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Focus on the Trading - Not the Money

It takes a certain strength of character to trade successfully. One who can stay focused on the task at hand, and not be overly concerned with the outcome. You must simply enjoy trading for trading's sake, rather than be excessively interested in the money. Ask any successful actor, business person, athlete, etc. and they'll tell you they don't do it for the money.

But that's easier said than done. When every trade represents money made or lost, how does one go about focusing on the trade itself, rather than the bottom line?

Professionals do not sit and mentally calculate how much money they are making from moment to moment, so if you are doing this as a trader, you are focusing on the wrong thing.

Focus on Trading System - Instead of Money

Focus instead on your trading system or your technique.

1. How quickly do you recognize and respond to a trading signal?

You've decided when A, B, and C are lined up, you're going to take the trade. At the precise moment you see that the above criteria are in place, do you ...

a) Immediately place the trade?

b) Hesitate for a split second and then place the trade?

c) Hesitate to "think it over" and end up missing the trade?

Obviously in daytrading, the correct response is A. Hesitation is a luxury you cannot afford if you are daytrading. If you discover you just cannot overcome this hurdle, then look to a longer-term outlook, swing trading, or position trading.

2. If you missed the above trade, and it turns out to be a winner,
do you:

a) Beat yourself up and tell yourself how stupid you are?

b) Tell yourself you'll never be a good trader?

c) Get physical, i.e. throwing things, screaming, etc.?

d) Determine to follow your rules next time.

Anything except D is a waste of energy.

3. If you missed the above trade, and it turns out to be a loser, do you:

a) Congratulate yourself on your uncanny ability to know when to trade?

b) Simply plan to execute by following your rules from this point forward?

c) Rethink your entire trading plan.

If you didn't follow your rules and it produced a winning trade, the worst thing you can do is congratulate yourself for it. Why? It reinforces your idea that you can trade on hunches or instinct, rather than with a rule based trading system. Do this and you'll never be consistent in following a trading system, and
consistency is what produced profits.

Losing Trades are not Always Failed Trades

A losing trade is not necessarily a failed trade -- make that distinction right now. If you followed your trading plan, the trade went against you and you exited the losing trade quickly (as per your rules), then that trade was a successful trade.

If you didn't follow your system, whether you won or lost money, that is not a successful trade. Do not fall into the trap of being inconsistent. Consistency is the key to successful daytrading.

Likewise, adjusting your trading system continuously means you don't have a trading system.

Follow Your Trading System for Success

After your trade, judge your success on whether you followed your trading plan, not whether you made or lost money. Keep a log to make sure you do this for every trade, and make a simple hash mark or check to indicate you followed your rules.

Example:

    Rules Buy/Sell Entry/Exit Time   
  Yes Buy Entry 10:34 A  
  Yes Sell Exit 10:43 A  
  No Missed - didn't take trade   11:05 A  

You can do this on a piece of scratch paper. The point is to start focusing on your rules, and whether you are following them. If you want to add up your tally at the end of the trading day, that is fine, just don't do it trade-by-trade.

Throughout the entire day, every day for one week, every trade you see, every trade you take, every trade you see and don't take, write down what you saw, what you did. Keep a detailed notebook on yourself.
It is the only way to tackle the all important psychological aspects of trading. Some experts say more than 90% of winning is based on the psychological aspects, yet less than 5% of traders are willing to spend five minutes, much less five days working on themselves as traders.

  • Why did you chose to hesitate?
  • Why you chose to act?

Capture as much as you can of what you are really doing. Capture any self talk - that is especially important.

This is not an easy thing to do because most traders get so focused on the trading itself, they forget to write down anything, let alone how they were thinking. After a losing trade, they might be so busy flogging themselves, they don't want to think about, much
less admit a mistake.

If you have the discipline to daytrade, you have the discipline to become a better trader and this simple process will go a long way toward that end.

Consistency is Key to Trading Success

Once you have discovered some of your consistent patterns, then you'll have a roadmap of how to address those issues. You can work with a trading coach such as Kathryn, who specializes in working with daytraders, you can find someone locally that understands trading and uses rapid change methods such as NLP or EFT, or you can self teach by reading and studying trading psychology. The goal is discovering your core motivation and criteria for success. ~~

For help with the psychological and mental aspects of daytrading contact Kathryn Martyn, NLP Practitioner, or see the Daytrader's Mentor.

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