1. CONFIDENCE: absolutely essential in an environment that feeds on emotional instability.
2. TRUST: if you cannot trust yourself who can you trust? Trust your rules, trust your edge, trust that you will do the right thing-no matter what!
3. FOCUS: you will never learn all there is to learn about the market. Push your ego aside and focus on one market and one edge.
4. ACCEPTANCE: you have to accept what the market is willing to give or you will give the market what it wants to take. (more…)
“Success is not to be pursued; it is to be attracted by the person you become.”
Trading success requires confidence. But confidence does not just come from knowing how to identify and act on good trading opportunities. It also comes from learning how to deal with adversity. It comes from facing a slump and working through the challenge to overcome it.
So, when you find yourself in a slump, embrace the opportunity. This is your chance for personal growth. It’s an opportunity to become a better trader. It’s an opportunity to establish a winning feeling, not a false one based on hope, but one with substance in which you know that whatever comes in the future, you’re ready for it and you can deal with it.
Enjoy the challenge.
Winners share certain behaviors and beliefs. Check to see if you possess the traits and beliefs of winning traders !!!
Without doubt the foremost reading, it seems, in trading circles. Douglas’ book, in my view, deserves its place at the top of a traders reading list. Whether you are trading currencies, commodities, stocks or futures this book will have something for everyone. The book tackles the psychology involved in being a successful trader. The book attempts to give the reader the tools to develop the Confidence and discipline to become and consistent winner.
I think the book is a superb read and although I cannot say right now how succesful it has been, it is one of the few books that I pick up nearly every day and read another chapter again and remind myself of some of Douglas’ inspiring ideas and thoughts.
The book ends with a great 20 trades learning excercise that is a must.
The key learnings I get from reading this book :
1)The market is random; you cannot predict it. Unless you know every individual who has a position in the market and you know their strategy for each trade it is impossible to know what will happen next.Give up trying to predict, and focus on the now moment and managing yourself , your money and your strategy.
2)The Power of Association. Douglas uses throughout the book a story about a boy and his fear of dogs. He uses this analogy to describe how previous experiences that have given pain, or expected pain, to us will mean that our mind will do everything possible to protect itself from future pain when it is exposed to similar circumstances at some point again in the future. i.e. If you recognise a market pattern where previously you lost a trade you will be compelled to exit the trade at that point or not take that trade on; because you will not want to experience pain. Douglas again talks about the here and now and describes how we can overcome these internal obstacles.
101%….Don’t miss to Read this Book !!!!
They are as follows:
Losing trades can have the same affect – if you let them. However, if you look at each trade as just one of your next 100 or even one of the next 1000 trades you’ll make in the next year, you’ll begin to attach far less emotion to the outcome of each trade. Detaching emotion from individual trades is one of the best ways to build confidence in yourself and your long-term success as a trader.
Losses are inevitable; they simply are a part of trading. How you handle losses is what can ultimately determine your level of success moving forward. Even a losing trade can be beneficial if you take what you can from it. Ask yourself, “Why did this trade fail? Is it a function of a market reversal, or a miscalculation on my part? Was my stop-loss set too close as a result of too large a position? Did I micromanage this trade and adjust my numbers on the fly? Did I completely abandon my trading plan?” A loss means you’ve already paid the tuition, so you might as well stick around for the lesson.
Ask the right questions when a trade doesn’t work out or when you hit a rough patch with your trading. The answers you find can help you greatly as you progress as a trader. Whether those answers allow you to avoid making the same mistake again or if they just give you some closure following a bad experience, take what positives you can find and move forward.
Bottom line: cut the loss but keep the lesson!
Trading is a journey and a competitive activity. Why would you not plan your trades? Are you relying on someone else to plan them for you? Are you thinking there is something magical about the markets and all you have to do is click the mouse or call your broker and money flows into your account? If any of these are true, you are setting yourself up for failure.
Make a plan. This plan is what resonates with your brain structure, trading personality and money attitudes. Make it as simple as possible and then trade it consistently, day after day. If the plan is not working, change it until you get one that works for you. If it is working and generating profits for you, keep it. Don’t try to fatten it up, give it more bells and whistles or get greedy with it. If it’s broken, fix it and if it isn’t then leave it alone. Keep it simple and keep going with it.
Look at your plan every night after the market close. Write down how it worked for you that day and then contemplate and write down how you will use it the next day. In your nightly preparations and your preparations before the market opens, review your plan, Ensure that you are ready to execute, that you know what you are going to do, when you are going to do it, and then just do it—then execute ruthlessly. This is one way to empower yourself and grow in confidence as a trader. Winning in the markets, sports, business and life is about superior positioning, planning, reviewing, reworking, and executing over and over again until you get it right in a way that is seamlessly competent.
The market often rewards bad behavior. You exit a stock because your stop is hit. You are okay with this because you followed your plan. The market then immediately reverses. You begin to think, “If only I stayed with the position.” The next time the market goes against you, you decide you are not going to get tricked again. This time though, the market does not reverse and what started out as a small manageable loss is now huge. The market will give you loss after loss forcing you to abandon a methodology right before it takes off without you. On the flip side, the market will lull you into a false sense of confidence. You trade larger and larger, taking on excessive risk. You print money until your risks become so excessive that one or two bad trades wipe you out. Learn from the market, but realize that sometimes it can be a lousy instructor. |
REVENGE, we all know it and have done it. It happens when you are tricked by the market and decide to take another trade before looking at the big picture, then BAM you are on the wrong side of the trade again. Pissed off and refusing to move while your money is going further down the drain. Scared to let go for fear that you are going to get tricked again.
PANIC, that is when you lack the confidence to enter or ride a profitable trade. This happens when you have taken some hits and now you lack the confidence to trade profitably.
IMPATIENCE, this happens when you can’t wait for a proper trade set-up and jump on a price hiccup/retracement, often finding yourself on the wrong side of the trade.
ANGER, you know that feeling that comes over you when you have taken a hit or two and you want to kill your computer.
SELF PITY, when you come to the market hoping for crumbs and get none, and can’t see why THEY won’t let you have just a little bit.
DEPRESSION, something perhaps outside of the market has you at an extreme low point.
INDIFFERENCE, it happens when you have gotten hit so many times that you just don’t care any more because no matter what you can win any way.
All of these emotions work hard against you clouding your clarity and give other traders the advantage over you.
If you are experiencing any of these emotions when you enter your platform; abandon your trading until you have yourself under control and have the clarity of mind to trade. Not doing so greatly increases your chances of handing your money over to a trader who is more emotionally fit and controlled than you are.
We are all human and it happens to us all, but what weighs heavy in your mind will often weigh heavily in your pocket.
Come to your trading platform, well rested, focused and ready to trade. You may take an occasional hit so what it is a LESSON. We all get them and if we learn the lesson that the loss has taught us; it will make us much better traders.
DO NOT TRADE YOUR EMOTIONS!!!!!—-
– After a lull (chop, quiet market) a new set of waves (setups, breakouts) will appear. Often, the first wave is not the best wave. Don’t get too excited because you see an OK wave (false breakout) after you haven’t seen any good ones at all. Often there is a better one behind it (look for confirmation).
– If you catch a wave ride it as long as you can, until you see yourself heading into shore, rocks, or other people (end of trend).
– Get into position and be ready to go for a wave so you’re ready to take a good setup once it appears. (focus, attention)
– Once you see a wave you want, commit to it to getting on it. Paddle as fast as you can to get enough speed to go with the wave. (have a plan, preparation, confidence with entry, execute with precision)
– Don’t try to catch the wave too early, make sure it has built up enough energy to carry you along (overly eager entries, wait for confirmation)
– Don’t catch the wave too late or else you’ll catch it on the top of the wave and it will throw you down into the seabed (buying tops or selling bottoms)
– Don’t try to surf every wave (over trading), just the ones that look easy to catch and worth the energy required to catch and ride it (capital preservation, high probability trades)
Any other surfers out there have some surfing/trading parallels? – If there’s no waves (setups) be patient and enjoy the water and sun. A setup will come. If not, then it wasn’t meant to be (sit on hands day) or not a good spot (market). Come back tomorrow or find another spot. Don’t try to make something of nothing.
