Mental Fitness for Traders

You've got a great trading system. So why are
you losing?

You've done your homework. Countless hours of
seeking out the right guru (or piecing together
your own system). Weeks of monitoring your
guru's daily trade picks (or paper-trading and
back-testing your homemade system). You've done
it by the book.  No seat of the pants trading
for you!

OK, now you're confident. It's time to put your
money where your homework is.

You've had your coffee and your first trade
signal is before you. Confidence high. Trade made.
First loss. Not a problem. You understood before
you started that successful traders both win and
lose and “losing is part of the overall winning”.

You've also heard more then once that “successful
traders don't win on every trade.” Moving on,
still confident. Next trade made. Another loss,
but this one hurt your pride a little because
you got stopped out early in the trade, and then
the market rebounded and would have hit your
profit target if you weren't stopped out.

You double check. Yep, you placed the stop where your
trading system told you to place it.  You kind of
had a feeling that the early weakness in the market
was just profit-taking from the previous day's
trading, but you're trading a system and you must
stick to it. Wounded, but resilient.

After a good night's sleep and a few mouse clicks,
your new daily trades are in front of you. Hey,
this one looks good! It's a little bit more risk
than yesterday's trades had, but look at that profit
potential! With a smiling face, the trade is executed.

With a nice start to the trade, you're feeling good
and you've moved your stop to breakeven, just like
your system said. Surprise piece of news - market
reverses - blows through your stop - an “unexpected”
loss. Is something wrong with the system? Has the
overall market “personality” changed, affecting your
system to the Core, rendering all your back-testing
irrelevant? Your confidence turns to doubt.

You decide to “watch” the next trade… I mean, isn't
it wise to make sure the system gets back on track
before you “throw good money after bad?”  Isn't that
what a conservative trader does? Trade watched.
It wins!

In your head, you beat yourself up a little because
you know that when you started your “live” trading,
you made an agreement with yourself to take the
first 10 trades “no matter what”… and here you
wimped-out and missed a big winner that would have
gotten you even.

What's happening?!!

What's happening is that you are out of control.
Your emotions are ruling your trading. The above
scenario plays out in every trader from time to
time.. newbee and veteran alike.

The winning trader senses what is happening and
nips it in the bud. The winning trader spend time
EVERY DAY, working on “the discipline of trading”.
Reads a chapter in his favorite psychological
trading book, scans the “ten commandments of
trading” that hangs on the wall over his/her desk,
listens to his/her mental training software for
futures traders… Something… Every Day… before
trading begins.

There are many more losing traders than winning
traders… and it's seldom about the trading system.
In my career, I've come across at least 50 systems
that I consider A+, yet I know for a fact that MOST
traders that have traded on these systems have lost.
Why? They were not in control of their emotions.

Are you?

RECOMMENDED: Mental Training For Traders:
TradingMind Software
http://www.directyourmind.com/scripts/tradingmind.php?10162

My best,
Norman Hallett