The Noetic Trader

Fighting to Climb Out of a Rut

2010-10-06T05:22:00.000+11:00

When you first start out trading, becoming a winning trader can seem impossible. Somehow you have to build up enough talent to trade markets that aren’t cooperative most of the time. When you are thrown off balance as a trader, it can be hard not to get in a rut. You might think, “Why bother trying again? I’ll just lose even more money. I want to give up.” If you aren’t careful, you can develop a “psychological complex.” Rather than look at the markets objectively, you can start placing too much emotional significance on setbacks and trading outcomes. Suddenly, routine setbacks are a big deal; each trade has more personal meaning than it should. When you make a trade, it’s as if your self-esteem and identity are on the line with your money. If you don’t do something fast, you may feel so anxious and overly emotional that you can no longer think logically. And then losses begin to mount.

In their book, “The Innergame of Trading,” Robert Koppel and Howard Abell outline a strategy for getting out of a slump and regaining your mental edge. A slump may reflect conflicts and issues that you have not yet resolved. It’s vital to identify these issues and find some resolution. Let’s review five major issues discussed by Koppel and Abell. First, make sure that you fully understand your motives for trading. Rather than trading for the money, it is important that you truly love the game. If you merely trade for the money, you will often feel disappointed by the endless setbacks you must overcome, but if you trade because you love the independence trading offers, and are stimulated by the intellectual side of trading, you will take setbacks in stride. Second, it’s also necessary to make sure that you trade with a trading style that suits your personality. Many traders make the mistake of trying to trade an approach that doesn’t suit their style. For example, they may have an overly anxious temperament yet take big risks on short-term trades that are inherently uneasy. This style of trading stresses them out to the point that they can’t enjoy trading. Instead, they vacillate between frustration and stagnation. In the end, you can only trade with the skills and resources you have available, and this may mean finding a trading style that suits you, rather than a style that is the most popular at the time. Third, trading should make you feel good. You should think it is fun. When you wake up in the morning, you should feel as if you can’t wait to trade. If it doesn’t make you feel good, you should wonder why you should even bother. And if you don’t wonder explicitly, it will gnaw at you and overpower you when you least expect it. Fourth, make sure that you acknowledge how difficult it is to learn to become a profitable trader. Don’t mistakenly think that trading is easy. It is not. It takes hard work to become a winning trader. People become upset when they forget how much time and effort is required to learn to trade. When you underestimate the difficulty of trading, you will feel frustrated when your performance does not meet your expectations. But when you remember that trading is extremely difficult, you will feel less disappointed when your hard work and effort do not always pay off. Fifth, build up a sense of confidence. You may not trade up to par at first, but it is vital that you believe that your hard work and effort will eventually pay off.

When the markets don’t cooperate with you, don’t despair. Work through personal issues that prevent you from living up to your potential. If you stay focused and cultivate a positive state of mind, you’ll recover from setbacks quickly and hone the trading skills you need to trade like a winner.

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If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 begin_of_the_skype_highlighting +1 650 320 1714 end_of_the_skype_highlighting begin_of_the_skype_highlighting +1 650 320 1714 end_of_the_skype_highlighting or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Maximizing Tendencies: When More Is Less

2010-09-23T14:01:00.000+10:00

In the trading business, the more profits you make, the better. But mediocrity rarely leads to maximum profits. Winning traders must constantly search for novel, high probability setups. And finding these setups isn’t enough. One must also trade these setups in a peak performance mental state. A study by Dr. Sheena Iyengar at the Columbia University School of Business, however, suggests that searching for the “best” alternative may undermine feelings of satisfaction. And when you don’t feel at your best, you will have difficulty trading the markets with the proper mental edge.
When it comes to making decisions, some people are maximizers while other people are satisficers. Maximizers seek the best alternative when making a decision. They make an exhaustive search of all possibilities. Traders who are maximizers put in extra time and energy to search for the most novel and profitable trading opportunities. They want to maximize their profits, and that means searching exhaustively for all possibilities, considering them, and choosing the best option. Satisficers, in contrast, seek the decision alternative that is “good enough.” They don’t make an exhaustive search. They merely look for a potentially profitable trading opportunity and they trade it

Maximizing usually pays off, but there are disadvantages. It takes a great deal of extra psychological energy to search and consider all possibilities, depleting limited psychological resources. Maximizers also tend to compare themselves to others and tend to feel regret and depression while making decisions. In a study by Dr. Iyengar and colleagues (Iyengar, Wells, & Schwartz, 2006), for example, maximizers did better financially in terms of yearly salary as a result of their decision making strategies, but they felt worse. They tended to fixate on realized and unrealized options. There may be an advantage to reviewing all possible options when making decisions, but mulling over them too much can be a distraction, and maximizers tend to get too wrapped up in fantasizing about the potential rewards of making the “best” decision. Although maximizers were better off financially than satisficers, they were less satisfied with their decisions, and felt more pessimistic, stressed, tired, anxious, worried, overwhelmed, and depressed while making decisions. At first glance, this finding is puzzling. How could people who do financially well feel so unsatisfied? Striving for perfection has its costs. Because they search for the elusive “best” option, maximizers increase the potential for feeling regret. By thinking and re-thinking potential opportunities, they put added pressure on themselves to make the “right” decision. But no decision is perfect, so they end up feeling uncertain and unsatisfied with any decision they make.

Trading profitably in the long term requires one to maximize profits. A thorough search of all possibilities will pay off in the long run, but it can also stress you out if you are not careful. The challenge is to find the balance between finding a high probability setup on the one hand and accepting the fact that it may not be the “ultimate” setup on the other hand. If you are a maximizer, it may be useful to ease up on yourself occasionally. Tell yourself that you don’t have to be perfect. Remind yourself that you have done much more than other traders in terms of searching for a profitable trading opportunity, so you might as well feel assured that you’ve done your best. You can relax a little. After you’ve made your decision, stop deliberating and take decisive action. It’s important to just execute the trade and see what happens. In all likelihood, you’ll make the profits you are seeking.

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If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 begin_of_the_skype_highlighting +1 650 320 1714 end_of_the_skype_highlighting or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

The Right Place at the Right Time

2010-08-23T17:09:00.000+10:00

Over the weekend, Tom received a call from his friend Andrew. "Hi Tom, did you take a look at Google last week?" Tom replied, "It was a rough week for my short positions. I didn't anticipate the buying surge and it hurt me a little. No, I didn't look at Google closely. I was caught up trading my own positions." Excitedly, Andrew says, "Well, on Monday I bought at 345 and sold at 370 on Friday. I made almost $4000 on that one trade alone." Have you ever received a call from a friend in the trading business bragging about a great trade that he or she made? If you aren't doing as well, and can also bask in the glory of success, it's hard to avoid feeling a little resentful, envious, and somewhat disappointed in yourself. You may think, "It's just a matter of being at the right place at the right time, and unfortunately, I was at the wrong place at the wrong time."

Trading can indeed be a matter of luck. When events aren't going your way, you can get thrown off, and become overly consumed with how poorly you are doing, that you can't think clearly. Trading the markets skillfully requires a clear, focused mindset, however. You can't get thrown off. But when your money is on the line, it's hard to think clearly. There's a powerful human need to trade with perfection. You want to be at the right place at the right time and make a huge win. One of the worst fears of many traders is missing out on a significant trading opportunity. It's natural to want to search for a once in a lifetime trade and make a year's worth of profits in a day. But constantly searching for such trades can be distracting. You spend the majority of your time searching for the ultimate trade setup, and when you do that, you start placing demands on yourself that you just can't reach. You think illogically. You lose focus, and you can no longer think clearly and astutely.

Ironically, if you become overly consumed with being at the right place at the right time, you will probably be at the wrong place at the wrong time. You won't think freely and creatively, and you will miss the potentially profitable opportunities right in front of you. From a god's eye view, they may not be the absolute best opportunities out there, but they may be good enough to profit from. If you devote all your effort to trading them, you will make profits. Remind yourself that you don't have to be perfect. You don't have to trade the best opportunities at all times. You just need to trade the best way you know how with the resources and opportunities you have available to you. You need to trade freely, rather than stagnating under the pressure to trade to perfection. Trading can be a matter of probabilities. Sometimes you'll be at the right place at the right time; at other times you won't. That's all right. If you are consumed with perfection and finding the ultimate trading opportunities, though, you will tend to put off making trades. And when you don't trade, you can't make profits. So don't limit yourself. There are many opportunities out there for you to take advantage of. The more trades you make, the more likely you will increase the odds of success, and take home profits.

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NEW! Trading System Integration Workshop Will Start August 18, 2010! Click here for more information!

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

The Calm, Perceptive Trader

2010-08-17T10:01:00.000+10:00

When your money is on the line, it's hard to avoid feeling a tinge of fear with every minute you're in the trade. Some traders crack under the pressure. They panic and lose the ability to read the markets with unfailing accuracy.

A study by Ingmar Franken and Peter Muris (2005) suggests that your approach to making decisions can strongly impact your ability to read the markets accurately. In the first phase of the study, participants were asked to describe their style of decision-making. Some people described a panicked approach to decision-making. They indicated that they tended to panic when they had to make a quick decision, felt they were under extreme pressure whenever they had to make a decision, could not think clearly when making a decision in a hurry, and tended to change their mind whenever there was a possibility that something might go wrong. Another group of participants described themselves as remaining calm while making decisions. These individuals not only made astute decisions while under pressure but also tended to feel upbeat and enthusiastic while making decisions. They enjoyed the thought of winning, and felt excited and energized by a win.

Participants' decision-making style influenced the way they played a game of chance. In the second phase of the study, participants were presented with two profitable and two losing gaming strategies (similar to a trading strategy) that varied on how much and how consistently they produced a win. The two losing strategies produced immediate, huge wins but over the long term, produced large losses. The two profitable strategies produced only modest wins initially but the wins were more consistent and the losses were smaller. Participants were allowed to use any of the four strategies they wished in order to make as much money as possible. Just like trading the markets, a participant could use a strategy, see how well it did, and then decide to use it again or try a different strategy. Making the most money required a person to accurately perceive how well the strategy worked and choose the strategy that produced the greatest profit. The ability to make this decision accurately was related to decision-making style. People who were easily panicked while making a decision tended to choose the less profitable strategies.

These findings suggest that if you are easily stressed while making decisions, you will be less likely to perceive market conditions accurately. You will tend to seek out immediate rewards even if it means you will end up losing overall. You may be at a disadvantage compared to other traders, but all is not lost. You can take preventative steps to work around your shortcomings. First, admit you are at a disadvantage and that you must make an extra effort to overcome your weakness. Second, limit the amount of risk you take. If you are prone to panic while making trading decisions, your judgment will tend to be clouded. Reducing stress and psychological pressure will help matters. Trade smaller positions to ease pressure. Use protective stops so that you feel you have an added sense of safety and security. In addition, increase your time frame. Taking these precautions can help you stay calm, and when you are calmer, your perceptions of the markets will be more accurate. Finally, pay particular attention to your win-loss ratio. If you easily frazzled, you will tend to seek out setups that provide immediate profits, but overall tend to put you in the red. By carefully monitoring your win-loss ratio, you will be able to see whether you are making more money on your winning trades than losing money on your losing trades. If you are losing too much money on losing trades, you will be aware of the situation, and be able to change your approach so that you make more consistent profits overall.

The calm trader is the winning trader. If you have trouble controlling your emotions while making trading decisions, you will tend to let panic, distress, and anxiety take over and cloud your perception. If you are vulnerable to panicked decision-making, don't ignore the problem. By limiting risk and doing whatever you can to ease the pressure, you'll increase your profitability.

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NEW! Trading System Integration Workshop Will Start August 18, 2010! Click here for more information!

Extreme Patience

2010-08-02T16:57:00.000+10:00

Did you invest in stocks during the rally earlier this year and now regret your decision? If you are a short-term trader, you may want to just accept the loss and close the position, but longer-term investors may want to wait to see if their original hunches about their positions were right. For the past few months, stock prices have generally fallen, and long-term investors may have been tempted to sell. But long-term investors may need to wait a few months to see if some of their positions will eventually reach their profit objective. It may be hard to wait for the long term. As you wait, you may start obsessing about how your positions have lost value. It's easy to start thinking you are deluding yourself, hoping against hope that a losing position will make a profit. Only you can determine whether a long-term position will recover and make a profit, but many analysts view the economy as strong and so there is tremendous potential this year if you can afford to wait it out.

If you are a buy-and-hold investor, patience is a virtue. But many investors have trouble waiting, and if you have trouble waiting, you may impulsively decide to close out your positions too early. Few people would think of selling their house just because of a slump in the real estate market, but most investors don't apply this thinking to holding long-term positions. One obvious reason is that the media doesn't cover the daily change in your personal home every day. You can't go to the newspaper every day and look up the current daily value of your house, and thus, you can't worry about how much its value has decreased compared to last week. Unfortunately, you can look at the value of your stock position every day, and every minute for that matter. And when you see the current value rise and fall, you'll watch your emotions vacillate from euphoria to disappointment. If you look frequently, you increase the odds that you'll take action, and if you act out of frustration, it is usually the wrong action. When you see it fall too far, you may feel frustration and close your position impulsively.

How can you wait patiently? You could simply stop looking at the stock price every day. If you could just avoid looking, you'll be able to stay away. This is easier said than done, though. The evening newscast covers the stock market and when you see the change in the indexes, you'll be tempted to see how your positions are doing. And if you read the daily newspaper, you'll be tempted to look up how well your positions did. If you don't have a problem with patience, there's no harm in watching the news or reading the newspaper, but if you do have a problem waiting patiently, it's worth taking extreme precautions. Stop watching the news and never pick up a newspaper! Now, your first reaction to this advice may be that it sounds a little silly. But if you have a problem with patience, it's vital that you take precautions. If you are trying to patiently wait for the next six months for a trading plan to come to fruition, for example, you must wait patiently. And if waiting requires taking special precautions, it is worth it. Reading the newspaper or exposing yourself to any information about your positions is like sitting in front of a bowl of candy and trying to avoid eating a piece. If you put the bowl in a cabinet, it's that much easier to show restraint. And it is the same with long-term investing. So if you are a long-term investor, try not to think about your positions so often. Don't think about how well they are doing. Realize that if you think about your positions too much, and check and recheck how well you are doing, you will have trouble patiently waiting for your long-term trading plan to come to fruition. When it comes to long-term investing, the longer you can wait, the more profits you will reap.

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NEW! Trading System Integration Workshop Click here for more information!

Regaining Poise, Focus, and Profitability

2010-07-27T18:32:00.003+10:00

Have you had one of those days where nothing went right? Perhaps you thought that Monday's malaise would drag into Tuesday, but unexpectedly saw the markets surge. Perhaps you were a little unprepared and the sudden change in market conditions ruined a few trading plans. Maybe you lost a little more than you had planned. Throughout the day, you were frazzled, frustrated, and dazed. If only there was a magic pill that you could swallow and regain your composure. Unfortunately, there isn't.

Trading the markets requires a focused, calm mindset. You have to look at the markets objectively, and gauge the ebb and flow of the market action. It's hard to do when you are thrown off balance. Since there is no magic pill, what can you do? It may not happen instantly, but you can practice regaining your composure with thinking strategies. In some cases, it is easy to regain composure: You can just take a quick walk around the block to get away from it all, calm down, and you will snap back into the proper state of mind. At other times, however, it isn't that easy. Your mind is engulfed by self-doubt. You feel frustrated and unable to think clearly. At times like these, a simple walk around the block usually doesn't work. In these cases, you need to actively use thinking strategies to release you from grip of distracting psychological issues.

Each person has his or her own psychological issues that surface during a frustrating day of trading. Some traders are undercapitalized and new to the business. When things don't go their way, they are consumed with self-doubt, unable to take decisive action. For other traders, it's a nagging feeling that they could always do better. They set high performance standards, and they are constantly searching for new trading ideas. Others have unrealistic views of the markets. They don't want to go where the markets take them. They want to dominate and control the markets. They look for certainty that just isn't there. A related expectation is a belief in an American work ethic. They believe they put in a good day's work, and they should be rewarded in proportion to their time and effort. But time and effort alone doesn't always pay off. All these expectations are reasonable in everyday life, but not when trading the markets. It's easy to allow them to intrude into your consciousness and take over.

Combating psychological issues, no matter how small, takes effort. You must actively engage your mind to counteract them. When you are consumed with self-doubt, for example, you have to tell yourself over and over that you can trade profitably. And you must use your off hours to convince yourself that you can truly do it. If you can't because you don't have the skill to trade in the trading style you are trying to master, or you are clearly under-capitalized, you will know it, and you will waste your time trying to fool yourself into believing something that isn't true. But if you truly believe you can make it, and are merely thrown a little off balance because a few things did not go your way during the trading day, then you can get back on track if you change the internal dialog you have with yourself and repeat over and over that you can make it if you try harder. Similarly, if you strive for extreme perfection, it's useful to remind yourself over and over again to ease up. When you do, you will calm down a little and will regain your objective state of mind. The markets won't live up to your expectations at times. They won't treat you fairly, and you are bound to face setbacks. It's important to remember these facts of trading and remind yourself over and over again of their validity. If you do, you'll stay calm. And when you are throw off your game, repeating these facts of trading will allow you to regain your objective state of mind. And once you are back in a focused, objective state of mind, you'll be ready to take advantage of the many market opportunities available to you.

Recommended Reading:

The product of a five-year collaboration between Dr. Ari Kiev, a leading psychiatrist renowned for his success with Olympic athletes, and top equities trader Steve Cohen, Trading to Win gives you the essential tools to overcome outmoded, self-limiting beliefs and mindsets that may be keeping you from a higher level of success. Illustrated with real market scenarios and applications, this powerful program will help psych you into a less stressful, more self-possessed mastery of the trading game and help you reach goals you may never have thought possible.

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NEW! How To Create a Proper Trading Business Plan! Click here for more information!

NEW! Join our Trader's Support Group! Click here for more information!

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Win or Lose: You Are A Winner Every Day

2010-07-20T10:41:00.020+10:00

Have you ever spent the day making trade after trade and gotten nowhere? You may have wondered why you woke up that morning, or even bothered trading that day. Perhaps there have been a few days where you've felt this way this week. It's been a hard week so far. If you aren't doing very well, it is understandable. Uncertainty abounds. On days when you are feeling unproductive, it's vital to have an upbeat attitude, though. You need to lift your spirits. So what if a given trading day wasn't fruitful? Who cares if you lost money today? Take it all in stride. How can you be so carefree, you ask? Real money was lost, so how can anyone convince himself or herself to feel good? There are trading days when your rewards are tangible profits and you can bask in the glory of success, and then there are those days where you must chalk the day up to experience. You settle for saying, "Perhaps I learned something valuable today. Let's figure out what I learned and be grateful that I got something out of the day."

What did you learn today? What did you experience? Did you make it through the day relatively unscathed? That's worth something. Maybe you learned that you could stand aside when you wanted to and get out of harm's way. It is something worth learning. Maybe you jumped into the markets too soon, and felt a little bit of regret from losses. Were the losses justified? Did you follow your plan, but the plan didn't work. If you lost because of a faulty plan, it's still valuable knowing that you could follow a plan. Losses due to impulsive decisions are another matter, however. If you traded impulsively, perhaps you learned how you might prevent impulsive decisions in the future. No matter what happened, though, you learned a valuable lesson.

In the modern, competitive world, we are obsessed with winning races. We want to make more profits than the next trader, and when we fail to make profits, we feel beaten. But the only benchmark that should matter is your own. So what if you don't make profits every single day? Maybe you do not yet have the skills or financial resources to make a profit every day. Even if you consider the metaphor of winning a race with other traders, would you try to run a marathon without the proper amount of practice? Would you feel disappointed if you couldn't reach an athletic goal that you knew would take more training than you had? You definitely would not, so why make such high and lofty trading goals? Give yourself a break. Sometimes it is wise to just do your best and accept what you've achieved. When you set high goals that exceed your skills, you will usually feel discouraged, and that may make you feel like giving up. Rather than kicking yourself for not performing up to par, consider the fact that you have learned a valuable lesson today and every day, win or lose. You may not have achieved a high performance goal, but you have achieved a learning goal. In other words, you have moved one step closer to fully mastering the markets. Every little experience counts. So rather than beat yourself up for failing to reach your standards, pat yourself on the back for making it through another trading day. Remind yourself that you are a winner. Don't set overly high performance goals that you can't achieve. Focus on skill building, rather than on making huge profits. When you focus on skill building, you will feel better, and you will keep trying. And in the end you will make the huge profits you desire.

Recommended Reading:

The aim of the book is to help you become your own trading coach, its broader purpose is to help you coach yourself through life.

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NEW! How To Create a Proper Trading Business Plan! Click here for more information!

Confident In Uncertain Times

2010-07-04T15:48:00.008+10:00

The markets can be uncertain at times, and these past few months may be particularly fraught with uncertainty. For example, we had disappointing jobs data last week that sent the U.S stocks lower last Friday. The Dow Jones Industrial Average was down seven straight days in a row last week and its longest losing streak since the eight-day period that ended on Oct. 10, 2008. It was the worst pre-July 4th week for the Dow in percentage terms since 1896. Everyone is a little on edge and waiting to see what happens next. It's at these times where you have to be more confident than ever. It's vital to have a detailed trading plan and to stick with it.

Uncertainty can throw us off balance. We don't want to believe that we may be helpless and powerless to the whims of market sentiment. In his book "Investment Psychology Explained," Martin Pring notes, "we do not like uncertainty. The need to have a firm opinion of where prices are headed is therefore a mental trick that many of us use to eliminate this uncertainty." During uncertain times, it's tempting to believe that we can control anything that comes our way. Feeling that we have control allows us to believe that we are more powerful than we actually are. Some people feel more powerful by rigidly making a firm opinion of where the market is going. They may read market indicators wrong and look for information that backs up their opinion while unconsciously ignoring information that contradicts it. It is vital, though, to stay as open and flexible in terms of your opinion as possible.

During uncertain times, a trading plan can be especially useful. It can keep you on target rather than distracted by biased perceptions of the markets and a powerful need to be right. Set a profit objective and visualize the way the trade may go as you develop your plan. As you imagine executing a trade, think of how the market may go against it. What indicators may signal that the market is going against you? If you clearly specify what you will do and when, you'll be able to fight the tendency to rigidly stick with a biased opinion of the markets.

We can't control everything, but during uncertain times, it's best to control what we can control. We can delineate a detailed trading plan and follow it. We can manage risk to insure that we can survive a few losing trades and allow us to feel assured that we can recover should we face a severe drawdown. We can also try to anticipate adverse events, such as media reports or market news that may go against our trade. That said, it is important to face the fact that you can't control every possible adverse event. In the end, it's wise to accept uncertainty. Don't get fazed by it. Instead, control what you can control, accept what you can't, and if you do, you'll trade calmly, skillfully and profitably.

Recommended Reading:

"The one, only, and by far the best book synthesizing psychology and investing. In addition to providing modern, scientific knowledge about psychology, this book provides a mirror into the mind and wide breadth of knowledge of one of the leading practitioners of brief and effectual cures. Will help to cure your trading and your life."
–Victor Niederhoffer, Chief Speculator, Manchester Investments

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NEW! How To Create a Proper Trading Business Plan! Click here for more information!

Grounded and Objective

2010-05-24T16:21:00.003+10:00

Last week, tech stocks took a dive. Mark lost $15000 on his AAPL position alone. It's Friday morning, but he still feels guilty. He can't get the losses out of his mind. He has been trying to scan through a series of charts, but his heart isn't in it. He has seen a few possible setups, but when he tried to execute a trade, he flinched. All he can think about is the losses he mounted yesterday. He feels afraid as he thinks about the money he could lose today if he isn't careful. When you trade the markets, however, you can't be fazed by setbacks. You have to trade calmly, objectively, and decisively.

It's difficult to be objective when you have lost a significant amount of capital. It's human nature to feel disappointed after a loss. But if you want to trade profitably, you can't let it bother you. Somehow you have to truly believe it doesn't matter. Several steps can be taken to trade more objectively. You can trade with money you can afford to lose so that losing won't hurt as much. You can also make smaller trades with tight stops to minimize the amount of money you will lose. In the end, however, you must find a way to make the whole trading experience impersonal. When it isn't personal and just business, you trade more freely, creatively, and decisively. The best way to stay free and objective is to ground your identity in an alternative reality. Trading should not be viewed as your reason for living. It is merely a profession. If you make it your reason for living, you will have your ego on the line along with your money, and the extra psychological pressure placed on you can make you buckle. If you ground your identity in another source, though, you will be able to take trading setbacks in stride. You won't be stressed by trading. You will feel free and be able to analyze the markets objectively, and act decisively.

Trading in the end should just be business. Don't let it define your identity. Your identity should be grounded in other areas: your family, your friends, or the leisurely pursuits you find most important. If you have a solid foundation outside of the trading realm, the events that occur during the trading day will have little impact on your identity. You'll feel calmer, and take stresses and setbacks in stride. Why should you take it seriously? If you ground your identity in other areas, losses, setbacks, and the uncertainty of the markets can't hurt you. You'll be free to trade the markets with a creative spirit that will eventually ensure long-term profitability.

Recommended Reading:

Conflicts, contradictions and paradoxes in thinking can spell disaster for even a highly motivated, astute and well grounded trader. Mark Douglas, a trader, personal trading coach, and industry consultant since 1982, sends the message that "thinking strategy" will profoundly influence a trader's success rate. Douglas addresses five very specific issues to give traders the insight and understanding about themselves that will make them consistent winners in the market.Trading in the Zone offers specific solutions to the "people factor" of price movement.

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Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

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The Little Things That Get In The Way

2010-05-18T18:03:00.007+10:00

A common complaint of novice traders is that they can't stick with their trading plan. They wonder why, and after they think about it long enough, they come up with fanciful explanations. For example, they start believing a motive to self-sabotage their efforts lies behind their failures. They may also start to think, "Maybe I secretly don't deserve success." Most traders, though, underestimate the power of the little things that get in the way. Specifically, they underestimate how much psychological and physical energy it takes to trade, or they don't appreciate how much practice it takes to follow a trading plan. And even though they think they are striving for modest goals, they stymie themselves by trying to reach unrealistic standards. For many novice traders, secret, unconscious motives are not at the root of the problem. They merely forget to appreciate how little things can get in the way.
When you can't seem to follow your plan, try looking at the little things that may interfere. Perhaps you didn't get enough sleep or maybe you are hungry. Don't believe me? Try sleeping extra time just for a week. Decide to miss part of the trading day for a week, and see what a difference it makes. Extra sleep can increase your ability to stay alert and will give you the extra energy you need to focus on your plan. You may need to change your life around and get to sleep earlier so that your biological clock is in a different time zone. Get the sleep you need, no matter what it takes.

Trading is stressful, and coping with stress requires psychological energy, and psychological energy is more limited than most people think. Getting angry, frustrated, or even disappointed, saps up precious psychological energy. Don't discount the impact of stress on the depletion of psychological energy. After stress depletes psychological energy, you need to replenish it before you can once again concentrate fully. When you are tired, and the market seems to move against you, it's hard not to want to just take a break. A tired, worn out feeling often lies below the surface of your awareness. You may think you are rested and alert, but you are not. Get rested, and you will be able to focus on sticking with your plan.

Sticking with a trading plan takes practice. Does this seem like an exaggeration? It isn't. Just like practicing a tennis swing, you have to learn to concentrate. You must practice focusing on your ongoing experience and controlling your emotions, and this takes practice. It isn't easy. Your money is on the line and a little bit of your ego, so you can't expect to be able to stay calm, alert, and focused without a lot of practice.

So when you can't believe you've abandoned your plan once again, don't jump to the conclusion that a secret, unconscious motive for self-sabotage lies at the root of your problem. It may just be a matter of reducing stress levels, getting plenty of sleep, and allowing yourself to develop the ability to practice following a trading plan.

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Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

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Learning to Defeat Past Learning and Instincts

2010-05-01T08:48:00.005+10:00

Are you having trouble mastering the markets? Do you have trouble taking losses? Do you react to potential losses with fear or regret? Do you find that you can't seem to methodically execute trading plans and take home profits? If you are having some difficulty accepting losses, and mastering the markets, you are not alone. For every one trader who becomes a Market Wizard, there are at least nine who don't. You can react to this knowledge in two ways: you can walk away in defeat or you can be determined to become one of the few who become a master.

There are two hurdles to overcome on the road to mastering the markets. You have to overcome your biological predispositions and override past learning experiences. Your biology and past learning in most cases protect you, but when it comes to trading, your natural biological urges and your past experiences may work against you. Biological reactions and past learning experiences work hand in hand to protect us, for example. Let's look at taking losses easily as one such example. When we touch a hot stove, we recoil out of fear to minimize damage to ourselves. Similarly, we carefully avoid spending money in our personal lives to avoid mounting debt that will be difficult to pay off. These past experiences protect us for the most part, but mastering the markets requires that you control biological reactions and modify past learning experiences. Rather than fear, you must practice staying calm in the face of danger. In addition, you must modify the rules you've followed throughout your life, such as taking chances with money and learning to think that losses don't matter.

Intellectually, you know you have to risk money, control your impulses and emotions, and make logical decisions to trade profitably. But this is easier said than done. You naturally will get excited when you make a winning trade, naturally feel disappointed when you lose money, and naturally close out trades when you perceive the market is about to move against you. You are human, and it is hard to fight human nature. Depending on your past experiences, temperament and personality, you will want to seek out solace from others when you lose, and if you have been successful in life, you have assiduously followed the lead of others and tried to adhere to social norms. Master traders, however, tend to act differently than most humans. They look inward for direction. They are not afraid of taking risks, even if it means hurting themselves in the end. Throughout history, famous traders, investors and business leaders have had tremendous ups and downs in their lives. Unlike most people, though, they bounce back and seem to take even the biggest setback in stride. You probably know this, but knowing this is often of little help. You are who you are. There is nothing wrong with that. Everyone has his or her own unique history and you have to appreciate yours. Unfortunately, that may mean that you won't be a winning trader tomorrow or even next year. But the good news is that if you work hard enough, you can overcome your biology and past learning experiences.

How do you do it? You must do it gradually and work hard at it. If you have trouble taking chances or recovering from losses, for example, minimize the chances that you do take. Accept your own personality. Don't make big trades where you risk twenty percent of your capital on a single trade, for example. Risk only two percent. Practice taking losses in stride; with every loss, practice telling yourself, "Losses should be expected. I'm not going to let it bother me." If you are like most people, this isn't going to work very well. The loss will gnaw at you. Again, it is natural to be bothered by losses. Your past learning has taught you to be bothered. If you were not bothered, you would have never been able to save enough capital to trade. These beliefs and biological reactions were adaptive throughout your life, so you can't expect to break free of them easily or quickly. It will take practice, and with enough practice you will change. With each small losing trade you will learn to accept the painful feelings of loss. You have to practice telling yourself that painful feelings of loss are a fact of trading life. Practice looking at the loss with a third eye, as if you are looking at yourself as if you are a character in a movie. Pretend it isn't real money but Monopoly money you are losing. Over time, your perspective will change, and you will start to learn to accept losses more easily. You can't overcome your natural inclinations over night, but with a commitment to change and with practice, you can make significant changes and become a master trader.

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Coping Skillfully To Achieve Success

2010-04-27T08:04:00.003+10:00

The markets are often unpredictable and uncertain. Some people collapse under the pressure, while others thrive on it. What's the difference between a trader who gallantly fights the stresses and strains of the markets and one who runs away in defeat? The specific approach you take to managing stress may be part of it. Traders who can weather the storm tend to make enormous profits, while those who succumb to the pressure end up losing. The market can be a mass of seemingly random movement, and vulnerable traders see chaos and uncertainty. They panic and act impulsively.
They ride a rollercoaster ride of emotions ranging from extreme disappointment after a loss to uncontrolled euphoria after a win. Winning traders, in contrast, see order in what others see as chaos. They believe that the odds are in their favor, and that if they make enough trades under ideal market conditions, they will come out ahead.

In "The Psychology of Trading," Dr. Brett Steenbarger describes a study he conducted with a group of 64 active traders. He discovered that the way traders coped with stress predicted profitability. He measured personality traits and the ways these traders coped with stress. Some traders were problem-focused copers in that they managed stress by developing specific plans for coping with stress. For example, they tried to find information to help them develop a specific plan to alleviate stress. They focused on their ongoing experience and methodically took a step-by-step approach to overcome stress. Less successful traders spent all their energy experiencing and trying to control unpleasant emotions. They denied that stressors were a problem instead of devoting their effort to finding solutions. In addition, they believed that the world should conform to their expectations rather than accept stressful events at face value. Their shortsighted focus on coping with unpleasant emotions clearly distracted them from trading the markets skillfully. Dr. Steenbarger's findings suggest that they tended to abandon their trading plans and traded less profitably than traders who were problem solvers.

It's tempting to succumb to the stresses and strains of the markets, but if you do, you will experience unpleasant emotions that will interfere with your ability to tackle the markets with a calm and focused mindset. Whether you are a novice or seasoned trader, however, you can learn to handle the uncertainty of the markets, and the stress it may produce.

The first step is to acknowledge that stressful events can interfere with your ability to perform. You'll waste more time and effort trying to avoid the potentially debilitating effects of a stressful event than if you just admit you may have a problem and try to work around it.

Second, it is vital to take an active, problem solving approach. Stay optimistic, yet realistic. If you put in the effort, you can overcome anything. Don't let the stresses and strains of the markets paralyze you. Think creatively and actively problem solve. You'll feel better, trade better, and take home more profits.

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Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

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"Helping You Achieve Your Goals"
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False Hope

2010-04-12T15:32:00.003+10:00

In "The Disciplined Trader," Mark Douglas suggests, "Execute your losing trades immediately upon perception that they exist. When losses are predefined and executed without hesitation, there is nothing to consider, weigh, or judge and consequently nothing to tempt yourself with. There will be no threat of allowing yourself the possibility of ultimate disaster." This is sound advice, but studies by behavioral economists suggest that many traders have difficulty following it. When they find themselves in the midst of a losing trade, they persist with a losing course of action, rather than cut their losses.

Why do traders falsely hope that a losing trade can turn around? There are many possible reasons. Research studies have shown that investors tend to believe a loss is merely temporary and that if they wait it out, a losing trade will turn around. In the markets trading outcomes are often uncertain, and this uncertainty allows people to hope for the best.

Holding losing trades may also reflect what behavioral economists call the sunk cost effect. Sunk costs refer to the original amount that is paid to acquire a stock. Sunk costs increase when the losing position decreases in value. During a losing trade, some traders talk themselves into believing that the "true" value is higher than the market suggests. They convince themselves that the "true" value is closer to their initial cost, or entry point, rather than its current value, and can't see why they should sell at a loss.

Denial and unrealistic optimism may be another plausible explanation. Humans are naturally risk averse; they are afraid to gamble with their wins, but are very willing to gamble with their losses. While in a losing trade, traders are willing to believe that by taking a chance, and holding on to a losing trade, the odds will work in their favor and the loser will turn into a winner. Other traders believe they are special and that their special talents or good fortune will turn a losing trade into a winner. Many traders, though, are afraid to admit they are wrong. They have a natural human tendency to believe that they made the right choice. After people make a decision, they tend to search for evidence to support their choice.

All of these explanations are viable, but we propose a few other possibilities. We have conducted our own analysis of the situation. We asked a sample of traders if they tended to hold losing trades and falsely hope that the trade would turn around. About 50% of our sample admitted they suffered from this ailment. What were these traders like? They tended to show less discipline and self-control in their personal and trading life than traders who readily closed losing positions. In addition, they tended to base their trading decisions on their intuitions rather than specific facts, and they tended to experience unpleasant emotions, such as anger, fear, and disappointment more frequently. If you show these personality characteristics, you may be prone to hold on to a losing trade, but you can overcome this tendency if you try.

First, accept the fact that losses are commonplace. You should expect to lose. Don't take losses personally. Losses do not reflect on you or your personal worth. They are routine in the trading business and should be put in the proper perspective. If you take losses in stride, you'll feel better. Second, define your potential losses before you execute a trade. Third, practice exiting your losing trades with precision and accuracy. Visualize encountering a losing trade and exiting promptly. There's no point in falsely believing that a losing trade will turn around. Take losses in stride and move on.

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Don't Let Overconfidence Undo Your Winning Streak

2010-04-05T11:25:00.003+10:00

Skip has been successful in everything he has tried: sports, academics, and business. He recently started trading to prepare for his retirement. He's done well, and last week made huge profits after a long winning streak. He is psyched up and optimistic. At this point, there are two ways Skip can go. He can either stand aside, and let his optimism wane, or he can jump back in the markets, and potentially give back his profits. A study by behavioral economists Brad Barber and Terrance Odean showed that young traders like Skip tend to take unnecessary risks after a huge windfall. They overtrade and tend to end up with lower account balances than traders who did not have a windfall. Trading expert Martin Pring in "Investment Psychology Explained" notes, "after a long winning streak, almost every investor and trader falls into the trap of thinking that he is infallible." If you want to stay profitable, it is vital that you control your optimism.

Everyone wants to be good at trading. Not only will you have more money and status, but you can have pride in knowing that you've developed a skill that few possess. You are one of the elite who mastered the markets. Rewards usually go to the humble, though. The markets have a way of exposing the arrogant trader who feels omnipotent.
Martin Pring offers a few guidelines for how to control your optimism and stay profitable. The first step is recognizing that you may have a problem with pride and overconfidence. Admit that you are human, fallible, and can make mistakes. Once you admit that you are human, you will feel free and be willing to look at past trades more objectively. If you think, "I'm the greatest trader in a decade," you won't be willing to look for faults in your trading plans. But if you think, "I'm human; I'm fallible, and of course I make mistakes," you will look at your past trading plans with a critical eye and you'll surely find ways to improve.

Second, focus on potential risks before potential profits. Traders who are overly optimistic tend to focus on the positive aspects of a trade, specifically how much money they will make. It's more important to focus on how much money you may lose, however. If you focus on what you can lose, you'll avoid risky, low probability setups. You'll search for less risky trades that have a better chance of making a profit. Third, develop a clearly defined trading plan with a clear exit strategy. Determine either a point where you decide the market has moved against you or a profit objective where you take profits and close the position. Committing to a specific trading plan will help curb your over-enthusiasm.

Finally, it's useful to move profits out of your account occasionally. For example, once you reach a 20% profit objective, take the money out so you will have a feeling that you have to start over again. You may also want to take a break from trading to feel that you have to "start over," sort of like summer vacation at the end of the school year. When you come back, it will feel like starting a new school year with new challenges. This strategy will help you control feelings of overconfidence after a big win. Many traders allow overconfidence to wipe out the profits they have just made. Don't give profits back. If you stay humble, you'll increase your chances of staying profitable.

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The Future Is Never Certain

2010-03-30T05:13:00.002+11:00

When trading the markets, uncertainty is often a fact of life. Consider the plight of Jack who tried to add as much certainty into his trading as possible. He decided to invest in a solid retailer. Consumer confidence was high and sales had been high at the retail stores for the past two years. He looked closely at the five-year chart and noticed a clear, upward trend. When the price did temporarily drop, the most it had ever fallen in the past five years was about $3. It was currently trading at $40. He decided to buy 2000 shares and protected himself by placing a stop at $37. He reasoned that the past five years would be a good indicator of what might happen in the next year: the stock price should continue to rise and should only fall by $3 at the most. There was something psychologically pleasing about studying the fundamentals of the company and its past stock performance. He felt assured. Even though his risk was almost 8% of his trading capital, he decided the risk was worth taking.

Unfortunately, history only repeats itself when it does. A month after entering the trade, the stock price fell to $35. Jack couldn't believe what happened. He thought, "How could I have been so wrong? I had considered all possibilities." Many novice traders think like Jack. They seek out a level of consistency in the financial markets that just does not exist. They believe that the markets follow natural laws and falsely believe that there are some magical mathematical principles that underlie it all. Big time institutional investors may be able to forecast the market action in the long term, but they have mountains of capital and can attempt to hedge risk, and even they have great difficulty merely matching the yearly increases of the indexes. For the smaller investor or trader, there are no secret mathematical formula. The past is the past, and what happened in the past may not forecast the future.

Don't falsely think that you can forecast market action with the same precision a physicist can program a satellite to reach Mars. The markets don't follow natural laws. There are many unknown factors that underlie the price action. The best you can do is study all available information and make an educated guess. As long as you manage risk, you can make trade after trade and get the odds to work in your favor. You won't be right all the time, but you'll be right enough of the time to make a profit. It may be pleasing to think that you can add certainty to trading, but you can't. You'll feel better in the long run and trade more profitably if you accept the fact that the future is uncertain.

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Staying On Target

2010-03-15T17:24:00.007+11:00

After carefully studying the technical fundamentals of a tech stock, John decided to buy 1,000 shares at $50 a share. After a recent product announcement, however, it traded at $54. Although it was higher than he had preferred, he felt it was still a good investment and figured he might as well buy at the higher price before it went even higher. As is often the case after a product announcement price jump, the price fell to $50 a share a few days later. Jack started to kick himself, "Why couldn't I wait. I knew it would fall. I should have waited. I could have saved $4,000." Jack plans to hold the position for six months and he still thinks the stock has the potential to hit $60, but he can't seem to stop berating himself for buying too soon and spending an extra $4,000. His feelings are understandable, but it's distractions like these that often throw traders off target. It's vital to continue to focus on your trading plan and not be stifled by self-reproach.

Depending on your personality, you may be prone to kick yourself for making trading mistakes. In John's case, he may have bought a stock at a higher price than he had hoped, but it isn't a disaster. According to his trading plan, he can reach his objective of selling at $60 in six months, and making $6,000 as he had anticipated. Many traders, though, are overly perfectionistic. They can't stop obsessing about how they could have entered and exited a trade more skillfully. Striving for high ideals is noble, but when it distracts you from focusing on your ongoing experience, it can be detrimental. For example, if Jack continues to berate himself for buying too high on this trade, he may not be able to focus on researching the next trade and developing a sound, new trading plan. He may also feel less spontaneous and creative. His mind may become filled with self-doubt and his thinking may become clouded. Striving for perfection can be much more of a distraction than a benefit in the long run.

At times of self-reproach, it's essential to talk yourself out of it. It's necessary to move from a mental state that concerns obsessing about errors to a calm, focused mindset concerned with thinking creatively. Although they may sound trite, repeating a few common sayings about trading the markets may be quite helpful: "I'm going to trade my plan and stick with it. I'm going to go where the markets take me. I'm a mere mortal; I can't control the markets. I need to accept the fact that I'm human and may make mistakes." You don't have to trade perfectly. You just have to trade profitably. Put a single trade in perspective. It's just one trade of the many trades you will make in your lifetime. You may lose or you may win, but the outcome of a single trade does not matter. What matters are your overall profits across a series of trades, not just a single trade. Rather than beat yourself up for minor mistakes, stay on target. You may make a mistake here and there, but it's all right. Take a mistake or a setback in stride and move on. If you look at the big picture and accept your human tendency to make mistakes now and then, you will increase the amount of time you spend trading with the peak performance mindset of a winning trader.

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Remembering the Obvious

2010-03-08T16:53:00.004+11:00

Traders are notorious for making the same mistakes over and over again. They abandon their risk limits. They sell earlier than their trading plan dictates, or hold on to losing trades too long. It's human to make mistakes, but long-term profitability in the challenging field of trading requires steadfast discipline. Discipline is often hard to maintain, however. Humans are prone to falter and act on impulse. How can you fight impulses? One straightforward method is to develop simple plans and remind yourself as to why you need to follow them.

There are times when we try to make things more complicated than they really are. Humans tend to over-think matters and seek out complexity. We may wonder why we make common trading mistakes, and as we wonder, we may search for a "hidden," unconscious reason for it all. Perhaps we secretly feel we don't deserve the profits we make and want to give back what we've made to return everything to the status quo. Maybe we secretly see money as the root of all evil and have trouble accumulating wealth. If you do hold these beliefs, they can severely hamper your trading performance, but not all traders are influenced by such unconscious motives. Sometimes a lack of discipline merely reflects a very human inability to make simple plans and follow them.

Psychologists have long noticed that people have trouble following simple plans. Whether it is managing their time, losing weight, or trying to stop smoking, people have difficulty controlling their behavior. One effective strategy, though, is to take a few obvious steps: Make a simple plan, observe and write down the conditions that stop you from following your plan, and remind yourself of the benefits for following your plan.

For example, if you have trouble maintaining your risk limits, it could be for simple reasons. You may be tired during the trading day and allow your objective state of mind to waver. Or you may get bored during the trading day and want to seek out a little excitement. Whatever it is, it is necessary to outline the specific conditions under which you do the undesired behavior that you are trying to change or control. Once you know these conditions, it will help you anticipate when you are prone to fall prey to them. No one can know under what conditions you engage in an undesired behavior but you. Identifying the conditions under which you do an undesired behavior is harder than it looks. It may take time to observe yourself making mistakes and identify when mistakes happen. The next step is obvious: Write down why changing your behavior is important. If you want to avoid risky trades, for example, then you need to write down why it's important to avoid such trades. You might write down on an index card, "I cannot afford to keep losing capital or else I will blow out my account." Once you write this fact down, you will have to repeat it to yourself over and over again. Will repetition of this fact guarantee that you will change? Unfortunately, no! But it will go a long way toward making you change. There's something about human nature that is hard to change, but if you repeat the reasons you need to change over and over again, it may stick with you.

Sometimes self-control is just a matter of willpower and reminding yourself you can maintain control if you try. It's like standing in line at the grocery store. If the line is long and there is only one checker available in the whole store that is impossibly slow, you may be tempted to leave, but if you decide that you want your groceries no matter how long it takes, you can convince yourself to wait in line patiently. You can repeat over and over again, "I'll eventually get out of here if I just wait my turn. I'm determined not to leave." Repeating this mantra over and over again will help you stay in the line. But if you think, "I don't have to time to wait. Maybe I can walk out the door and go to another store," leaving will start to seem like a good idea and you will do it. A similar strategy can be taken with trading. If you want to avoid selling a trade prematurely, it is useful to repeat to yourself over and over again, "Stick with the trading plan. Don't sell until the price reaches my profit objective." Repetition is the key strategy. Repeat what you want to do and remind yourself over and over again why you want to do it. Focus only on the trade at hand, and repeat what you want to do over and over again. It may seem obvious, but it works.

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Handling Success

2010-03-02T08:50:00.004+11:00

In his book, “Trading to Win,” Dr. Ari Kiev notes, “winning days are often followed by plateaus and losing streaks.” Behavioral economist Dr. Terrance Odean observed that novice online investors who had a series of winning trades tended to have periods of overtrading. It’s as if they believed they could take more risks, and potentially lose profits, since they had just made more than they expected. If you want to be a profitable trader in the long run, though, you must learn to keep your profits rather than give them back to the markets.

Why are winning days often followed by plateaus and losing streaks? Loss of focus and concentration is a major reason, according to Dr. Kiev. In the back of their minds, most traders are thinking, “How am I going to find a profitable trading opportunity?” When you find it, and capitalize on it, you feel relieved. You may wrongly think, “Now I can relax. I can let my guard down.” When you relax, you might trade less carefully. You might take lower probability setups because you think you have the luxury of taking risks. Or you may become overconfident and move beyond your risk limits because you are ahead. This is where traders end up giving profits back to the markets. Just because you have a little bit of a winning streak does not mean you can be sloppy and lose focus. It’s vital at these times to maintain concentration. Stick with your method, continue to develop trading plans, and follow your trading plan.

A second reason losses may follow winners is that winning takes psychological energy. Winning may feel great, but as you are winning, your adrenalin is pumping. After a big, exciting win, your mind and body just want to relax. When you are worn out, you are prone to make poor decisions or trading errors. The solution to this issue isn’t clear. Dr. Kiev suggests regrouping, and to continue to face the markets in earnest. This may be hard to do for some traders, however. The mind is like a muscle. Once you expend psychological energy, you need rest. It’s like playing a championship game. Some players are so prepared mentally and physically that they can play the entire game with ease. For other players, the added stress of a big game wears them down. It’s the same with trading. If you are rested up, you can regroup, and continue trading after experiencing big wins. You just need to be aware of your tendency to let your concentration lapse, regroup, and then face the markets with a renewed focus. If you are so tired that you cannot recover quickly, however, you may want to stand aside until you feel you are fully rested. But whatever you do, don’t underestimate, or be completely unaware of, the psychological toll that winning takes, and how after a win, you may be prone to trading the markets with a sloppy, unfocused mindset.

Although some traders secretly feel they don’t deserve to make profits in the markets, and unconsciously sabotage themselves, for many, it’s just a matter of feeling that you need a big reward after the good fight. This reward usually manifests itself as a sloppy, unfocused approach to trading. Be aware of this tendency, so that after you experience winning trades, you will stay focused and maintain your momentum, rather than give profits back to the markets.

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Waiting Patiently For Your Financial Dreams To Come True

2010-02-22T19:49:00.004+11:00

If you are like most people, you want to make a fortune, and you want to make it now. It is a reasonable wish. Who wouldn't want to make enough money to make all their dreams come true? But such a future-oriented focus is often the undoing of many traders. Making money in the markets takes time. You have to wait for ideal market conditions and you have to build up the requisite trading skills to take home huge profits. And if you are like many traders, it will also take time to save up enough capital to trade on a scale that can make you wealthy. If you are serious about making it in the trading business, you will have to learn to be patient.

Many people can't wait to be rewarded. Depending on your style of trading, being unable to wait patiently can be a problem. For a long-term investor, for example, it is necessary to buy-and-hold long enough for a long-term strategy to play out. There may be minor fluctuations during the waiting period, but seasoned investors have learned to wait it out. Most novice investors, in contrast, impulsively sell as the masses panic and buy the stock back at a top, which usually results in a losing trade. If you are a long-term investor, it is necessary to be able to control your impulse to take a profit and allow the price to rise over time. Even shorter-term traders, such as a swing trader, must fight the urge to sell early. Although trades are held for much shorter windows, a swing trader must know how to wait patiently for the optimal time to sell.

Trading expert, Dr. Van K. Tharp argues that impatient traders tend to show a future-oriented focus. They dream of the profits they will make in the future, but at the same time, they desperately need them right now. Getting rid of impatience requires the trader to curb this future-oriented perspective and focus on the near future. Traders can become more patient by following a set of specific steps. First, it's necessary to admit that you are impatient. This can be difficult to do. It's hard to admit our limitations. One of the best ways is to make it impersonal. Pretend you are watching a television show about yourself. Pretend the character on television isn't you. Watch how impatient you are. See yourself as an objective observer would see you, and then, think about how you might change. Second, imagine you have two "tuning" knobs in front of you. Pretend that one of the knobs controls your focus on the future. If you turn the knob to the right, you will focus years into the future. If you turn it to the left, your focus will move closer to the present. When you are impatient, you are looking deep into the future. If you are extremely future-focused, you need to make an adjustment. Turn the knob to the left until you are focusing on the present. The second knob is the speed of your thoughts and behavior. When you are impatient, you are thinking too quickly and impulsively. Imagine turning the speed control down until you think and react more slowly. Third, realize that your impatience may be a signal that you need protection from the consequences of a trade, or trading, that you are afraid to face. When you are afraid of facing a potential loss, you may impatiently close a trade for fear of experiencing a bigger loss. It's better to face consequences head on. Can you afford to lose capital on a series of trades? Or, are you making up dire consequences that don't exist? It's necessary to consider the consequences of your actions and decide if you can deal with them. Finally, remember times when you showed self-control and were patient. What did you do? How did it feel? Implement some of the thinking patterns and behaviors that helped you maintain self-control in the past.

Don't let impatience thwart your long-term economic plans. Impatience can dash traders' hopes for economic success. Without the proper discipline, you will make losing trades that will eat away at your account balance. By trading with patience, you can build up your account balance slowly and surely and eventually reach your economic goals.

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Seeking Out Protection In A Risky World

2010-02-17T08:14:00.003+11:00

For the past few weeks, making a profit in the trading world is hardly a sure thing. How you deal with this fact of trading, though, depends on your personality. Some people take risks in stride, while others obsess over them. Which type of person are you, a natural born risk taker or an obsessive, fearful seeker of safety?

Life is a matter of taking risks, but some people embrace it while others superstitiously try to avoid it. For example, have you ever seen an extremely ineffective car theft device called "The Club?" One is fooled into believing that by putting a massive metal bar on your car steering wheel, you are protected. It seems like it would work until you realize it takes merely a few minutes to cut the steering wheel with a hacksaw and pull it off. Similarly, why do car stereos have removable faceplates? Do you think thieves are actually unaware that there isn’t an expensive stereo beneath a removed faceplate? These kinds of "protective" devices make us feel better, at least until we realize that they don't work. At that point, we think, "How could I have been so stupid?" That said, feeling protected helps take the edge off. Even if it is just superstitious behavior, like wearing your lucky shirt on the day of a big trade, you feel better when you do it. There's a psychological benefit to it, even if it isn't foolproof.

We can alleviate some of the uneasiness of taking risks through risk control. By risking a small percentage of your trading capital on a single trade, and looking at the big picture, you will feel more at ease. From a psychological viewpoint it is to your advantage to make a potential trading loss so insignificant that you may start thinking, "Why am I even bothering making this trade?" There is no universal rule for how to limit risk. Some experts suggest risking merely 2% of your capital, while others suggest 5%, and still others suggest using past market action to determine the amount of loss you can afford to take (for example, if the market is bullish with many opportunities for profit, then you can take a little more risk.)

The best way to control risk is to set a protective stop, but whether or not you set a stop loss or how you do it depends on your personality and attitude toward risk. If you are a natural born risk taker, you may not set a formal stop loss at all. You may keep an informal stop loss point in mind and close your position when the stock price reaches that point. At the other extreme, the obsessive-compulsive, worrier trader may set the stop loss too close to the entry price and end up getting stopped out too early. The middle ground seems to be reasonable for most traders. Again, it depends on your personality, but if you are afraid to take a loss, a stop loss can help. If you don't have a stop loss and hate taking a loss, you may not close out a position when the price falls hard. You may be prone to hope against hope that the trade will turn around, and watch your losses mount as you fail to take action. The stop loss order, however, guarantees that you will be out of the trade should the price take a dive. The trick is not to be overly rigid or rule oriented when setting a stop loss. The obsessive-compulsive trader, though, tends to make up superstitious rules for setting a stop loss. For example, suppose that a trader has a $100,000 account and does not want to lose more than 2% or $2,000 on a single trade. Suppose that the trader buys 1000 shares at $50 a share, a potential loss of $50,000. An overly rule oriented trader may mechanically decide that the price cannot fall below $48 and set a protective stop at that point to restrict the losses to about $2,000. But this is superstitious behavior to some extent. The stock may fluctuate between $47 and $51 as is rises over time. The trader is likely to be stopped out. It is vital to be more flexible. It may be necessary to purchase less than 1,000 shares and set the stop loss lower in order to minimize risk to about $2,000, or just risk more than $2,000 if the potential profit warrants taking a slightly greater risk. Whatever you do, it's necessary to accept uncertainty and make a reasonable decision than a superstitious one. Taking losses are difficult, and we all want to seek out protection to ease the burden of making tough decisions, but it's essential to make reasonable decisions rather than superstitious ones. Protect yourself, but don't be afraid to take a little extra risk when you need to. Risk is a fact of life, and in order to live productively, you must accept it.

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Regaining Emotional Control

2010-02-08T20:34:00.004+11:00

Imagine the ultimate relationship with the markets. You clearly see a stock reach your entry point; you execute your plan, patiently wait for your profit objective, and take a profit. In your imagination, it's all so easy. You are calm, patient, and disciplined. Sometimes we trade in such a peak performance mindset, but oftentimes, we don't. We may get thrown off by an adverse event, or for some unexplained reason, we feel irritated and just can't seem to see things clearly. Have you ever been so frustrated that you look at your screen and you just can't seem to concentrate easily? Once you are extremely frustrated, everything starts to get blurry. You look at the most simple indicator and it's hard to fully comprehend it. At these times, you have lost control of your emotions and you may be likely to make a trading error. It's vital to regain control.

Ideally, a peak performance mindset exists when you have nerves of steel. You are calm, focused, and able to fully attend to the markets. There are no distractions, and even if there are, they don't faze you. This ideal can be difficult to achieve at times. Sometimes, you are tired and you have difficulty concentrating. It may seem obvious, but the best way to make sure that you can enter and stay in a peak performance mindset is to get plenty of rest. Make sure you aren't hungry, sleepy, or physically uncomfortable. These factors in and of themselves may not always lead to trading errors, but they can contribute. You may be hungry and sleepy, and suddenly, an adverse event thwarts your trading plan. You may not react as you had planned if you are distracted by hunger and unable to concentrate because you are sleepy. The best way to prevent factors, such as hunger and weariness, from having a potential influence on your trading performance is to eat healthy and get plenty of sleep.

Ideally, you should love trading. You should trade because it is your passion, not because you need the money. That said, not everyone can always love this profession that much. Ideally, you may prefer to trade mainly for the inherent intellectual rewards, but the fact is, you probably want the money too. Everyone has pet peeves with trading. It's important to identify your pet peeves. Perhaps you are not adequately capitalized, but need to do the best you can with your available financial resources. Maybe you would like to trade in a completely carefree state of mind, as if outcomes don't matter, but you need to make money on trades to pay some of your bills. Perhaps you like to trade, but part of you (maybe only a small part) wishes you were able to do something else, such as real estate investing. Everyone has unique pet peeves, and these pet peeves can influence your trading at times. In the back of your mind, you mull over these issues, and when things do not go your way, you may be prone to think like a victim, "Why can't things go the way I had planned. I wish I had more capital to trade bigger. I should give up this pipedream." How do you deal with this issue? You can't entirely eliminate the impact that these pet peeves may have on your mood, and thus, your trading performance, but you can neutralize them. First, acknowledge that you have pet peeves. Make a list of every possible pet peeve during off hours. Second, acknowledge their significance and truly admit that they may bug you at times, but also genuinely acknowledge that in the end, you prefer to trade despite them. Once you take these two steps, you'll find that your pet peeves with the markets and the trading profession will impact you less during the trading day.

Our emotions can surprise us at times. We think we are calm and ready to approach the markets with discipline, but something distracts us. It seems to come out of the blue, and it often does. However, if you get plenty of rest and identify and resolve psychological issues that lurk in the back of your mind, you will be more likely to regain the ideal mental state you need to trade profitably.

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Trading Like a Warrior

2010-02-01T16:04:00.003+11:00

It's the middle of the trading day. You’ve been monitoring the market action carefully. Everything seems just right; you enter precisely at the point you had planned. Now it’s just a matter of waiting patiently for the price to rise to your profit objective. So you wait. It rises a little, but when it wavers, you start to lose confidence. You think, “Maybe I was wrong about this trade. The market seems to be going against me.” What do you do next? Some people panic. Out of fear, they freeze. While in a daze, they can’t take decisive action. Other traders get angry. They think, “The market isn’t supposed to move that way. What’s going wrong? Someone or something is manipulating the market unfairly.” Usually, thoughts like these make you upset and emotional. Emotions at critical moments of trading can knock you off your game. Rather than thinking calmly and rationally, you are overly emotional and on the verge of making a trading mistake. Rather than trade emotionally, though, it’s better to trade like a master warrior, a person who stays cool under pressure, and focuses on the process of trading rather than on the prize.

Psychologist, trading expert, and best selling author, Dr. Richard McCall is a good example of a trader who focuses on the process rather than the prize. He approaches trading the same way as he approaches the martial arts. As a master in the martial arts, Dr. McCall argues that the execution of a trade should be approached in the same manner as a martial artist fights an opponent. Dr. McCall argues that many traders react emotionally as they trade. They don't trade in the proper state of mind. In an exclusive interview, Dr. McCall advised, "instead of worrying about the money, you really must concentrate on creating an art form…get away from the reward issue…get away from the downside or the upside. You must learn to perform and execute flawlessly in a Zen like manner. Unfortunately, people execute a trade merely to make money. That trips them up. It makes them uninspired. It makes them confused, and it will ultimately interfere with their ability to be fluidly consistent." According to Dr. McCall, many traders are consumed with emotions when they should be focusing on their ongoing experience. "They just angst over how to get the very best execution and get the most money out of the market. They get mad and angry because they encounter slippage and things like that." Rather than trade emotionally, it's vital to stay calm and logical. Take your ego out of the picture and focus on what is happening moment by moment.

Research studies illustrate the benefits of taking decisive action rather than focusing on the prize. Compared to people who focus on executing a specific action plan, people who concentrate on the rewards they will receive upon completing their goals are less likely to achieve their goals (Powers, Koestner, & Topciu, 2005). A warrior doesn't focus on the benefits of winning a battle. The battle must be won first. A warrior who stays alive focuses on immediate, ongoing experiences and taking decisive action. If you want to trade profitably, you must do the same. Focus on the process of trading, and think about the prizes after they are safely deposited in your bank account.

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The Lottery Mindset

2010-01-24T19:30:00.004+11:00

Do you ever dream about winning the lottery? There are actually people who have such good luck that they repeatedly enter contests and win. They win so often that if they wanted, they could count on winning, even though they are essentially trying to capitalize on chance. They develop a "lottery mindset" in that they approach life by counting on rare chance events. The rest of us aren't so lucky, and we don't live our lives counting on a fluke like winning the lottery. We work hard, master a profession, and work steadily to make a living. In many ways, top-notch traders approach their profession in the same diligent way. They don't view trading as recreational gambling, and count on a fluke to make a profit.

That said, many people do experience key life-changing events. We have all heard of people who needed a lucky break and got it. You often hear of actors who with their last 50 bucks went on an audition and landed a job and ended up as a star of a hit sit-com. You probably know of friends who were desperately searching for a job for months, and needed a job fast! With only a week's worth of resources left, they found a job. It can also happen in sports. Olympic athletes may practice their entire life for "one moment in time" when they can perform at their best. But there is some luck involved. A family member may pass away or they may become ill, and it may throw them off their game. Sure, they have rare talents, but the Gold Medal winners are also lucky enough to have everything go their way. There are times when life can come down to a few key moments. It's a little like playing Lotto and hoping that you'll win.

Even though profitable traders don't approach trading as if they are playing the lottery, they all have at least one big winning trade in their careers. In a series of exclusive interviews, we asked traders to describe their biggest winning trades. Jesse described how he invested in Juno Online. "I bought about 3000 shares, and the stock went up 20 points in two days. It went up fast and there was really no reason for it. I had a feeling it was just hype and euphoria, so I sold out and made $60,000." Andy described how he used to trade currencies. "One day I was trading Yen, and made around $18,000 in just a day." Don's biggest trade was in the heyday of the dot-com boom. "A European auction company was upgraded one morning. It was touted as the next eBay. CNBC was playing it up. The stock had just split and they got the price target a little bit wrong. They quoted an ungodly high amount. This was merely a single digit stock. That morning it had traded up over 100. I shorted it as it was opening. It opened at 80 or 90 and it ran up to 120. I ended up covering the next day at half of what I shorted it for."

Do people make huge profits capitalizing on a once in a lifetime trade? Sure they do, but the question you need to ask yourself is, "Do I want to trade hoping to make all my profits on a fluke?" Do you want to approach trading with a lottery mindset? If you do, you'll always be on edge and you will have difficulty trading with discipline. You'll tend to take big chances, and you may end up losing big. It's better to trade more prudently. That doesn't mean never taking a risk or pushing yourself to invest a little more capital when you hit upon a winning streak. What it does mean, though, is controlling over-confidence. Don't seek out those one or two trades a year that will make up for all you've lost. There's an advantage to using a more methodical approach: Continue to search for solid, high probability trade setups, outline detailed trading plans, and trade prudently with unwavering discipline.

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Don’t Self-Sabotage: Think Optimistically and Take Advantage of New Market Opportunities

2010-01-20T12:32:00.003+11:00

There was no January Effect in 2010. No steady increase in prices on the last days of the year. Things looked very optimistic at the end of the year. The last day of trading for 2009 seemed to be a downer, but the first day of trading for 2010 seemed full of optimism. Retail sales weren’t so bad at the end of the year, and all indications suggest that the Fed will not raise interest rates anytime soon. The economy seems to be growing. Good trading times may be just ahead. Are you ready? It’s times like these when the right mental edge can make all the difference. If you want to take advantage of trading opportunities for the New Year, it’s vital that you approach trading with the proper mindset. Be ready to work hard and do whatever it takes to come out a winner.

Unfortunately, many traders aren’t up to the challenge. They don’t have the proper mindset. They don’t have rock solid confidence, and when they see a high probability setup, they flinch, make a trading error and end up with a losing trade. When market conditions are ideal, though, you must be ready to take advantage of them. Self-reproach is the biggest culprit. Many traders are ready to criticize their actions.

Some traders take setbacks in stride. Nothing seems to faze them. Why? They know how to put any setback into the proper perspective; they readily think, “It’s just business. It says nothing about me.” After years of experience, they’ve seen it all, lived through it all, and have learned that the markets are ultimately in control, and so there’s no reason to get unnecessarily upset about the uncertainty of it all.
Other traders, however, secretly fear that the markets will expose their inadequacies. Deep down, they believe they will eventually fail. A little voice in the back of their mind tells them so. This little voice isn’t correct, helpful, or accurate, but it has a subtle impact on the trader’s every move. These thoughts usually happen just below our awareness. Dr. David Burns in his book, “Feeling Good,” calls these thinking patterns “automatic thoughts.” An event happens, such as the market goes against you, and you “automatically” think, “The truth is out; I can’t keep trading profitably.” The old saying, “I think, therefore I am,” is apt here. If you think you can’t keep up your trading performance, you won’t be able to. You’ll start believing your little voice that tells you that you can’t trade. And you will find that even a minor trading error will upset you.

How do you defeat the little voice? Dr. Burns suggests writing down your automatic thoughts after they happen and analyzing them. Break them down, refute them, and convince yourself that they just aren’t true. For example, if you face a trading setback and think, “This setback shows that I’m not a natural born trader; I might as well give up,” you will actually feel like giving up. This automatic thought is inaccurate, however. When you look at it more closely, you can see that it is not true. First, setbacks happen to all traders. Setbacks should be expected. By thinking they are rare and significant, though, you are exaggerating their importance. You are “magnifying” the event into something bigger than it really is. A setback may reflect poor market conditions, and it may even reflect a lack of experience on your part to deal with a particular set of market conditions, but it is not so meaningful that it is a “sign” that you are not a “natural born trader.”

Keep things in proper perspective. In addition, believing that there is such a thing as a “natural born trader” is another fallacy. Maybe there is no such thing as a “natural born” anything. The philosopher John Locke argued that the mind is a blank slate. You can learn how to do anything if you set your mind to it. Granted, you may not ever be Paul Tudor Jones, but you don’t need to be a “Market Wizard” to make profits in the markets. Believing that only a top-notch trader can make money in the markets, and that you will never be one of them, just sets you up to feel bad about yourself. Forget about whether there are or are not “natural born traders.” Work under the assumption that you can go far if you work at your own pace to master the markets and work as hard as you possibly can.

No one really knows what the future will hold, but the start of the New Year looks promising. Don’t sabotage your efforts through self-doubt and unreasonable self-criticism. You can trade profitably if you put in the time and effort. Think optimistically, work hard, and take home the profits.

January Workshops:

* GOAL SETTING Workshop - Palo Alto CA
Jan 23 and 24, 2010 - "How You Can Create Your Future - 2010"

Click here for more information

NEW! Join our Trader's Support Group! Click here for more information!

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Plans for the New Year - 2010

2010-01-05T05:53:00.003+11:00

Happy New Year and may 2010 be a prosperous one! There are lots of exciting new things for this year and make sure to visit our website www.onlinetradingcfd.com. Enjoy!

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Are you going to make any New Year's resolutions for 2010? Whether it is a personal or professional resolution, here are a few tips for making your New Year's resolutions a reality.

Not to put a damper on your plans for making a significant change in your life, but research studies have shown that people have great difficulty keeping New Year's resolutions. Here are a few ways you can increase your odds of success, however.

First, set a realistic goal. Many people think they can do the impossible. They think they can radically lose weight, for example, without a heroic amount of commitment or effort. Any change, even a minor one is difficult, so it's vital to be realistic. If you are planning to improve your trading performance, don't plan on doing too much. For example, if you are a novice trader, don't plan on making a 30% profit. Trying to achieve such a high performance standard will usually lead to failure, and deep down, you know that achieving this goal is unlikely. Set your objectives lower. For instance, rather than aim for making a specific return, you might decide to learn about the trading field and settle for making a series of "practice trades" to learn about trading and develop your intuitive feel for the markets. Set learning goals, rather than performance goals, such as devoting a realistic amount of time each week to learning about the markets. Don't set unrealistic performance goals that will lead to failure and make you feel down and beaten.
It's also important to develop a specific plan for how you will achieve your New Year's resolution. Map out what you will do in a step-by-step fashion. Consider what you will specifically do and when, and anticipate any obstacles that may prevent you from reaching your goals. For example, determine when and how you will develop trading strategies to achieve your goals, and consider the fact that you may not have enough time to develop these strategies if you have too many personal obligations. It may be necessary to decide specifically how you will free up personal time to work toward developing your trading strategies. That said, in addition to following a specific plan, it is also important to maintain a carefree attitude.

A recent study on how people achieve New Year's resolutions illustrates that a carefree attitude is useful for achieving your objectives (Powers, Koestner, & Topciu, 2005). In the study, all participants tried to achieve New Year's resolutions, but some people were overly perfectionistic while others were carefree and independent minded. The participants in the study who were too exacting actually were less likely to achieve their resolutions, even if they had a detailed action plan. People who didn't even have a specific plan did better, as long as they were carefree and independent minded. Being carefree instead of being an extreme perfectionist made all the difference. When trying to achieve a New Year's resolution, major setbacks should be expected. The setbacks aren't important, but how you react to them is crucial. If you feel that you absolutely must achieve your resolution and that any setback is a sign that you will ultimately fail, then you will probably fail. But if you treat each setback as natural and expected, and if you let your own personal standards guide you, you'll feel more at ease. You will snap back quickly and keep working diligently toward your objectives

The start of the New Year can be a time to make exciting new plans. But it is often difficult to turn plans into reality. You can do it, though. Set realistic goals, outline a detailed plan of action, and commit to it. At the same time, be open to setbacks and don't let them beat you down. If you follow these tips, you'll increase your chances of reaching new heights in 2010.

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January Workshops:

* Trading Plan Implementation Workshop - Palo Alto
Jan 16, 2010 - For more information, click here

* Trading Plan Implementation Workshop - Online
Jan 17, 2010 - For more information, click here

* GOAL SETTING Workshop - Palo Alto CA
Jan 23 and 24, 2010 - "How You Can Create Your Future - 2010"

Click here for more information

NEW! Join our Trader's Support Group! Click here for more information!

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Don't Let the Holiday Season Stress You Out: Stay Calm and Relaxed

2009-12-22T11:22:00.007+11:00

During the holiday season, our personal obligations can be a little overwhelming. There may be parties to attend or you may have to find the time to buy presents for family and friends. Can this added stress impact your trading? It can, if you are not careful. It is vital to stay calm and relaxed while you get a read on the markets and execute trades. Successful traders have learned how to make trades in a carefree, relaxed, and focused manner. They don't put unnecessary pressure on themselves, stress themselves out, and then crack under the added stresses and strains. This is a little harder to do during the holiday season, however.

During the holiday season, our mental energy may be taxed to the limit. And when that happens, you may find it difficult to stay focused on the markets. It may be hard to concentrate. Your mind may wander, easily distracted by issues of the holiday season: "What is the weather going to be like when we need to drive to my parents house for dinner? I hope the weather isn't too bad. How busy is the mall? I don't want to stand in long lines again; I should have done my holiday shopping earlier." When you are distracted by stressful events outside the markets, even the slightest sign of a trading setback can make you feel uneasy. You may be more easily prone to frustration and anger. Continuing to trade under these conditions can lead to impulsive decisions. Implementing a trading plan, for example, requires a carefree, focused mindset. But if your limited psychological energy is depleted from all the stress you are experiencing, you will have little psychological energy left to devote to monitoring your trades.

If the holiday season is getting to you, it may be useful to rest. You might want to take a four-day weekend, or take the rest of the month off. But if you have to trade during the rest of the week or month, make sure you take frequent breaks to deal with pent-up background stress. Take small breaks; go for a walk and work off some of the tension that is building up. Since this time of year is stressful, it's also useful to take preventative measures to ensure that you aren't overly consumed with stress. Make sure you get plenty of sleep, avoid drinking caffeine, and exercise regularly. These steps will ensure that you have the mental stamina you need to survive through the holiday season. This time of year can be tough on your psyche, but if you take decisive steps to reduce some of the stress, you'll feel better and enjoy the season rather than feeling stressed out.

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Jan 23 and 24, 2009 - "How You Can Create Your Future - 2010"

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If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Rogue Trader: Hiding Out From Yourself and Others

2009-12-14T10:15:00.005+11:00

The movie "Rogue Trader" illustrates how psychological motives can be the downfall of any trader. Nick Leeson was a young trader out to prove himself. His trouble started when a young member of his trading team mistakenly bought contracts when she was supposed to sell them. The mistake was obviously a small financial disaster. To save her job, Nick decided that he could make up the losses without his superiors knowing about the mistake. He succeeded, but his short-term financial triumph set a bad precedent. Nick erroneously thought he could repeatedly make a big financial loss, cover it up, and make up the losses later. But Nick's actions eventually led to the downfall of Barings Bank, an institution with a glorious past, including the financing of the Napoleonic Wars, the Louisiana Purchase, and the Erie Canal. As general manager of Barings future trading operations in Singapore, Nick bet Japan's stock market would rise. But it slumped after the Kobe earthquake. During the slump, he doubled his bets hoping to recoup his losses. Every loss was hidden in a secret "error account" so his office would always appear profitable. As the losses grew Leeson acquired extra funds by various means, sometimes illegal, to continue trading. He hoped against hope that he could turn it all around.

In the end, he struggled with his own demons: He wanted to please his working class parents, persuade his beautiful wife that he was successful, and please his superiors, allowing them to think he was a trading genius. The tale of Nick Leeson is dramatic enough for a movie plot, but it also exemplifies the very human need to win, even when it means fooling ourselves and others. Many times, we are so desperate to win that we deny our shortcomings, and believe that we can do anything. But, in the end, we are merely hiding from ourselves and others. It's a common ailment, large corporations don't want to see how poorly things are going and stay on a failing course of action. And individual traders and investors similarly have difficulty seeing financial problems.

It's vital to stay brutally honest. Everyone makes losing trades, and when you make a losing trade, it's useful to remind yourself that if you identify the problem quickly, you can climb out of a seemingly bottomless pit. Nick Leeson should have followed this advice. At one point he was "merely" in millions of dollars in debt, but because of his denial, he ended up losing hundreds of millions. The same thing happens to everyday traders; a "mere" $10,000 loss could end up as $100,000, either from one trade or a series of trades over many years. It's vital to monitor your trades and face how much you are making or not making. It may hurt at first, but it is important to remember that things could be worse, and if you take decisive action early, you can prevent them from getting worse. So don't hide from yourself or others. Go your own way. You have no one to please but yourself. So what if you don't live up to your expectations? Lower them, and feel good about yourself and what you have done, no matter what it is. And don't try to save face. Don't hide from yourself or others. Face the facts, take decisive action, and solve any problem that comes up as quickly as possible. In the long run, you'll end up profitable, and successful.

******************

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December Workshops:

* Free Webinar
Dec 20, 2009 - How You Can Increase Your Trading Profits by Changing Old Habits

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* Free Webinar
Dec 29, 2009 - How You Can Increase Your Trading Profits by Changing Old Habits

Click here for more information

January Workshops:

* GOAL SETTING Workshop
Jan 23 and 24, 2009 - "How You Can Create Your Future - 2010"

Click here for more information

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Winning the Battle or the War: Thinking of the Big Picture

2009-12-08T15:51:00.003+11:00

It's easy to get caught up in daily defeats. You look at the recent news, unemployment is 10% and see that the dollar is having challenges to get back up there. And your trading strategies may not be working under current market conditions. If you aren't careful, you could get discouraged and feel like giving up. When you aren't making the profits you desire, you could end up feeling like a failure, as if you'll never make it to the top.

When you are discouraged by everyday setbacks, it's vital to keep your eye on the big picture. You could be losing a battle here and there, but you may end up winning the war.

Many traders make the mistake of letting their feelings of worth be determined by everyday trading results. It's understandable. You think, "If I make profits today, and every day this week, I'm doing great. But if I end up losing most days, then I'm a failure." This kind of thinking is based on how people view compensation for a conventional 9-to-5 job. You put in your 40 hours, do a good job, and you get paid handsomely. You feel good for working diligently and productively for the week. In the trading profession, though, you may not always receive adequate compensation for your efforts. When you don't reach the profit objectives you set, you can feel as if you didn't get paid adequately for your efforts.

When trading the markets, it's necessary to avoid thinking in conventional terms. An extremely productive week may not produce profits. When you are trying to achieve a certain level of income in a given time frame, you are setting "performance goals" that you may not be able to achieve. A better kind of goal to set is a "learning goal." You may not be able to achieve a particular performance goal during a given week; that is, you may not always be able to achieve a particular dollar amount, but you can achieve a particular learning goal. Everyday you trade, you gain valuable experience regarding how you approach the markets. You see various set-ups and learn how they can or can not lead to a profitable trade. Don't undervalue these learning experiences. Everyday, you are achieving learning goals. Your daily efforts may not directly lead to profits, but indirectly, they do add to your wealth of experiences.
You may only win a battle here and there, but when you add up the battles you do win, over the long haul, you end up mastering the markets, and winning the war in the end.

If you merely focus on how much money you make as a trader, and use a conventional payment schedule, you'll put in a gallant effort at times, fail to get the conventionally defined paycheck you expect, and feel ripped off. But if you define your paycheck in unconventional terms as the amount of experience you gained, you'll feel rewarded for making a series of trades, profitable or not, and feel you've accomplished something. And regardless of how much money you actually make, you will have indeed accomplished something: You will have further honed your trading skills. And in the big picture, winning these minor battles will help you win the war. You'll master the markets and become a winning, profitable seasoned trader.

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Relax... Rest Up During the Holidays

2009-12-01T11:35:00.004+11:00

Today marks the start of the holiday season. During this time of year, many people have extra responsibilities and hassles. There are holiday parties to attend, family obligations, and holiday shopping. With all of it comes added stress. There are two ways you can handle it, though. First, you can let it all get to you, and that in turn will influence your trading decisions. Or second, you can use the time to take it easy and get a well-deserved rest.

As you are well aware, the holiday season can impact the markets in a variety of ways. The market closes on holidays throughout December and that can impact how traders react. Consumer confidence influences holiday spending, which in turn impacts prices in some sectors. And it's the end of the year, a time when some investors may decide to close out positions for tax purposes. In some ways, it is not business as usual. These changes, along with the added stresses in your personal life, can make this time of year especially chaotic. You might want to consider standing aside more often than you usually do and getting a little rest in preparation for the next year.

The mind is similar to a muscle. When you go on a long run, for example, you soon run out of energy. You can't go any farther. Your muscles begin to ache and you need to take a rest and recuperate before you start moving again. After a year of fast-paced trading, it may be useful to take a rest. The mind has limited energy. When you take a rest and rejuvenate, you can face the market action with a renewed sense of vigor.

Trading often comes down to performing in a peak performance mindset at a few key moments. To take advantage of these key moments, you must be relaxed. If you have strained your mental "muscles," you'll have difficulty taking advantage of these opportunities. Your mind will be elsewhere or you'll be too tired to act decisively. When you're tired, it's hard to gauge market action accurately. You'll be prone to decision-making biases and you may act impulsively because you are too tired to patiently wait for the proper signals to enter or exit a trade. By staying relaxed yet full of energy, you'll be able to trade in a logical and consistent manner. You can use the holiday season to take a break and get some needed relaxation and rejuvenation.

How you react to the holiday season is your decision. You can let the added stress get to you and feel overwhelmed. Or you can cut back your obligations, whether trading commitments or personal commitments, and rest and relax. If you use this time to rest, though, you will be ready to tackle the markets energetically and enthusiastically at the start of the New Year.

******************

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If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Happy Thanksgiving

2009-11-23T15:52:00.003+11:00

During Thanksgiving dinner, Jack tells his wife, "What do I have to be thankful for? I've made a bunch of bad trades all last month. My life could be going a lot better than it is." What Jack doesn't realize is that his life could also be going a lot worse. When things don't go our way, it's natural to become frustrated and fall prey to a victim mentality. "Why me?" is the mantra of the losing trader. Winning traders, in contrast, take setbacks in stride; they look on the bright side and work hard to get back on top.

Thursday is Thanksgiving Day, a day where we look at our lives and appreciate what we have, rather than mull over what we don't have. If you are like Jack in that you haven't been doing very well and feel down, try lifting your spirits. The markets are closed, so you might as well take the day off and enjoy it. Appreciate what you have accomplished. Every trader has accomplished some sort of milestone, whether it is merely having the courage to make trades or having enough skill to realize steady profits. Trading is an inherently rewarding profession. It's fun, an intellectual challenge, and exciting. Be thankful that you are able to engage in such an activity.

Usually, people feel unappreciative of what they do have when they compare themselves to others. Don't compare yourself to others. It's tempting in the modern, competitive world to constantly ask, "How am I doing?" Comparisons are useless, however. Run your own race. Don't constantly think you are trying to beat others to an imaginary finish line. People who achieve great things work independently and on their own terms. They don't care how others are doing. They follow their own timeline, follow their own passion, and look inward for where to go next. Trading is a creative activity. You alone are the one who needs to hone your trading skills. You are the one who must find a method that matches your aptitudes and personality. Comparisons to other traders just make you feel frustrated. How you perform has nothing to do with how others perform. All comparisons will do is torture you. You will feel jealously or envy. When you see that you are doing relatively poorly compared to a fellow trader, you are likely to think distracting thoughts such as, "Why can't I do as well?" or "I must not be as good of a trader as I had thought." Don't look at anyone else's record but your own. Everyone has a different learning curve. To keep your spirits up, you'll do best as a trader to focus on improving your past performance record, rather than looking at how other traders are doing. You don't know what factors created their performance records, so comparisons can only mislead and hinder you. How well you are doing compared to others does not have a direct bearing on how you should feel about your inner-worth and feelings of success in life.

There are many good reasons to feel extremely thankful for what you have accomplished. Appreciate what makes you unique. Spend Thanksgiving Day celebrating your talents, whatever they are. Appreciate what you are able to do and give thanks that you are able to do it. Happy Thanksgiving.

******************

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December Workshops:

* Dec 12 and 13, 2009 - The Art of Quantum Trading - How to Think and Trade Like a Champion
Palo Alto California - Click here for more information and to register.

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Playing With Fire

2009-11-16T17:37:00.006+11:00

As you trade the markets, it's vital to trade calmly and with confidence. If you constantly worry about failing or losing money, you will sabotage your efforts and end up losing in the end. That said, you don't want to be too overconfident. The overconfident trader is the naïve trader. In the back of your mind, you should always remember that trading is like playing with fire.

At a party last month, I was talking with a young woman about her retirement plans. She made a good salary, but not high by any means. She proudly told me that she had saved and invested $50,000 in the markets. Unfortunately, she seemed to also think that the markets were as secure as a bank account. Understandably, she became a little perturbed with me when I suggested that she was taking a potentially huge risk, and could possibly lose a few years worth of savings if the market had turned dramatically. My point isn't to pessimistically deride the markets, but to point out that trading requires risks, and taking risks doesn't always work in your favor.

An astute Enlightened Super Trader subscriber pointed out last week that not everyone can trade successfully. That's true. As we have pointed out in numerous columns, many are called to the trading profession, but relatively few end up profitable in the end. It is important to remember that you are taking a risk and that you can lose. You must look at your financial resources, innate trading talents, and your commitment, and find a trading or investment approach that matches your resources and abilities. For some, that may be short-term trading, and for others, that may mean long-term investing.

If you are a novice, short-term trader, you may not want to jump in headfirst until you check things out. You may want to take some education or make small practice trades to gauge your skill level before risking years' worth of savings. For example, in an interview with educator and trader coach of Enlightened Super Trader Education advised short-term traders to risk money that they could afford to lose. Again, it may sound pessimistic, but losses are commonplace when trading. For your own safety, you should prepare mentally and physically for a worst-case scenario, and make sure you can live with the consequences. Decide how much you can afford to lose, and if you do risk money, use protective stops or other financial instruments to minimize your losses. If you have trouble handling stress, or have trouble controlling your emotions while under pressure, you especially want to limit your risk, and may want to consider long-term investing rather than short-term trading. But again, the key is to be aware of the downside.

Trading is a rewarding activity. It is intellectually challenging and if you have a knack for trading, it can pay off financially as well. But trading isn't fun if you lose so much money that you can't recover. Trading is a lot like playing with fire. If you aren't careful you can get burned badly.

******************

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November and December Workshops:

Palo Alto, California

* Nov 22, 2009 - 1 Day Trading Workshop - How to Be a Consistent, Profitable Trader
Palo Alto California - Click here for more information and to register.

* Dec 12 and 13, 2009 - The Art of Quantum Trading - How to Think and Trade Like a Champion
Palo Alto California - Click here for more information and to register.

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

A Good Hard Look at the Facts

2009-11-10T08:41:00.002+11:00

Have you ever made a small losing trade and thought, "It's all right. I'll win on the next one." The next trade comes along, and you lose. And then the next one is a loser, and so on, and so on...until finally, you are in a severe drawdown. Before you dig yourself into a hole that is virtually impossible to climb out of, it is vital for survival to constantly monitor your progress. Take a good hard look at the facts and make adjustments.

Humans are notorious for their eternal optimism. Who wouldn't want to think they were making a killing in the markets. When you aren't profitable, though, it's easy to fall into a state of denial. In order to build up our ego, we ignore how poorly things are going and tend to look at the world through rose-colored glasses. There are times when it is useful to look on the bright side. To win in the markets, you have to truly believe that you can succeed. Focusing on your limitations or the inherent challenges the markets often pose may get you down. And when that happens, you may think it's impossible to master the markets.

On the other hand, too much denial may prevent you from taking the steps you need to improve your trading performance. Denial can go too far. If you feed your account every month, you may not face the fact that your trading strategies just aren't working. Successful traders carefully monitor the process of trading. They keep a trade diary in order to identify those strategies that work from those that don't. They identify the specific market conditions that are optimal to their methods. They also report their moods in an attempt to isolate psychological factors from market factors. Some strategies just do not work under particular market conditions. And if you are bogged down with psychological factors, no trading method is going to produce a profit. It may be hard to face the facts, but unless you do, you'll never be able to identify your weaknesses, make midcourse corrections, and hone your trading skills.

It's hard to not be impacted by images and feelings that enter our consciousness without knowing it. Humans have a natural affinity to attach emotional significance to inanimate objects, like stocks. It is helpful most of the time. When you hear about a product or services failing to perform at par, such as a new computer running too hot or an airline that tends to arrive late and misplace luggage, you instinctively try to avoid such companies in your personal life. You may similarly avoid the supermarket that fails to store its raw meat properly or the drug store that sells over-the-counter medications with expiration dates that end within a week. We feel uneasy when we experience such events in our everyday lives. Avoiding products and businesses that don't meet our expectations is a useful rule of thumb. Unfortunately, the same processes also work for pleasant events. When we see an attractive model of a car that everyone is buying, we tend to want to get one for ourselves. We will even ignore poor gas mileage if it is in fashion, and "everyone" is buying one. We carry these subconscious processes into our trading life. We may "feel" good about a stock, and buy it because of these feelings. We may take unnecessary risks because we have a hunch that the stock will go up. Sometimes our hunches are based on a rapid, astute analysis of existing data, but at other times, they merely reflect irrational subconscious preferences.

Don't be afraid to keep a trade diary. Identify what works and what does not. Don't let denial prevent you from taking a good honest look at what you're doing. You may be surprised to find that you are doing a lot right, and that by making a few minor changes, you can greatly improve your trading. The aware trader is the winning trader. By taking an honest look at your limitations, you'll be able to hone your trading skills, reach ever-higher levels of performance, and take home huge profits.

******************

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November Events and Workshops:

Palo Alto, California

* Nov 14, 2009 - "How To Change Losing Habits"
Palo Alto California - Click here for more information and to register.

* Nov 22, 2009 - 1 Day Trading Workshop
Palo Alto California - Click here for more information and to register.

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Facing Temptation With Discipline

2009-11-01T15:53:00.003+11:00

Looking at your screen can be much like looking at a slot machine, and stopping yourself from dropping a dollar in the slot and pulling the handle. You must restrain yourself from making an impulsive trade, but there's a very human tendency to seek out excitement and receive a quick reward. You must fight temptation and maintain self-control, however. Electronic trading platforms have made trades easier to execute, but at the same time, they've made trade execution so fast and easy that many novice traders overtrade, and even when traders don't overtrade, they may be tempted to constantly monitor their trades and abandon trading plans prematurely, a common ailment of novice and seasoned traders alike. Practicing patience can help you stick with your trading plan until it comes to fruition.

Impulsive trading doesn't happen in a vacuum. Many factors contribute to prematurely abandoning a trading plan. A significant precursor, though, is a feeling of boredom. When we are bored, we may want to spice things up, and what better way to put a little excitement into life than looking at a position to see how well things are going. What's the problem? The more you look at how a trade is going, the more you think about it, and if your plan is to patiently wait for a week or longer, looking can only make you feel like you want to take action. It's necessary to remove temptation.

Don't think you are a hero. The biggest mistake traders make is thinking that they have superhuman self-discipline. Do you remember the "Got Milk?" commercial from a couple years ago? Imagine eating a frosted cupcake and trying to stop yourself from drinking a glass of milk. You could try it, but it wouldn't be easy. Rather than put yourself in such a situation, it's easier to avoid eating the cupcake altogether. It's the same with trading: Avoid looking at the market action unless it is a necessary part of your trading plan.

How else can you maintain discipline? First, admit your limitations. Self-control is like a muscle. You need to practice self-control. Don't try to be superhuman. You can't run a marathon tomorrow if the farthest you had to run in the past year was between your front door and your car when you were late for an appointment. You need to work up to it. Don't expect to be able to maintain self-control without extensive practice. Give yourself time to build up your self-control skills. Second, make a strong commitment to build up your self-control skills. Take the matter seriously. Until you commit to change, you cannot improve your ability to maintain discipline. It's similar to losing weight or quitting smoking. A person must first acknowledge that he or she has difficulty with self-control before change can happen. Admitting that you need to improve your self-control skills goes a long way. Third, you must use psychological techniques to learn to maintain discipline. It is essential to monitor your self-talk. The kind of self-talk that most people have when they lose control is, "I need a little excitement. Let's see how my positions are doing." When you look, however, you'll bring the emotions regarding your trade into your consciousness. You'll start thinking of how well or poorly the trade is going, and when you start thinking about it, you will be putting strain on your self control "muscles." It's useful to remind yourself that you can maintain control: "I can wait if I try. I just need to concentrate." Fourth, when you start thinking about making an impulsive move, immediately run away from your screen until you "cool off" and allow your emotions to dissipate. In the old days, brokers helped prevent traders from acting too impulsively. Having to call a broker provided a cooling off period. A trader may have wanted to change his or her trading strategy prematurely, but it wasn't as simple as clicking a mouse to execute a trade. A trader had to call up the broker and deal with the interpersonal issues of what he or she might think. A trader was likely to stop and think, "I don't want my broker to think that I'm wishy-washy, impulsive, or timid, let me think about this a little more." But these days, you can go to your computer and buy, sell, and re-buy a position in a matter of minutes. An obvious remedy to impulsive overtrading is to use a broker to place your trades. Another solution is to acknowledge that looking at your screen too soon is a temptation, and avoid looking at it as much as possible. And if you do catch yourself looking, leave the room as soon as possible before you take an action you don't want to take. Don't trade impulsively. The winning trader is the disciplined trader. The more you can stay calm, rational, and in control, the more profits you'll take home.

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Stop Kicking Yourself For Making a Mistake

2009-10-27T20:36:00.003+11:00

John is kicking himself right now. He just made an unexpected losing trade and he feels especially down. He expected to make a killing, and he was looking forward to winning and celebrating big. He thought he had done everything to prepare for the trade. He had looked at the moving average to discern the trend. He looked at the highs and lows of the stock for the past two months, and set his stop loss accordingly. But in his strong desire to believe that he was about to execute a winning trade, he made a fatal error: He forgot to account for an upcoming earnings report. The company failed to meet analysts' forecasts, and the stock fell hard and fast. John didn't lose too much. His protective stop saved him, but it still hurts. He had gotten his hopes up, and now, he is especially disappointed.

John's plight is common for both seasoned and novice traders alike. There is a strong human need for eternal optimism. John isn't naïve. He knows that earnings reports can unexpectedly impact a stock price, but he had wanted to make a big winning trade so desperately that his unconscious mind prevented him from seeing matters clearly. Sometimes, we want something so strongly that we see things that just are not there, or we shut out things that we don't want to see. That's what John did. He didn't look carefully at all possibilities and he missed the obvious.

Why does John feel so badly? It could be for a number of reasons. First, he got his hopes up, but his dreams were dashed. When we expect a big win, and don't get it, we are especially hurt. Second, John may be trying to live up to his own unrealistic, perfectionistic standards. He may be beating himself up because he wrongly believes that he must trade to perfection; he must account for all possibilities. It is a fact that had he been able to see that an earnings report was scheduled, an obvious potentially adverse event, he would have saved precious trading capital. But mistakes do happen. We are human. We often let our emotions take over, and when that happens, our rational mind doesn't stand a chance.

How can John feel better? He needs to change his frame of reference. When many people make an obvious mistake, they let their superego rule. Our superego consists of the ideals we strive for and the moral rules that our parents taught us while we were youngsters. When many people make a mistake, they treat the situation as if a parent or teacher were scolding them for breaking a rule. They re-experience feelings from childhood, hurt, beaten feelings. In some cases, the feelings may be shame or guilt. This is the wrong frame of reference to use to understand trading setbacks, however. When you lose money on a trade, it is not useful to allow your unconscious to equate the loss with being punished by your parents for breaking a rule. Instead, it is vital to look at matters from the perspective of a trader. Traders are human and they make mistakes. How many people actually make a living as a full-time, active trader? Hardly any. If you work under the assumption that anyone can trade, you will feel badly when you make a trading error. However, if you work under the assumption that few people can actually trade profitably, you'll quickly forgive yourself for making a mistake or a losing trade. Every trader makes mistakes. There is a lot of information to sift through, and as we all know, our zealous pursuit of money often gets in the way of our ability to see the markets with crystal clear accuracy. When you change your frame of reference, your entire perspective changes. You stop getting your hopes up. When you remind yourself how challenging trading really is, you realistically start to recall that any given trade has little relevance in the context of a larger set of trades, and thus, it is unreasonable to expect success on a single trade. If you don't get your hopes up too high, you cannot be knocked down too far when a trade turns out to be a loser. And when you realize that trading is so difficult that few people can trade the markets with perfection, you'll accept your limitations and appreciate the winning trades you do make, instead of beating yourself self up for making the losing trades that are commonplace in the trading world.

*************

The Worthy Trader

2009-10-19T19:22:00.003+11:00

Jack has been on a winning streak, and his account balance is up, way up from where he started. He has generated more in a month than their parents ever earned in a year. He now has a lot more money than his neighbors, friends, and relatives. He is on top of the world, but is he satisfied? No, he can't believe his good luck. He feels his good fortune is just a fluke that could end at any moment. Have you ever felt like Jack? If you have, you're not alone. Many successful people feel they are unworthy of success. They feel they are imposters, as if they will be caught for being a phony at any moment.

Trading the markets is difficult. It requires rock solid confidence. Market conditions are constantly changing. If you have wavering confidence, you may find that your trading acumen abandons you at the slightest disappointment. Suddenly, you give up on winning stocks too early. You back losers or take the wrong side of what could be successful trades. At other times, you simply can't maintain your sense of conviction about what to trade, and when to trade it.

It's vital to have rock solid confidence. You can't be easily swayed. A winning trader doesn't waver when faced with seemingly impossible challenges. He or she is stable, calm, and objective, even under the most chaotic market conditions.

What is the secret behind rock solid confidence? What all confident people know is that the only opinion that matters is their own. Instead of caring what anyone else thinks, they look inward. Looking inward for guidance and direction is unnatural for many people, however. Throughout most people's lives, significant others have tried to place conditions on whether they will receive approval or disapproval. Parents imply, "I'll love you, but only if you do what I say." Teachers warn, "I'll give you a good grade if you follow my instructions," and supervisors control workers by saying, "I'll give you a good performance evaluation if you meet my expectations." It is reasonable to start looking toward others for a sense of personal value. For some people, the need for recognition becomes extreme, though. Some people let others define their self worth. If others give them approval, they feel good. But if they meet with dissatisfaction, they feel poorly about themselves. Over time, one may get into the habit of looking toward others for approval. Some traders, for example, may even be motivated to trade in order to gain approval. They may think, "If I can make a fortune trading, I'll get the love and respect I've always wanted." Although such thoughts may be motivating, they can be a hindrance to profitably consistent trading. First, one is often disappointed to find that money isn't usually associated with respect and approval. And even when it is, most people find that they never get the level of respect that they had hoped to find. In the end, one usually becomes disappointed and loses the motivation to trade over the long term. Second, if you tie your winnings to your self worth, you put an extreme amount of pressure on yourself to perform. And when the stakes are that high, one usually chokes under the strain. Trading is difficult enough as it is. Putting on extra pressure makes a challenging task almost impossible.

Rather than look outward toward others for a sense of self-worth, it is vital to look inward. The only opinion that should matter is your own. Trade because you find it personally rewarding, not because you think you'll eventually gain approval from others. Focus on the immediate experience of trading. You'll find it more enjoyable, and feeling a need to live up to societal expectations about what is "right" or "wrong" won't distract you. If you allow yourself to set your own personal standards, you'll feel a sense of freedom, and this sense of freedom will allow you to trade effortlessly and creatively. So avoid looking toward others for approval and self-definition. The more you can look inward, and think independently, the more confident you will feel, and when you feel confident, you will trade more profitably.

*************

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October Events and Workshops:

One Time Event - Melbourne Australia

* Oct 25, 2009 - "Quantum Trading - Introduction To Self-Awareness"
Melbourne, Australia - Click here for more information and to register.

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: +61 439 421 219
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Your Money or Your Self - Esteem

2009-10-12T14:58:00.004+11:00

In a classic radio comedy bit, a criminal asked Jack Benny, "Your money or your life?" Mr. Benny had to think about it for a little while. In a recent article in "Personality and Social Psychology Bulletin," psychologists Liqing Zhang and Roy Baumeister conducted a series of experiments to examine the extent to which people would be willing to lose money to save face. Which would you be willing to part with first, your money or your self-esteem? If you are like most traders, you are likely to let your money go before your self-esteem.

Trading lore is replete with traders who gladly fed losing trades to avoid admitting the fact that they made a mistake. They hoped against hope that a losing trade would turn around if they could merely wait long enough. In the end, it's better to cut your losses and to move on, but few traders do so. They lose more and more money. Why? The biggest reason is ego. They don't want to admit they were wrong. They don't want to feel like a loser.

Drs. Zhang and Baumeister (2006) showed how people are willing to lose money in order to protect their self-esteem. Participants played a game of chance that was similar to continuing to invest in a losing trade: they were told they could win a jackpot of $10 if they patiently played long enough by feeding the investment in 25-cent increments. Each participant was given $5 in quarters to play the investment game. They had the choice of continuing to put in quarter after quarter to keep an investment going or cutting their losses. In the experimental group, participants were threatened by being told that most people choke under pressure when playing the game and that if they were prone to crack under strain, they would have difficulty. A control group was not given this "ego threat." These researchers also looked at people's self-esteem to see if it would impact the amount of money participants lost. What did they find? People who were threatened by being told they would choke under pressure lost more money that people who were not threatened. In addition, people who had high self-esteem lost more money than people with low self-esteem.

One might think that people with high self-esteem would handle a warning that they might choke under pressure better than people with low self-esteem, but they did not. One might also expect people with high self-esteem to perform better on the investment task than people with low self-esteem, but people with high self-esteem lost more money than people with low self-esteem. Why? People with high self-esteem tend to want to defend their ego. They want to preserve their self-esteem even if it means continuing to lose money on a game they can't win.

What is the lesson? Don't link your net worth to your inner-worth. If you think you have value as a person because you make money on winning trades, you will believe that an outcome of a trade determines your self-worth. It does not, however. No matter how much you win or lose, you still have value as a person. If you remember this fact, you will be able to trade more rationally and objectively. But on the other hand, if you let your self-worth be defined by how well you do as a trader, you will be putting your self-esteem on the line with your money, and you will be likely to do anything to maintain your high self-esteem, even if it means losing money. So whatever you do, forget about making it personal. Trading is not personal. It is just business. If you keep your self-esteem out of the picture, you will trade more objectively, rationally, and profitably.

*************

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October Events and Workshops:

One Time Event - Melbourne Australia

* Oct 17 -18, 2009 - "The Peak Performance Trading Workshop" Melbourne, Australia - Click here for more information and to register.

* Oct 25, 2009 - "Quantum Trading - How to Think and Trade Like A Champion" Melbourne, Australia - Click here for more information and to register.

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: +61 439 421 219
USA: +1 650 320 1714

Do You Protect Yourself?

2009-10-06T10:40:00.005+11:00

It is a muggy day and Peter can't seem to do anything right. He has fumbled around all morning. He didn't sleep well last night. He is tired, and he is tempted to just quit for the day, drink a few tequilas, and sit in a hammock by the pool. But he still has enough willpower to fight temptation a little longer. He has been working on a trading plan for the past month and he wants to see it through. Today's market conditions are just right. He wants to execute the trade today, a day he has patiently been waiting for the whole month. It is a day like today that Peter is glad that he has prepared beforehand for what could go wrong. He may not be at the top of his game at the moment, but he knows that he can survive a worst-case scenario should it happen. He has taken precautions and knows deep down that he can live through a major setback. So even though it is a tough day, he has decided to stick with his plan, execute it, and see if he can take home a profit.

When it comes to mastering your psychology, feeling safe and protected can do wonders. If you are truly afraid of making a mistake, you will not feel calm and relaxed. You will be on the verge of making a trading error. And when you are under extreme pressure to perform flawlessly, you feel it. There's an old trading adage that is apt to trading in the calm, calculating state of mind: Make the trade so insignificant in the big scheme of things that you wonder why you are even bothering executing it. Managing your risk is the key to cultivating an unwavering, psychological sense of safety and security. If a trade requires you to risk only a relatively small percentage of your account balance, you'll feel at ease. You will know that you can survive a setback, and you will think, what do I really have to lose? I can relax a little and see what happens.

There are other obvious ways to feel protected and safe. For example, you can use a protective stop to make sure that you restrict the amount you can lose on any given trade. Look at the past performance of a stock and estimate an ideal stop loss point that protects you, but does not allow you to get "stopped out" too early. Once you've determined an optimal stop-loss point, use the automatic settings on your trading platform to ensure that you are protected even when your self-discipline fails you. Perhaps the most important form of protection, though, comes in the form of a well-developed trading plan. If you know specifically when to enter and when to exit, you can execute the plan even while feeling a little stressed out. You can mechanically follow your plan, focusing on your immediate experience rather than the long-term consequences of a trading loss. It's also important to anticipate adverse events as part of your trading plan. Make sure that earning reports or a Federal Reserve announcement isn't going to ruin your trading plan. Careful and precise planning is the best way to protect your account balance.

Just like engaging in a dangerous sport, you feel better when you know that you have some form of protection. Athletes protect themselves with helmets, and airbags and seatbelts protect us as we drive in rush hour traffic. Successful trading also requires adequate protection. Protection not only ensures that you can survive to trade another day, but it also allows you to feel relaxed while you execute and monitor a trade. So protect yourself. If anything can go wrong, it usually does. You don't have to worry, however. If you take precautions, you will survive the inherent setbacks in trading, and end up winning in the long run.

*************

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* October 11, 2009 - Risk Management Strategies For The Trader/Investor. Register now to save your spot!

One Time Event - Melbourne Australia

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* Oct 25, 2009 - "Quantum Trading - How to Think and Trade Like A Champion" Melbourne, Australia - Click here for more information and to register.

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: +61 439 421 219
USA: +1 650 320 1714

Do you wait for the right time?

2009-09-27T08:02:00.005+10:00

Real traders execute trades all day, every day. Don’t they? There are times when it may be useful to stand aside, especially when you cannot cultivate the proper mental edge.

Many traders can’t stand the idea of missing out on trading opportunities. They feel they must always search for a winning trading opportunity and put on trade after trade all day long, regardless of the likelihood of the setups producing a win. There may be a few good reasons to stand aside, however. Market conditions may not be optimal for your style of trading. You may be in a slump and unable to trade in the zone. Or you may just feel like taking the day off. Trading isn’t the same as working on an assembly line. It’s not as if you can put on trade after trade as if you are bolting on wheel after wheel. Trading requires an intuitive feel for the markets. You must be in sync with the market action to the point that you perceive solid high probability setups. High probability setups are not always there, and even when they are there, you may not see them.

A proper mental edge is vital for trading success, and there are times when you just don’t have it. You may be tired and unable to concentrate fully. You may have just faced a series of setbacks and cannot seem to talk yourself out of a slump. You may feel so stressed because of a series of losses you have recently mounted that you have trouble coping with even a minor setback. When you are thrown off your game by these circumstances, it is necessary to stand aside and regain your composure. By taking a break from the markets, you can regain your confidence. Let’s consider a few ways that you can regain your mental edge.

First, make sure you are well rested. When we are tired, we have difficulty coming up with clever solutions to problems. In addition, coping with stress requires energy, and when you are tired, you just don’t have enough energy to cope. The best solution is to make sure that you get enough sleep at night. That may require that you get to bed early, especially if you live on the West coast. Early to bed, early to rise…the old adage is often apt for trading the markets.

Second, reduce your stress levels as much as possible. Entering the zone requires the proper match between your skills and the difficulty of your goals. When you have inadequate skills for the goals that you are trying to achieve, you feel stress, and don’t enter the zone. On the other hand, if you don’t feel challenged, you will feel bored, dull, and unmotivated. Developing realistic trading objectives that are challenging yet achievable will help you enter the zone. For example, don’t expect to make an unrealistic level of profit on each trade. Be realistic. When you try to achieve realistic goals, you will see how you can achieve them and naturally reward yourself as you make progress. If your goals are too difficult, however, you will choke under the pressure.

Third, patiently wait for the right time to trade. You have to go where the markets take you, and sometimes, market conditions are just not optimal. It is necessary to wait for market conditions that suit your trading style. When a host of factors match, from your mindset to market conditions, you will enter the zone and take home enormous profits.

Did you like this article? Leave a comment below.

September Events and Workshops:

* Oct 17 -18, 2009 - "The Peak Performance Trading Workshop" Click here for more information and to register.

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: +61 439 421 219
USA: +1 650 320 1714

How to be a Centered Trader

2009-09-22T02:32:00.006+10:00

Profitable traders have full control over their emotions. They don't allow emotions to interfere with their concentration. They focus on the markets, and through focused concentration, they can react to subtle changes in the markets with aplomb. This is what I call it as "centered trading."

In our exclusive interview with traders, we've heard master traders describe what it is like to cultivate a focused, centered mindset. Scott, a seasoned trader, describes how winning traders stay focused on the markets and on executing their trading plan even after a disappointing setback: "You can't let what just happened ruin what's about to happen." According to Scott, traders that do well are good at saying, "Okay, I made a mistake, what's next." Mark, a well-known hedge fund manager notes that a trader must recover quickly from a setback and not see it as defeat. It's similar to playing sports: "As soon as you lose the ball, you've got to head the other direction. You don't have time to think about it or cry about it. You've got to move. Your awareness of what's happening allows you to do that. You must look at what the markets are saying, position yourself, and don't think about the situation fully until the game is over."

Centered traders are able to focus on the essential elements of the trade before them. They don't worry about the consequences of their actions during the trade. They disregard past mistakes and avoid worrying about future events. They distance themselves from their emotional responses. They let their thoughts pass through their consciousness. It's a meditative state where they can allow their mind to look at the market action from a creative, alternative perspective. The more centered you are as a trader, the less easily you will be distracted. Becoming a centered trader takes practice, though. There are practical guidelines for how to develop this ability.

First, I suggest to gain awareness of the automatic nature of negative thoughts. Negative thinking tends to go through your mind without your awareness and impacts your trading. By gaining awareness of how you think negatively, you can turn away from negative, self-defeating thoughts.

Second, is abandoning adversarial metaphors of trading, such as fighting a battle. Rather than hostile imagery, you should see the trading arena as a serene environment.

Third, it is necessary to remove your ego from the process of trading. "You need to stop focusing on your image and surrender to the Tao or the path before you." - Dr. Kiev

Fourth, and most important, make an effort to practice some form of meditative exercise to learn to cultivate the proper centered state. These exercises can be formal meditation or alternative methods, such as praying, reading a story, humming, or using dance or physical exercise.

With practice, you can learn to move away from allowing automatic negative, emotional thoughts from taking over. You'll be able to focus on your ongoing trading experience and trade more profitably.

***********

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* Sept 24 -28, 2009 - "The NO B.S Trading Event Of the Year!" Click here for more information and to register.

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: +61 439 421 219
USA: +1 650 320 1714

The Calm Before The Storm

2009-09-15T10:13:00.003+10:00

Jack didn't sleep soundly, tossing and turning all night. He dreads facing the trading day ahead. He is half asleep, and cannot stop worrying about his positions. "What will the markets do today? How will traders react to the rate hikes? I can't lose any more money." Before Jack even woke up, he was at a disadvantage. He was already frustrated before making his first trade. When trading the markets, it's easy to feel overwhelmed by it all, but on the other hand, it's essential to trade with the proper calm, logical mindset. You cannot be on edge and ready to act impulsively. Instead, you must calmly and rationally evaluate your options and make a firm decision. How can you calm down? One possible way is to briefly enter a meditative state of mind, and take a break before having to face the storm of chaotic market events.

When you are frustrated, your thoughts are racing. Frustration usually has an important, adaptive function: it sets your body in motion to lash out physically when in physical danger. It is part of the fight-or-flee response. It may be useful to react to physical danger impulsively, but it is not helpful when trying to calmly and rationally trade the markets. When you feel anger, anxiety, or frustration, it is necessary to calm down. When you are agitated, you are likely to react impulsively in response to even a minor setback. Not getting a proper fill or a sudden selling spree might set you off. You may do something that you will regret later.

Calming your mind down before the trading day can help. Some people prefer exercise to release pent up energy, but others may prefer a form of meditation. There are many ways to meditate, but here is a way that may work for you. Find a quiet place to lie down. Next, concentrate on your breathing. As you breathe, think soothing thoughts. "Calm down. It will be all right today. I'll just try my best and accept what I can do." Allow yourself to be human. You don't need to be perfect and if you remind yourself of this fact, you will calm down. Some people prefer quiet music while trying to calm down. Others prefer complete silence. But the main goal is to concentrate on calming down, and to do whatever works best for you. Soon, your thoughts will start to become peaceful. For a moment, you will relax and your thoughts will slow down.

Don't be disappointed if your feelings of relaxation are only temporary. When you are extremely worried about the markets, you may find that your thoughts can be easily shifted from soothing thoughts to worries about the markets. This is natural. The point of the meditative exercise is not to completely eliminate worries and frustrations, but to find temporary relief from the stresses and strains that may consume you at the start of the trading day. By taking a break, you will feel rested. The brief rest will help you build up the emotional and mental energy you need to tackle upcoming challenges with grace.

The markets can be frustrating to trade. The markets go their own way and may not live up to your expectations. It can be frustrating, but rather than let it get to you, it's vital to take time out before the trading day to calm down, meditate, and relax.

***********

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September Events and Workshops:

* Sept 20 -24, 2009 - "The NO B.S Trading Event Of the Year!" Click here for more information and to register.

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: +61 439 421 219
USA: +1 650 320 1714

Do You Have the Guts? A Reality Of Trading

2009-09-08T18:33:00.006+10:00

Short-term winning traders have guts. They have to. No one has a crystal ball. You can guess what the markets will do, but you can never know what will happen with complete certainty. Only the traders who risk enough money, and make enough winning trades can hope to achieve glory. And living under these conditions takes guts.

Trading can be about 99% market psychology. Do fundamentals play a role? Sure they do, but mass psychology can play a bigger role at times. Consider a current news headline: Ford Motor Company recently announced a third quarter net loss of $129 million or 6 cents per share. What can you do with this information? It's hard to know. On the one hand, you might anticipate the stock price to fall as car sales continue to decline and pension costs plague an already vulnerable company. On the other hand, the stock price may be at a bottom, and ready to rise at the slightest news of prosperity. For example, when Ford confirmed that it had brought in an outside mergers and acquisitions expert from Goldman Sachs to review possible strategic alliances or asset sales, the reaction of the masses increased the stock price. But in the end, no one (besides insiders) will know for sure what will happen in the next few weeks or months. In the final analysis, you must have guts to base a trade on your personal analysis of Ford Motor Company, right or wrong.

What can a trader do? You have to take a risk and think optimistically. Rather than mull over how much money you may lose on a trade, it's useful to put the trade in perspective. It's merely one trade among many. Think of the bigger picture. You may lose on a single trade, but across a series of trades you will come out ahead overall. By risking only a small percentage of your capital on a single trade, you can allow yourself to feel at ease, and calmly assess where any given trade is going. You can nonchalantly close the trade when it isn't going well, or let it ride when it is winning. Successful traders plan on executing many trades and know that not all trades need to be winners in order to increase the equity in their accounts. It's your success overall that counts. Keeping this in mind takes some of the pressure off, and allows you to go from trade to trade in order to allow the law of averages to work in your favor.

Although thoughtful and astute analysis of a company and its stock performance is vital, trading can also be a matter of chance. It may be impossible to anticipate the outcome of any single trade. However, with a large enough number of trades and a trading approach that has a high chance of producing wins, you can expect to come out ahead if you make enough trades.

Although trading involves chance and risk taking, you should not draw the conclusion that winning traders are reckless. They aren't. They approach trading systematically. They develop clearly defined trading plans and they trade them. They wait for market conditions that increase their odds of success. But most of all, they have a positive attitude. They know that if they do their homework and make enough trades, they will take home a profit. There are no guarantees, but if you work hard, and have the guts to take a risk, you will experience the glory of trading like a winner.

***********

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September Events and Workshops:

* Free Webinar - Sept 13, 2009 - "Is it possible to make 900% from trading?"
Click here for more information and to register.

* Sept 20 -24, 2009 - "The NO B.S Trading Event Of the Year!" Click here for more information and to register.

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: +61 439 421 219
USA: +1 650 320 1714

How To Get Back In The Right Course

2009-09-01T05:03:00.003+10:00

Have you ever found yourself frustrated or angry, but didn't know why? Perhaps you were innocently monitoring a position and the market suddenly turned, and when it did, you watched half of your potential profit evaporate. You would have thought a commonplace event such as this would be taken in stride, but it was not. For some reason, you felt threatened, upset, and scared. It was as if a centrifuge of emotions took over, and there was no warning. It just overtook you. You didn't expect it. You were not sure why you were so incredibly upset, but all you knew was that you lost concentration and could no longer focus on following your trading plan. You couldn't think clearly. You were in a daze. Once you lose control, it's hard to regain your concentration and focus, but unless you do, you can't trade profitably.

Why do we over-react at the wrong time? Our expectations often control our emotions. When our expectations don't match what actually happens in the markets, we react emotionally and impulsively. We have a natural human desire to win, but the markets don't always cooperate with us. When we are caught off guard, our knee jerk reaction is to think that the markets have treated us unfairly. We start thinking that things should go our way, and when they don't, we get angry. But trading is a profession where you should work under the assumption that things are not always going to go your way.

Trading events may not go your way, but you don't need to let this fact of trading overwhelm you. If you are caught off-guard, a losing trade or unexpected setback will disappoint you. If you anticipate such events, however, you'll stay calmer and more relaxed, ready to take decisive action to remedy the situation.

It's vital to anticipate adverse events rather than react impulsively and emotionally. Don't expect everything to go your way. If you believe that such adverse events should never happen, you will react with frustration and anger. And if you are too angry and frustrated, you will not be able to act decisively. You will not be able to respond quickly to potential problems. Rather than get angry, frustrated, and become distracted, you need to think calmly about how to take evasive action to protect yourself. If you anticipate the problem, you will calmly think of an alternative plan, and put it into practice.

When trading the markets, setbacks and adverse events are the rule, and without the proper mindset, such setbacks can be paralyzing. As a trader, it's vital to have the right mindset. If you realistically anticipate setbacks and adverse events, you won't be caught off guard psychologically. Instead, you'll be able to bounce back quickly, make new profitable trades, and come out ahead in the long run.

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How To Get Back Up After Being Knocked Down

2009-08-25T07:23:00.003+10:00

It's not the number of times you fail that matters. It is all about getting back up after you've been knocked down. Ask any successful person and you'll find that he or she has experienced a mountain of failure. Trading is a challenging profession. Few make it, and of those that do, many eventually blow out their accounts and give up the profession. What's the difference between the successful, winning trader and the disillusioned would be trader who gives up: It's all about expectations, persistence, and a realistic, yet optimistic, attitude.

Positive thinking alone isn't going to make you a winning trader. You can believe that you are destined to be one of the next "Market Wizards," but if you aren't ready to accurately assess your skill level, and put in a heroic effort to develop the skills you need to master the markets, looking at the markets through rose colored glasses won't get you very far. The kind of optimism you need to succeed as a trader is a combination of enthusiasm and a willingness to do hard work. It's similar to the work of an athlete. An opponent might beat you, but you don't leave the field in despair if you want to be a winner. You stand up, try again, and over time, you hone your skills in a variety of contexts until you feel naturally confident that you can handle almost anything. Each setback represents a new challenge, a learning experience that will bring you closer to your goals.

From a psychological viewpoint, there is a lot you can do to help motivate you to continue.

First, you can keep your eye on the big picture. Don't worry about the minor setbacks that you experience today, this week, or this month. Remind yourself that if you continue to practice and hone your trading skills, you will eventually develop the skills you need to master the markets. Every trade you make, successful or not, takes you closer to your goal. You will see a new market condition, or you may learn how you mentally handle a specific challenge. These experiences teach you, and bring you closer and closer to mastery.

Second, never stay down for very long. If the markets beat you down, stand back up and try again. Persistence and hard work is the only path to success. The difference between those who win and those who sit on the sidelines is an unrelenting ability to face their demons, overcome them, and try and try again until they make it.

Babe Ruth struck out many times in his career, but overall, we remember his winning averages. Winning traders also make many losing trades, but all that matters in the end is how many winning trades that are made and how much money one makes on those trades. You will never find out if you can master the markets if you don't make enough trades. Don't sit in the corner and mull over your failures. Take them in stride, move forward, and make the profits you've dreamed of taking home.

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If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: +61 439 421 219
USA: +1 650 320 1714

What If You Were Stranded In An Island?

2009-08-18T03:24:00.004+10:00

If you were lost and alone on a desert island, with only a satellite connection to monitor market action and place your trades, you would probably trade more profitably. What about the emotional support from colleagues? What about the feel of the markets provided by the media? What about friends to show off to when you win? In the end, most people would be better off if they were alone on a desert island. Why? As much as humans are social beings, other people usually get in the way. When we are trying to trade "in the zone" with a calm and focused mindset, social issues often distract us: caring what others think, listening to the opinion of others, trying to make a good impression, comparing ourselves to others. If you could trade on your own terms and at your own pace, you would trade at the top of your game.

Social processes are powerful, more powerful than we care to admit. If you ever traded in a room full of traders, you know what I mean. If a young trader is on a good run, making a bunch of winning trades, and you are in a slump, you feel as if you should be doing better. You start thinking, "This is a little embarrassing. I better step up my efforts, and try to make more winning trades." Suddenly, you may start trading impulsively. You may start putting a little pressure on yourself so you won't be so far behind. Social pressure can be strong at times, and compel you to trade impulsively. Think about what is happening, however. You are taking unnecessary risks, and for what? To make a few winning trades, and when you do, temporarily think you are "just as good" as the guy on the roll? Is it worth it? It isn't. You may end up losing money and feeling worse. If you looked at matters logically, you would think, "Who cares what anyone else is doing but me. I'm going to go my own way. I'm going to methodically and carefully follow my method, the method that I know earns profits." But the social and psychological processes that make us want to compete and make a good impression often defy logic. We succumb to our psychological, social needs and end up less profitable in the end.

It's essential to go your own way when you trade. Don't look toward others for advice. Don’t worry what other people think. Don't try to impress others. It's harder than it looks, but if you acknowledge the power of these issues and prepare for how they might impact you, you can beat them. Get ready to put up a defense. Repeat over and over, "I'm not going to care what anyone else is doing or worry about what anyone thinks. I am going to think independently and do things my way, no matter what. It's only about me and no one else." You might pretend you are alone on a desert island. Imagine you are by yourself, alone, and loving it. If you can devote all your psychological resources to your immediate experience, you will enter the zone. Don't be distracted by other people. Just do things your own way, and in the long run, you'll trade like a master.

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If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: +61 439 421 219
USA: +1 650 320 1714

How To Get Back In The Zone

2009-08-11T05:25:00.003+10:00

Trading can be especially enjoyable when you are trading at your peak. There are times when everything just seems to click as you move effortlessly with the ebb and flow of the market. There are various names for this optimal state of mind, such as "trading in the zone" or "flowing with the markets." But whatever you call it, traders in this ideal mental state almost completely lose themselves in what they are doing. They are focused only on the ongoing process of the moment. They are not self-conscious, concerned with how well they are doing or worried about doing poorly. Their complete attention is focused on trading. Unfortunately, we are not always in this optimal state of mind. We get thrown off our game. We experience setbacks, and when we face disappointments, we lose our mental edge. When we are out of sync with the markets, it's useful to get back in the zone. The best way to regain your mental edge is to look at your assumptions about trading. Many times, we put too much pressure on ourselves, expecting miracles when we are merely humans.

It is all right to be naïve. Many times we believe we must have perfect knowledge and know exactly what will happen next. But few people have such a wealth of experience with the markets that they can anticipate every possible market move or adverse event. Always remember that you are human. You cannot know everything, and that is all right.

And because you are human, it is vital to remember that you are not perfect. It's useful to approach trading with the mindset, "I can make occasional mistakes. It's understandable." It's impossible as a trader to be thoroughly competent, adequate, and achieving all the time. Certainly, you should develop an extremely detailed trading plan and try to account for all adverse events that may go against your plan, but there are limits to what you can do. Your trading idea may just not pan out, and there's little you can do about it besides taking proactive steps, such as managing risk and having clearly defined exit strategies to protect your long term financial interests. Holding yourself up to unrealistic standards is just going to make you feel frustrated, fearful, and unnecessarily uptight. By accepting your limitations, and trying to work around them, you'll feel more at ease, and ready to capitalize on a high probability setup when you come across it.

It's also vital to take losses in stride. You can lose money and allow yourself to not feel like a loser. It's hard to take losses, and when you encounter a string of losers, it's natural to feel shaken and uncertain. But the worst thing you can do is stay on the ground after you have taken a fall. It's useful to get back in the zone. You may decide to scale back and make a few small trades to try to regain your edge. Or you may decide to stand aside and merely study the markets in order to get a feel for how the markets are moving. Whatever you do, however, don't stand still. Keep moving, even if it is just thinking rather than acting. If you can keep your mind moving and trying to solve problems, you will regain your mental edge.

It's easy to get thrown off by setbacks and lose your mental edge, but there is a big difference between feeling permanently beaten and temporarily off your game. If you keep problem solving and try to take active steps to get back into the zone, you will get there, and feel like a winning trader once again.

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Take Time To Recover

2009-08-04T03:24:00.002+10:00

Jack has had a bad day. Nothing seemed to go right. Every decision he made seemed to lead to ruin. He bought at every top and sold at every bottom. At the end of the day, he just couldn't relax. In fact, he couldn't get to sleep that night, and a few days later still felt bothered. If only he could let it go and relax. But letting go of past mistakes and achieving an optimal, relaxed mental state is often more easily said than done.

By its very nature, trading is stressful, and when you make a series of bad mistakes, it all builds up. At that point, it's especially difficult to recover from such a dramatic setback. How do you recover? How do you let yourself off the hook, relax, and move on?

When you've faced a series of trading setbacks, it is natural to feel a little overwhelmed. It's emotionally and financially hard to lose money, and deep down, you know it. Your logical mind tells you that it's much more difficult to make money in the markets than lose it. From a purely mathematical perspective, it's going to take many more winning trades, compared to the number of trades it took to lose the initial stake, just to break even. And when you've just made a series of losses, it's hard to face the amount of work you'll need to do to make it all back. The first question you must ask, however, is what are your options? Do you want to just give up? Of course not. When you are down, it's vital to get back up and fight with determination to overcome the setback. That said, feeling frustrated and beaten actually protects you at first. When you are frustrated, you use up much of your stored psychological energy. You need some time to allow your mind and body to recover. So for a little while at least, frustration allows you to rest. But there comes a point where it does no good to continue to wallow in self-pity. You must start trading again.

One of the solutions to calming down is to write a relaxation script. When we feel frustrated, we are usually thinking with a victim mentality: "Why me? What did I do to deserve this? Why can't things go my way? What can I do? I want to just give up." When you're feeling overwhelmed, you might want to pull out a script to read to counteract your thoughts of feeling like a victim. You might think, "These setbacks are temporary. Right now, all seems hopeless, but once I get a little rest and distance from the event, I'll be ready to pick myself up and face these setbacks with determination." After you get some rest, you'll be ready to work again. And when you're ready, you might try reading another script: "I may be down, but I'm not out. If I work hard enough, I can get back on my feet. I just need to make a plan and work hard." These motivating thoughts will set you on the right track. You'll feel a sense of energy and empowerment.

Picking yourself up after a setback is vital, but we can easily feel beaten after a series of setbacks. Don't despair, though. You may temporarily feel beaten, but if you work hard enough, you'll get back on your feet and return to profitability.

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