Exercise

Going to the gym and lifting weights is great for getting into shape and bulking up your muscles. Your mind can be transformed into better shape with sharper mental acuity through exercise as well.

Last week I touched on some exercises in concentration that would help you out. Lets expand on those ideas now and see what else can be done to get to a higher level when trading.

As ever, goals should be in the forefront. " I want to become a consistently, profitable trader". Writing down goals turns them into something more than just random thoughts. It sets them into your mental pathways. The words on paper have a physical form. You can see them now. Your muscles have taken a command from your mind and turned it into a tangible thing. This sets the basis for learning habits. The mind commands, the body responds.

If you’re having trouble in certain areas of your trading, you can focus your mental directives there to help you escape them. For instance if you have a bad habit of adding to your losers, write down “I will not add to a losing position” 50 times. It’s kind of like doing affirmations. Repetition helps you ingrain a command so that eventually you can overcome a bad habit if your will is strong enough.

Write down as many positive trading affirmations that you can think of. For example:

- I always follow my trading plan

- I accept that losses will happen

- I take profits when the market offer them to me

- I believe in my decisions

-I never risk too much in a trade

- I always use stops

You get the idea.  The more you have, the more you can pratice with. Record them on an MP3 player and listen to them in your sleep. You brain has a wonderful habit of learning what you practice and the more you bombard it with  the correct way to trade the more likely you are to turn into a great trader.

Pattern recognition can be learned through the use of “ flash cards”.  If you review my site you’ll notice that most of the chart patterns look the same. Buying as it breaking to new highs, selling as it breaks to new lows, selling or covering when shorter candles or dojis appear after long runs. If you were to view a bunch of charts in rapid secession, you can get a sense of what patterns give a high probability trade. I never am sure what a stock will do in the future, but I know that probability is on my side with the pattern that has demonstrated it time and time in the past. Your eye and brain can be trained in this way.

Develop your contra ideals. By that I mean that trading often requires you to do the exact opposite the situations in normal life require you to do. You may hold onto a loser because you are seeing your money disappear and you don’t want to end the trade without getting it back.  The contra response is to cut that loser soon so you don’t dig yourself a bigger monetary and psychological hole. If you go into your third loser in a row, it may be natural to have negative thoughts about the next trade, but all that will do is attract more losses to you. The contra attitude is a positive one that focuses instead on your proven 80% success rate because you KNOW that you can follow your trading plan and the law of averages will return in your favour.

Having a winning attitude is what it is all about. If you approach trading trying to protect what you have, you will most likely not succeed as a trader. You have to think that you have a system (you actually have to have a system) and it works more often than not and the winners are always more than the losers.  Trading becomes a probability game then.

 You become what you think about the most.

 

If these things don’t work for you, then visualize if you had Tony Soprano seated next to you and had to explain every trade. It would make you feel very uncomfortable to have to justify why you were breaking your no adding to losers rule.

You: “ I’m gonna average down ‘cuz I think it’s going to move higher in the          future”.

Tony: “Cut your loss you frickin’ idiot. You’re already $300 in the hole and now you’re going to tie up more money hoping it’s going to rise? What are you a moron? Find another trade”