First of all stop thinking that greatness and ease while trading lies in finding the next Holy Grail indicator. It doesn't. Frankly the fewer indicators you use the better off you’ll be. Price action is the be all end all for me. An uncluttered mind is free to apply a system and go with the flow of the markets. Simple is better!
The holy grail of trading is when your mind is rooted in discipline. That means you can do the right action at the right time unaffected by external or internal factors. Unflinchingly applying your system, playing the probabilities, looking at both sides of a trade, not celebrating wins, not moaning about loses and beating yourself up, not reliving bad habits time and again when you ought to know better.
To gain discipline, I believe it is necessary to actively exercise your mind power. This can become the bedrock of an entirely new you. If you are currently having trouble and find yourself wallowing in an emotional battlefield, take a step back and work on the mental aspects of trading before you blow out your account.
Lets start with some housekeeping. Stop the time wasters be they gadgets or people. Perhaps it’s necessary to regress back in your life and throw out the junk that is negatively impacting you. Your thoughts on winning, losing, being wrong, being right, self worth, hard work vs easy work just to name a few may hold the key to get you over to the consistent winning traders side. You need quiet reflection and to examine in depth the real reasons behind your stupidity. I’ll call it stupidity for lack of a better word because if you find yourself doing the same things over and over that self sabotage your other efforts to achieve something, it is plain old fashioned stupidity. All we are here to do is to interpret the candles or whatever you use to place your entries. Letting many other wayward thoughts and feelings intrude into this process is what we can strive to eliminate. Getting rid of or reconciling with these ideas to the point that you recognize they are a part of you but not letting them interfere with your intended actions is an achievable goal if you work at it. Start with a clean and clear mental space to construct the new you. All this is leading to singleness of purpose and thought patterns. Your mind is an ultra powerful tool that can hatch an idea and carry it out through hard work and dedication, if you let it. Having a definitive goal lets you have a point to focus your thoughts to like a bullseye target.
If you have read some of my other articles you will know that each morning as I wake up, I visualize many of the typical trading patterns that make up my edge/system. Breaks to new highs or lows, dojis, selling into strength, waiting for pops or pullbacks to enter or exit. I don’t know what the trading day will bring, but by doing this I am availing myself to see the conditions that will be profitable to me before they happen. I don’t know when they will happen, only that they will sometime during the day. I am prepared. I have seen that probabilities play themselves out to my benefit out when I act on them. I also cover the downside as part of my system in case they do not work out that particular time. This doesn’t take more than 5 or 10 minutes while still laying in bed yet is vital to my success.
Here is how I practice: As I close my eyes, in my minds eye I see the chart pattern, the candlestick colours, the volume bars. Zero in on each minute detail. Examine it from right side up, upside down, side to side. Get right in amongst the candles and look around in 3D. During this process I keep focus on the task at hand. If my mind drifts, I bring it back like I would a dog on a leash trying to sniff the next fire hydrant. Always come back to my goal. Clear everything else from my mind.
You can also start with some simpler exercises if you like. Visualize letters of the alphabet one at a time. Count how many you can see in your minds eye before some other thought intrudes. As you get more advanced, flip them over side to side, top to bottom, see them as they reverse, make them thick or thin. Add a light in the corner of your picture for a reflection. Change background colours. Keep focused on your goal. Let nothing interfere. It will take practice to be able to do this. As you work on it day by day you will get better. It’s like any other muscle that you exercise.
As an exercise when you go to bed, close your eyes and see in your minds eye a white movie screen. Imagine all the things that you would change in the future to become the person you want to. Imagine doing, having, saying and playing a mental movie of the new you. Being the best you that you can be. Revel in the joy of being in control of your life. It’s not just about the money, it’s being content with your life if you are not currently so.
Change that mental movie screen into a pen and paper. In your minds eye write down positive affirmations about yourself in your own handwriting. “ I am ready” “I am an excellent trader” “ I always follow my plan” “ I can do this” for example. See the script as you write it. See the letters appear. Hear the pen on paper. Reinforce the positive aspect at all times. Training your brain takes hard work but it is very rewarding. You will find other areas of your life will improve not just trading. This is all about being happy and doing what you want to do. After a while you will find that visualizing the charts is easy, that instantly taking the positive outlook on events makes you mentally stronger.
Having gotten a bit of discipline in this way now paves the road forward towards a much more rewarding future. Work at it , never give up, achieve your goal and it is something that will stay with you throughout your life. I don’t care what level of education is or what your upbringing was. IF you desire real change in your life it must be worked at little by little. It won’t just fall in your lap. We are all built the same but some of us have worked hard to get where we are. And you can do this yourself as well if you really want it badly enough.
6 comments:
Another great post Scott. Now to take it to heart...
nice post.
one thing i would like to add addresses the fact of the mind wandering during the visualization or meditation. it always frustrated me that i couldn't hold onto a thought for probably more than 3-5 seconds before another thought crept in. i would give up in frustration that i couldn't keep my mind focused.
after reading a short book on meditation, they said that this wandering would happen. that it was okay. that the idea was to recognize it was wandering and bring your mind back to the thought, word or idea. so instead of being frustrated by not visualizing well, i learned that wandering was usual and it was my job to make the mind re-focus. the book suggested starting out with a small time frame, maybe 2mins. then gradually increasing the time spent visualizing every week or so.
basically, after learning that it was okay to only hold onto a thought for 3 seconds, i felt better about practicing.
I really appreciate these posts from you Scott. Thank you.
Although not to the extent you suggest, I do a lot of the visualization exercises that you mention. Upon waking, just before going to sleep etc. This got me to the stage where I know and believe in the law of large numbers, my edge playing out in the LONG run, being flexible in mind and action. I am consistently profitable SIM TRADING.
Now, I switch over to live trading and I'm frozen stiff with fear. Down slightly in my first week of trading due to normal variance but have regressed to old mental behaviour (discipline in trading remains rock solid)
Any advice? Seems crazy that I wouldn't follow through with what clearly works in the long run.
Looking forward to any reply you might give :)
MM
Another really powerful post Scott.
Thanks.
MM- sounds like you are stuck in the spot between your beliefs and the application of your edge. Try one trade at a time, strictly adhering to your system. Analyze your actions afterwards. Try and get over to the purely mechanical actions involved in trading. Whatever your step 1 is, step 2 is etc. Let the markets tell you what to do as opposed to letting your emotions speak. Before entering a position plan for the downside and your exit should the trade not go as probabilities suggest it might. In this way you are open to and prepared for anything to happen. IF your edge/system works, it will then be a matter of playing the probabilities and working them. Monitor yourself and have preset triggers so that if you get overwhelmed and try to force things, revenge trade or feel out of control, then you will stop trading and go back to watching until you can figure out where you are going wrong.
Whatever system you use make sure it is a simple one.
Above all believe in yourself. Trust that you can do this. Build on every little success no matter how small. Even cutting losers quickly can be considered a success.
MM- Scott's last statement is vital. He has said it before and I would just like to re-iterate that cutting losers quickly, or getting stopped out, is part of your plan, so it is considered a success in such that you are following your edge/plan.
Granted, I say this to myself over and over again, and get frustrated with each and every stop but I know at some point those feelings of being wrong will dissipate. And it shouldn't even be right/wrong because we never know when our losers will come. There is a random distribution of our winners.
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