Daytrading the S&P500
A Visual Approach

Whether you win or lose long-term in the market will depend on what psychological strategies, if any, you develop. At the worst, the random psychological patterns and coping strategies you have unconsciously developed in life will probably ruin you as a trader. If you see a signal and your response is, "I hope this is not another loser," you need to change your internal self talk.

A positive mental approach is necessary for trading at your highest level. One of the best psychological feedback loops that top traders have habituated is:

1. See the signal
2. Realize that you are familiar with the signal
3. Have a positive feeling about the signal

This psychological model is very tradeable and uses a supportive mentality that allows taking a trade easily.

A Daily Regimen for Top Trading

1. Daily Psychological Analysis.
Sit at your trading desk with your eyes closed for about 1 minute to shut out distractions. Focus on how you are feeling that day and assign a self-rating from 1 to 10 with 1 being the lowest and 10 being the highest. To perform optimally, traders need to exercise, get plenty of sleep, and avoid alcohol and recreational drugs.

Some individuals have food sensitivities (wheat, dairy, caffeine and others) that can adversely affect their mental and physical performance. Perhaps you have had a major disagreement with your spouse or other family member and are mentally fixated or distracted as a result. If your personal rating is not above a certain level, you may want to avoid trading that day:

PoorAverageGood

1    2    3    4    5    6    7    8    9    10

Tracking your personal self-rating and your objective performance over a period of months and seeing at what lowest self-rating level your trading begins to suffer can save you a great deal of money. An ideal way to visually evaluate this self-rating versus profits is to create a table in a spreadsheet with your self-rating in one column and your profit for that corresponding day alongside and track your self rating for several months.

Create a scattergram chart using this data in your spreadsheet. Some scattergrams will drop precipitously at a particular level while other charts will show a steady decline as the self-rating drops. At a certain self-rating level, you will not want to trade that day.

Other body or mental parts needs may be more subtle and require close attention to any signals you may receive. Be attentive to these signals during the day so that all of these needs can be quickly met and you can focus on trading without these subtle distractions.