Day Trading Tips
Mind & Money Part 7

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Learn to use Elliott Wave in your Day Trading

How Traders Talk Themselves Into Bad Trades

We are all influenced by our experiences. If you have a car accident on a rainy day at 7th and Vine, then the next time you drive on a rainy day past 7th and Vine your eyes will dart this way and that, searching for signs of danger.

One single experience creates a neural pathway that your brain will follow given the same circumstances. When learning a new skill those pathways are slowly being created until the skill is perfected.

If you are just learning to trade, what seems to happen? The trades you decide to take, go wrong, and the trades you decide to let pass, would have been good winners. Why is this happening? Probably it is more your interpretation of the situation than reality. Develop some criteria for your trading, rules you follow.

If A is present, B is present and C is present, you will take the trade. Follow this pattern for at least 10 trades before you determine whether it is a winning system. Consistency will gain you the rewards.

How do you trade a system consistently? You must start becoming more consistent by taking charge. Listening to the way you talk yourself into and out of taking trades, you can eventually learn to diffuse negative disempowering talk and instead use empowering talk.

"Okay, here it is setting up, oh this looks good, A is in place, let's check B, yeah, B is in place, where's C, oh Jeeze, C is in place, now what? Should I take the trade?"

A professional trader would have already placed the trade, a novice is still deciding what to do.

"Well, I read something about not taking trades at 10:15 and it is now 10:17. What about the bad news I read in the paper this morning about the economy? What if it all goes horribly wrong? What would my family say? What would my friends think? I hate this!"

All this chatter has taken place in the space of a few seconds, but what happens next?

"Ahhhhrggg! The trade, it's moving in my direction. Oh why, oh why didn't I take this trade? I'm an idiot. I'll never be a successful trader."

Our trader didn't take the trade because he continued to question the validity of the signals he received, after having received them. How is this self-talk in any way going to help this trader? It won't. Banish such talk immediately.

As soon as you see a set-up, you have the phone in your hand, or have pushed the button on your electronic order system, and the trade is made. Talk to yourself then, if you must, but use empowering talk, say, "This is good, I've followed my system."

How to Diffuse a Verbal Bomb

Much of the self talk we use is laced with destructive, this-is-the-end-of-the-world type nonsense. You can easily diffuse much of the power of these comments by learning to use softer, more playful descriptions.

Practice softer self-talk. If you really feel like swearing, try some of these favorites I learned from my beloved grandfather: Dag-nabbit! Ding-bust-it! Ding-blast-it! Dad-gummit! You'd be surprised at the looks you get.

Change Your Perception - Change Your Mind

Think about it, the emotional uproar you experience when highly stressed, afraid or upset -- rapid heart beat, quickened pulse, shallow breathing, pit in your stomach -- these are all the same things you experience when you are highly excited or thrilled. These feelings are positive or negative depending entirely on how you choose to label them.

Use this highly charged emotional climate to your advantage. Change the way you perceive what is going on around you into something positive.

All performers experience the pre-performance jitters commonly labeled as stage fright. Professional performers use this highly charged emotional climate to psyche themselves up and get excited, while less skilled performers literally become unable to step on stage, crippled by the intensity of their feelings. What words do you support a skydiver uses just before stepping out of the plane?

You are a performing trader, choose to be excited. Every time you begin talking in a negative way, change it as soon as you realize it is happening, and instead say helpful, empowering comments. Tell yourself you're excited, not upset. Get involved in creating the outcome you really want. Be on your own side.

Make a list of your new statements and pull it out, or paste it in front of you. To become a good trader, you must practice trading. Rehearse your skills day-by-day and practice changing your self-talk. Notice throughout the day, even while not trading, what kinds of things you say, and change negative talk into something more positive. If you keep at it, over time your new way of talking will become your usual way of talking, and it can impact your trading in a very big way.

Coming Next: All is Not What it Seems - How Your Perception Alters an Event