Daytrading Tips

General Trading Articles

Mindful Daytrading - See What You May be Missing

Do You See What I See?

Ten witnesses will describe the same event 10 different ways. This is because they saw the same event, but from 10 different perspectives. Their physical location, personal background, and mental state would also affect their recollection.

At any given moment your brain is collecting and processing millions of unique bits of information. Everything you see, hear, feel, and sense is categorized and filed away. Research has shown that our brains record and store every detail of our perceptual world. We simply could not function, if we were unable to delete much of this detail from our conscious awareness.

Your brain will focus on whatever you deem important at any given moment, and consequently, what you regard as less important (in that same moment), your brain will file away. Your conscious mind is then able to deal with the "important" information, making the decisions necessary to perform the task(s) at hand.

This deletion explains why, "It was there a minute ago," happens to all of us. It is why you'll later find that same object, right where you were looking. It was there all along. You likely formed a mental snapshot of what you were seeking, then as you scanned the area, your brain helped by deleting much of the detail that didn't match your picture.

Think of how this affects your "view of the markets" when you are trading. If you have already determined market direction, you will only see that which confirms your directional bias. You could be seriously jeopardizing your ability to see "what is."

Fighting the Market

If you expect a down day, and have strong emotional reasons backing up that belief, you may choose not to notice clear indications the market is trending up. You may be stubbornly attached to your idea of market direction and find yourself fighting the market, placing one losing trade after another. You may exit good trades far too soon, knowing the market will reverse, only to be proven wrong.

If you've just had three or more losing trades in a row, pull back. Look at the market from a different angle. Whatever time frame you use for a trigger, look at slightly longer-term charts. Do you still see entry triggers, or have things changed? Another way to shake up your belief that you know what the market will do, is to look at the market from the opposite position than that which you "know" is correct. Seek that which you don't wish to find, and you may see more clearly.

If you've ever said, "I can't believe I took that trade," now noticing all the indications you wish you'd seen earlier, it is an example of this phenonoma at work.

Trading to Win

Follow your trading system, notice when it is not working, and adjust accordingly. Pay attention to your preconceived notions of what kind of trading day it will be, or which direction it will trade. None of us know the market in advance. Stop trading to be right, and start trading to win.