Posts Tagged ‘psychology’
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.
Continuing the conversation, here are the next 5 items on my list.
6. Give up complaining. Do you find yourself complaining about your trading? What are the results of those complaints? How are you dealing with the feeling of those complaints? Awareness of those feelings leads to acknowledging those feeling which can lead to action in dealing with those feelings.
7. Give up the luxury of criticism. Criticism of trading results are often tied to point 1 which is the need to be right. Listen, we don’t have any control over a trade once it’s in the market. Sometimes we just get it wrong. That doesn’t mean that everything you’ve worked for is flawed and needs to be revamped. We were just on the other side of the market. Stop, reevaluate your position, and move forward. Make it that simple.
8. Give up your need to impress. Who are you as a trader? Does you’re trading meet your goals and expectations? This phrase should be in front of you every time you sit at your trading screens. It does not matter what anyone else does in the market. It only matters what I do in the market. Repeat that to yourself on a daily basis. The only person you’re measuring is you. If you only get 2 ticks or 2 pips or 2 cents out of the market, you have accomplished something that 80% of the population has no idea how to do. There will always be traders that can get more. Who cares! What are you able to do?
9. Give up your resistance to change. If you think about it, this is very counter intuitive to tradeing. If nothing changes, then we don’t make any money. But as the old adage says, ” we are creatures of habit.” Once we set a pattern, we tend to want to stick with it and not make adjustments. Unfortunately, that doesn’t work in our field. Our trading methods depends upon recognizing market conditions and taking advantage of them. Trading 10 years ago, when I started is very different than it is today. If we’re resistant to change then we are resistant to our ability to take advantages in the market. Nothing is forever and that holds special truth as traders.
10. Give up on your fears. Fear is a reaction to our perceptions. Change the perception, we change the use of fear. For example, the experienced skydiver will have a different gauge for fear then the novice. Fear can be healthy and useful element in our trading, but only if we understand what it is telling us. Fear is not the issue but how we react to it.
More to come.
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.
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.
How many times have we been told that to achieve your goals you need to express them out loud and tell others so that you may be held accountable. Well according to Derek Sivers, professional musician and founder of CD Baby, the best thing to do is keep it to yourself. At this short TEDGlobal 2010 presentation, Derek gives some scientific evidence that telling the world your goals isn’t the best course of action.
In today’s market, with the advent of high frequency trading platforms, it is even more important to clarify the reasons for entering the market. Super computer trading platforms are designed to take advantage of market movement in fractions of a second. The idea is to make $.01 on a stock trade 40,000,000 times. If you think about it, what clearer value could there be for a trading strategy. Tiny profits many times over and over again.
To get a better idea of this, 60 Minutes’ Steve Kroft hosted a segment on the secretive world of high frequency trading. It’s a small peek into who might be on the other side of our trades.