Psychological Preparation for Trading (7)
Secret Seven: How to turn mental discipline into the power to profit.
Human emotion can greatly affect one’s performance in any arena. Being able to control one’s emotions is an essential quality of successful traders. Like any skills mental discipline can be trained. In today’s blog we’ll reveal the secret process step by step so that you can walk away with concrete method for self-improvement practice.
Here is an ancient Chinese wise tale with an important lesson for traders: Long ago during an archery contest, an archer was at his best when nothing was at stake. But when he was asked to wager a sack of rice, his performance went down because he was distracted by thoughts of what he might lose. When he was asked to wager an ounce of gold, his performance got even worse in a great degree. Even though he possessed the same skills of archery, his heart and mind became distracted by the fear of losing personal possessions.
We learn from this story that performance can suffer when something valuable is at stake. The greater the risk, the greater the negative impact on performance. This is the spread that separates theoretical performance and operational reality. Based on this phenomenon we have developed a mental training method called the Emotion Transmutation Method to bridge this gap. Here is the method.
The Emotion Transmutation Method
FIRST: Learn the rules with paper trading.
With paper trading, you can learn the correct way of applying the trading rules with greatly reduced market impulses. In the upcoming blogs we’ll introduce some “Trade Setups with AbleTrend” to assist you to make the best use of AbleTrend.
SECOND: Paper trading with double size of your normal bet. Once you’ve learned how to execute the trade based on the principle based rules, increase the emotional stimuli by double sizing the positions. You need to imagine paper trading trades are with real money and “feel” that the double size of the positions is real. You train yourself like athletes develop their skills. You do over and over again to establish the confidence you need in yourself, in the system and methods you apply. Only by then you are ready for step three.
THIRD: Trade the market with real money and imaging that you are still doing paper trading. Now you trade the market with real money and with your normal size, and imagine that you are still doing paper trading as you have been doing well. If you have trained your mind with paper trading well, you’ll be able to do the actual trading with much less distracted by the market impulses and can actually concentrate on carrying out the right trading rules. Thus tremendously improve your trading results.
Because psychology plays a significant role in trading, the Emotion Transmutation Method can help you to “detach” yourself from emotional attachment to money. It can assist you to realize the goal and actually turn your mental discipline into the power to profit. Here is a recent chart with AbleTrend guidance chart which provides principle based rules that can be practically applied in trading.
This sample chart shows us that with the opportunities exist now, a lot of money can be made just trading one lot well. The potential of doing multiple contracts is even great. It will only become scalable when one’s mental discipline is well established. It’s like dribbling skill to basketball athletes, they need to practice the basic skill of dribble again and again till it become automatic response before they can compete in the real game.
Sizing trades larger is not a function of greater conviction in the trade, that Is to say ‘I really believe that crude will trade lower’, but rather conviction in your trading processes, that is to say ‘I really understand my edge, my system and processes will work. I can trade larger size because I’ve been there before and I’ve made allowances for greater exposure’
There are many tricks and best practices to turns a trading system into successful operational reality. That’s why our 30-day trial offer includes one-on-one help & weekly web calls to help you to make the most out of AbleTrend. Ultimately the best way to learn this skill is by picking up the software, trying it out and practicing.
If you’re not already using AbleTrend, use promo code: WTMF10 To get extra 10% off for AbleTrend 7.0 30-day trial.
For addition insights and articles on trading, see our blog: blog.ablesys.com Or watch archived sessions from our introductory and member’s webinar series: Click here to view our youtube page
I welcome your feedback. Did you like today’s message? What other topics would you like to see? Please let me know at gracezh@ablesys.com
With Warm Regards,
Grace Wang
AbleSys Corp.
gracezh@ablesys.com