pietistic
11-17-2005, 05:10 PM
Sent to my email from my trading partner, no idea where he got it from, but it's a great read.
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Regardless of what style, regardless of what method, regardless of what school of trading a trader is from, there are few common variables to all successful traders. Some traders might be technical, some might be fundamental; some might only trade earnings while others may have invented their own method that works perfect for them. However, one thing is for certain; all successful traders have at least mastered one common variable. That common variable, without a doubt, is the "mental aspect of trading" the so called "trader's psychology". There is NO question in my mind that is the most important variable! . A trader needs to master, to the best of his ability, his mindset while trading. In so many cases that becomes the missing variable which will prevent an average trader from becoming magnificent and very successful.
This particular blog is dedicated to that ever-so-important variable, the mental mindset of a trader – the trader's psychology.
Many years ago, someone once made a comment to me, "you only feel as good or bad as your last trade." I can't even begin to tell you how true that statement was.
Something very interesting happens when we trade. We all tend to feel as good or bad as our last trade. I will give you a good example. Recently you've been trading really well. You've been happy with the money you are making. You feel good about the way you have been trading over the last week, month or quarter. And then on Friday, you're trading and you just can't seem to do anything right. We all have those days. It happens. Every baseball player strikes out, I don't care who you are. Ted Williams strikes out. We all strike out. So it's a Friday now and we just can't seem to do anything right. And we end the day at a loss. A loss, which relative to us is bigger losses than we are comfortable taking. Something very interesting happens. You go home and for the remainder of that day, you feel horrible. You might even feel like you ruined your weekend! You just have this bad taste in your mouth that you can't seem to get rid of. We just don't feel good!
It's amazing that the prior week, or two weeks, or quarter when you were doing well, is 100% forgotten that Friday night. And for the whole weekend as well. As if it never happened. The Friday loss sits on you like a ton of bricks. It hangs in the air over you. When someone asks you about the market over that weekend you get that sick feeling in the pit of your stomach. When asked about work, our mind runs straight to that last trading day and we feel horrible, and vice versa. So many times traders who are not doing so well and struggling, perhaps it could be a tough time in the market, you could be a new trader, it certainly could be an experienced trader who is not really having a good run, having a so called "slump". And on that particular Friday, you have a good trading day. And now you feel great about yourselves. You start thinking things like, "wow, everything is finally starting to click, things are working, it's about time all the work I put into this is paying off." You feel so great. And again, you tend to forget about how you have been struggling and you feel that this is really the start of something. We all do this, we all feel as good or bad as our last trading day.
Now, there are some major pitfalls with this thought process that a trader must be aware of. Let's take the example where a trader is doing very well, and all of a sudden he has a bad trading day. A major pitfall I see this happening all the time that traders like to do is, they say "I'm taking tomorrow off….I need a break. I really had a tough day, I just don't feel good, and I need a day off."
This is the absolute worst thing you can do! You now force yourself to live with this horrible feeling about your profession... all you're left with are these bad feelings about the market, about yourself, questioning your confidence, whatever. You're going to sit with those feelings not for one, but for two or three days or however long you take off. You're extending the feeling of negativity.
Adam's prescription :
Come to work the next day!!!!!! Do not take time off!!! I don't care if you place only one, two or three trades, something very small and just make a $1. Then you turn off your system and walk out the door, where literally you are out the door at 9:31am EST. something is going to change in your mindset. Almost magically you feel better ending the day up one dollar!!!!! You are no longer subjecting yourself to sit with that sour feeling for longer then you need to.
On the other hand, you are not doing so well because you're new, which is understandable, most people do that. Or perhaps it's a bad market or you have things going on in your life outside of trading, that is affecting your trading, whatever the case is, and you go in and have a very good trading day. You now feel great, and you feel like things are clicking, things are great, things are wonderful.
One Big pitfall that I see all too often is when traders feel like it's coming together or "I'm out of my slump" or "what I've learned is kind of falling into line" They tend to come into work the next day and try to force things. In addition, they're inclined to add on some extra size to their positions due to the "this is my time" philosophy... And all too often, I see them giving back their gains and then some. And the vicious emotional rollercoaster repeats!!!
Adam's Prescription:
Forget about the last trading day. Everyday is a new day so treat it that way. DO NOT force trades, if you force it, bad things inevitably happen, and the whole cycle starts again.
Adam encourages questions and comments via email. Each week he'll be posting a question presented by a trader and answer it in addition to his new prescription
---
Regardless of what style, regardless of what method, regardless of what school of trading a trader is from, there are few common variables to all successful traders. Some traders might be technical, some might be fundamental; some might only trade earnings while others may have invented their own method that works perfect for them. However, one thing is for certain; all successful traders have at least mastered one common variable. That common variable, without a doubt, is the "mental aspect of trading" the so called "trader's psychology". There is NO question in my mind that is the most important variable! . A trader needs to master, to the best of his ability, his mindset while trading. In so many cases that becomes the missing variable which will prevent an average trader from becoming magnificent and very successful.
This particular blog is dedicated to that ever-so-important variable, the mental mindset of a trader – the trader's psychology.
Many years ago, someone once made a comment to me, "you only feel as good or bad as your last trade." I can't even begin to tell you how true that statement was.
Something very interesting happens when we trade. We all tend to feel as good or bad as our last trade. I will give you a good example. Recently you've been trading really well. You've been happy with the money you are making. You feel good about the way you have been trading over the last week, month or quarter. And then on Friday, you're trading and you just can't seem to do anything right. We all have those days. It happens. Every baseball player strikes out, I don't care who you are. Ted Williams strikes out. We all strike out. So it's a Friday now and we just can't seem to do anything right. And we end the day at a loss. A loss, which relative to us is bigger losses than we are comfortable taking. Something very interesting happens. You go home and for the remainder of that day, you feel horrible. You might even feel like you ruined your weekend! You just have this bad taste in your mouth that you can't seem to get rid of. We just don't feel good!
It's amazing that the prior week, or two weeks, or quarter when you were doing well, is 100% forgotten that Friday night. And for the whole weekend as well. As if it never happened. The Friday loss sits on you like a ton of bricks. It hangs in the air over you. When someone asks you about the market over that weekend you get that sick feeling in the pit of your stomach. When asked about work, our mind runs straight to that last trading day and we feel horrible, and vice versa. So many times traders who are not doing so well and struggling, perhaps it could be a tough time in the market, you could be a new trader, it certainly could be an experienced trader who is not really having a good run, having a so called "slump". And on that particular Friday, you have a good trading day. And now you feel great about yourselves. You start thinking things like, "wow, everything is finally starting to click, things are working, it's about time all the work I put into this is paying off." You feel so great. And again, you tend to forget about how you have been struggling and you feel that this is really the start of something. We all do this, we all feel as good or bad as our last trading day.
Now, there are some major pitfalls with this thought process that a trader must be aware of. Let's take the example where a trader is doing very well, and all of a sudden he has a bad trading day. A major pitfall I see this happening all the time that traders like to do is, they say "I'm taking tomorrow off….I need a break. I really had a tough day, I just don't feel good, and I need a day off."
This is the absolute worst thing you can do! You now force yourself to live with this horrible feeling about your profession... all you're left with are these bad feelings about the market, about yourself, questioning your confidence, whatever. You're going to sit with those feelings not for one, but for two or three days or however long you take off. You're extending the feeling of negativity.
Adam's prescription :
Come to work the next day!!!!!! Do not take time off!!! I don't care if you place only one, two or three trades, something very small and just make a $1. Then you turn off your system and walk out the door, where literally you are out the door at 9:31am EST. something is going to change in your mindset. Almost magically you feel better ending the day up one dollar!!!!! You are no longer subjecting yourself to sit with that sour feeling for longer then you need to.
On the other hand, you are not doing so well because you're new, which is understandable, most people do that. Or perhaps it's a bad market or you have things going on in your life outside of trading, that is affecting your trading, whatever the case is, and you go in and have a very good trading day. You now feel great, and you feel like things are clicking, things are great, things are wonderful.
One Big pitfall that I see all too often is when traders feel like it's coming together or "I'm out of my slump" or "what I've learned is kind of falling into line" They tend to come into work the next day and try to force things. In addition, they're inclined to add on some extra size to their positions due to the "this is my time" philosophy... And all too often, I see them giving back their gains and then some. And the vicious emotional rollercoaster repeats!!!
Adam's Prescription:
Forget about the last trading day. Everyday is a new day so treat it that way. DO NOT force trades, if you force it, bad things inevitably happen, and the whole cycle starts again.
Adam encourages questions and comments via email. Each week he'll be posting a question presented by a trader and answer it in addition to his new prescription