Finding the Right Mindset
Jack woke up later than usual this morning. He didn't sleep very well, worrying all night about two big losing trades he made yesterday and kicking himself for trading too impulsively. Today, he is worried about how he will make back the money he has lost. He really doesn't want to trade today, and wishes he could just take the day off. Maybe he should stand aside until his outlook improves. In order to trade profitably, it is vital to trade with the proper mindset.
Ideally, all traders want to trade in the zone. While in the zone, trading is effortless. Setups are easy to spot. And when a trader sees them, he or she is confident that a profitable trade can be executed with relative ease. But you can't be in the proper mindset all the time. What do you do when you're feeling off the mark? Some seasoned traders gauge their mindset at the start of the trading day and if it isn't quite right, they stand aside, take the day off, and wait until they return to a peak performance mindset.
If you rarely have a day when your mindset isn't up to par, taking a day off occasionally can't hurt. But if you are chronically in the wrong state of mind, you'll see very few profits if you constantly take the day off. You may want to try to improve your mindset. There are a few goods ways of getting back your mental edge.
First, set modest goals. If you are in a poor mindset, it's dangerous to start making big trades. You might want to start out slow and small. Try making a few practice trades and don't expect too much. Once you start the ball rolling, you may suddenly find the grove and start feeling better. People usually feel in a rut when they are trying to achieve goals that seem impossible at the time. By lowering your standards, you will increase your odds of success, and when you encounter some initial success, you'll start to feel better.
Second, review a past winning trade. It will remind you of your potential. When you're in a rut, you tend to think, "I can't trade. I can't imagine making a profitable trade today." The mind can play tricks on you when you are in a bad mood. Suddenly, you forget all the profitable trades you've made and erroneously think that you can't trade profitably in the future. If you carefully run through a winning trade that you've made in the past, though, you'll start remembering how talented you could be. It will distract you from the negative thoughts that incessantly run through your mind. You'll stop thinking about how down you feel and you'll start to pick yourself up.
Third, tell yourself empowering thoughts. By themselves, empowering thoughts may not work very well to get psyched up. For example, if you really don't have a sound trading strategy or if market conditions are terrible, an optimistic outlook won't do much to set an enduring peak performance mindset in motion. You'll feel optimistic for a few minutes, but a few losing trades will merely get you disappointed again. However, if you start off slow, come up with a realistic trading plan that is consistent with current market conditions, and execute it with realistic expectations of success, you'll feel a sense of accomplishment even if you don't reach your goals. You'll think, "That's pretty good considering I didn't expect much from this trade." Once you start building a little momentum, a few optimistic beliefs can put you on a roll. You will start thinking, "I'll take each setback in stride. I'll see how far I can go. If I gradually expand my vision, I'll make more and more profits, and end up profitable in the end." It may seem a little naïve to think that positive thinking can do wonders, but if you have reliable trading skills and are merely in a bad mood, positive thinking can set you on the right track and get you moving forward again. So when you're in a rut or a bad mood, don't let it keep you down. By taking specific psychological steps, you can move from self-doubt and stagnation to confidence and profitability.