decisions?
The challenge in trading is an inner challenge. That’s both good and bad news. We have the ultimate responsibility. How we handle that responsibility has more to do with our success or failure than anything else.
People that know me and my coaching know that I’m a big believer in intuition. I’ve written about being in the moment as an important aspect of trading. Some of the best traders rely on that unexplained something that puts their trading above everyone else. One of my favorite stories is that of George Soros and his famous trade shorting the Bank of England. Yes he had a lot of technical and fundamental evidence to back him, but to hear him tell the story, the final call was a gut feeling he had that helped him place nearly 100% of his fund on the bet the British Pound was going to take a dive. He made over $1 billion for his trouble.
That’s the power of intuition. The ability to see beyond the perceived. So how intuitive are you? Would you like to get an idea? This article by Vishen Lakhiani from finerminds.com asks the question How Intuitive Are You?
I took the quiz and scored a 45. There’s room for improvement but I’m pretty proud of my score. What’s your score? Post your score in the comment section of the blog. I’d be interested in knowing.