Monday Mantras for this week, and I was thinking after some conversations I had with people where they might have been down last week or had not done as well as they would have liked to last week…
Their focus is more about wanting to make up for being down or not making progress last week (Watch the Video 19 mins).
Not making target last week. And it just made me think that that’s a less than ideal way to go about your trading.
You can not bring past emotions into your next trade because that is going to be impacting your beliefs when you’re selecting your trade, it’s going to impact your decision and state of mind.
The more clear headed, centred and grounded you are when you are trading, the wiser the decisions you will make. It is not wise to bring an emotional state to trading.
If you feel that you want to make back what you may have lost, or make up for not making target last week, anything like that, is going to impact the quality of your decisions.
The quality or your ability to what I call simultaneously assimilate what the chart is telling you.
We label opportunities in the market, we try and noun-ify it, and I heard Van Tharp say this as well, and it’s obvious, we trade our beliefs.
Even having a strategy itself, by definition, means that you’re trading beliefs.
But the less beliefs you project onto a chart within your strategy, the better.
The ideal state to be in when setting about to trade, apart from being trade-ready, is to be able to look at a chart and simultaneously assimilate what it is telling you.
And to be clear on the what the market type is and which of your strategies it will fit.
Rather than you projecting your beliefs or your judgement onto the chart.
Because remember and if you’re coming at a chart and you’re looking at it from the point of view, Is this a setup?
Can I use this strategy or that strategy?
I’ll just double check this and I’ll just double check that and make sure it will fit my strategy.
The more you’re doing that the more the beliefs that you are projecting onto the chart and you’re labelling it at that point in time. And the moment you label it, you have judgements associated with it.
We do that all the time in life.
We’ll label somebody that’s done something to us at some point in life that we didn’t like.
They were mean to us or something, and we will label that person mean.
And that person’s probably no more mean than a saint.
But in that moment, in that time that person was mean to you, or that’s how you perceived it.
Now you’ve labelled that person mean forever.
That’s the way it is on a chart.
And even though you label or judge an act and therefore label a person, that label could last a lifetime.
It could last years.
But, when you’re doing that same thing with a chart it’s instantaneous.
It happens straight away, and that is the label that you’ll be trading with on that chart.
Now that chart will be gone in a second and at the next tick that chart’s changed.
And the following tick and the following tick that chart’s changed.
But you have labelled it as it was the moment you made a judgement on it.
Does that make sense?
It’s a different way of looking at it and something you may not have thought of before.
But it is a vital component to successful trading.
And the easiest way I can explain it is what I heard Van Tharp say once.
That we label the market, or we name the market, as a noun.
So it’s a thing, it’s a noun.
Whereas the market is not a noun, it’s constantly evolving, so it’s not a noun.
And the moment we place a noun, we call it a noun or we see it as a noun, that is when we label it. That’s when we project beliefs onto it.
So that is why I say when you look at a chart you need to simultaneously assimilate the information it’s giving you.
What is it telling you.
So you’re not giving yourself time to project your beliefs onto it.
It needs to tell you what it is doing in order for you to know which of your strategies to trade.
Or, if you’ve only got one strategy, if it fits your strategy.
So that’s an important point that I wanted to make.
If you’re coming to a chart with a sense of feeling that you need to make up a loss, that’s straight away a judgement or a label or a belief you are projecting onto the market or the chart.
It’s How can I make up?
You are seeking out trades rather than allowing the trades to come to you.
It may sound a little bit semantic.
You might sort of say, Ah, Judy, come on, that’s just splitting hairs or being semantic.
It’s not, that is actually the crux of what generates mistakes.
That is the cornerstone of mistake land, if you want to put it that way.
That is where mistakes happen, that’s how we trade mistakes.
And, as I’ve always said, it is the mistakes that are the difference between a profitable month and a losing month.
I’ve seen it over and over and over again. People are trading in the month and they go back over the month and you could see 20% of their trades were spot on.
They had a good success rates in those 20 trades.
But then they made 10 trades that were, crazy.
Bore no relationship to the strategy rules, bore no relationship to any form of consistency, and they lost.
And something like that could be the difference between having a profitable month and a losing month.
It’s always the mistakes that you make that make the difference.
I’ve seen it too often, over and over and over again, eliminate the mistakes and you will have profitable months.
Because spotting technical setups is not difficult, a mentor I had a few years ago, a very wise man. Ray, lovely, wonderful guy.
He actually said to me, in all his years of experience, and I think he’s got 20 years experience in trading.
He said that in his experience the majority of people spot technical setups fine, it’s not a problem at all.
The problem comes in the execution. And this is where the mistakes come.
It’s where you second guess yourself.
It’s where you project your beliefs onto the market, it’s where you put fear or you introduce stress into your trading.
So that brings me to the focus of this chapter – it is imperative that you are 100% confident and certain in your trading.
Have a mantra – I’m Confident and Certain in my Trading.
The more confident and certain you are in your trading, the more you’re open to simultaneously assimilating the information the market is giving you for you then to know, not decide.
To know, what strategy to use or if it’s appropriate for your strategy to trade.
And the more confident and certain you are in your trading, the less lower vibrational beliefs you will be projecting onto the market.
Or onto your output in the market.
For example, if you’re confident and certain that’s a centre poised state, you’re not going to be fearful that you’re going to have another losing week.
Or you’ve got to make up for last week, therefore you will avoid hope trading.
You’ll avoid gambling.
You’ll avoid hopping in and out.
And you will avoid all those low vibrational fears, anxiety, guilt maybe.
Fear of missing out type of emotions, you will eliminate those from your trading.
When you are centred, grounded and in that moment, certain and confident, you’re vibrating at a whole different level.
There’s no stress, and there’s an open mind allowing you to just simultaneously assimilate the information the chart is giving you for you to know what and how to trade.
It’s a very very important difference. I cannot stress this enough.
You will know whether you are 100% confident and certain or whether you’re stressed.
You know yourself.
So let this be a check for you to put into your trading plan.
This has got to go into your trading plan.
When you’re sitting down to trade, now I’m going to have to assume that you’ve already got yourself trade-ready, that’s the first point.
Do not even sit in front of a chart unless you are trade-ready.
So let’s assume you’re trade-ready.
You’ve gone through that process.
You’re sitting in front of your chart.
I want you to ask yourself in that moment,
How am I feeling?
Are you feeling any sense of stress?
Any sense of wanting to make up for last week?
Any sense of shame, guilt, fear over your last trade?
If yes, walk away.
Do not trade.
Because you are not in a trade-ready state, you will not be open to simultaneously assimilating the information the chart is telling you for you to know what to trade.
So walk away, it’s not worth it.
Above all else, our number two philosophy in the Tribe of Traders is, You’re a money manager first, a trader second.
So walk away.
Protect your capital at all cost, because without capital you can’t trade.
But if you are sitting in front of the chart, trade-ready, ask yourself, What state am I in?
And if you’re feeling it, you’ll feel it in your heart. It will come from your heart, it won’t come from your head, a feeling of confidence and certain, knowing that you’re 100% present and in the moment, that there’s no other emotions, there’s no other beliefs that are going to impact you right now.
Because as it is, we already trade our beliefs in the market with our strategy.
By definition we have beliefs, because we believe, for example, one of our strategies is POGO, we believe that once price bounces of the 20 EMA, the 20 exponential moving average, and it has created a two cycles and you’ve got a 20 and 50 in the right order, in the order of the cycles, that price is likely to continue upwards; that’s the end of phase two, it’s likely to go into phase one. That’s a belief.
Now that belief, like any strategy, has been tested and back-tested, and because we all project our beliefs onto the market, because markets are nothing more than human behaviour, generally speaking that’s likely to happen – because the market are a reflection of human behaviour.
But let that be the only beliefs that we trade in the market.
It’s an important concept, it’s a very important concept.
We trade enough beliefs in the market, let us eliminate the low vibrational beliefs.
The beliefs around your strategy that you’re trading in the market is fine, that is fine because that has been tested, you will have back-tested that or you will have had years of experience with that, that’s fine.
But coming in at the market with stress levels, with fear or anxiety or stress, that’s not tested, it doesn’t belong in the market, it doesn’t belong with your relationship with the market, and it certainly doesn’t belong with your relationship with trading.
So hopefully that makes sense.
A great mantra for you to consider is – I’m a confident and certain trader.
Let that be the state that you are in before you open a chart.
So you’ve done your trade-ready, ask yourself as you sit down in front of the chart or in front of the laptop or computer, whatever it is you trade, and ask, What state am I in?
Because the first thing you’re going to ask yourself when you open a chart is,
What is the market type?
Remember, I learned this from my life mentor, Dr John Demartini, he’s my life mentor, a very long time ago; the quality of your life is dependent on the quality of the questions you ask yourself.
So I am always, asking myself questions.
So, after I’ve got into trade-ready, what state am I in?
I’m calm and confident.
But if I’m not calm and confident and I’m feeling any sort of stress, walk away.
So the first question I ask myself when I look at a chart is, What is the market type?.
Then I will simultaneously assimilate the information the chart is telling me for me to know what to trade.
The very last thing I think about when I place a trade is how am I feeling.
Be conscious of the thoughts that are going through your mind as you’re placing the trade.
Success does not happen by accident, and success in trading certainly does not happen by accident, it happens by design, and it happens through consistent behaviour, so small things done over time, that gives you the biggest impact, or it compounds your account, it compounds your behaviour, it compounds your relationship with trading.
And, what’s more, the behaviour and the patterns and the approach you take to trading will be the same approach you put into all forms of wealth building.
And that is why I say trading is the gift that keeps on giving, it’s why I love it so much, it’s why I absolutely love it.