– Want to trade your best when it counts the most?
Then you have to learn to keep your focus of concentration in the “now” of the performance. All too often, not just newbie day traders but some experienced traders too, like to “time travel” when they compete. They go into the past and focus on a mistake that they just made. “What an idiot! I can't believe I did that!” Or, they jump ahead into the future and worry about the outcome or messing up. “What if I make another mistake? You must be calm as a trader and most definitely not feel as though you are under pressure.
To trade to your potential, you must train yourself to stay in the” now,” focused on what you are doing in the moment. This means that you have to take the game one play at a time, one trade at a time. If you find yourself “time traveling” or leaving the now, then you want to recognize that you've left the “now” and quickly return your focus to the “now.” This one, very simple yet critical mental skill is the heart of mental toughness. If you'd like to consistently raise the level of your game, then you must discipline yourself to stay focused in the “now.”
Thursday, 19 August 2010
Flow for L2ST Traders
In the trading room today I spoke about some questions that we all need to ask ourselves as traders, as taken from the book “The Intuitive Trader – By Rober Koppel”.
In his ground breaking work FLOW (Mihaly Csikszentmihalyi), a psychology professor at the University of Chicago, interviewed thousands of people to discover the characteristics and qualities of the ideal performance
state. He termed this state “FLOW”. It is a unified experience of heightened focus and “flowering” (his term) in the moment where we feel total confidence and control.
Characteristics of Flow:
- Physical Relaxation
- Psychological Calm
- Optimism
- Energised Demeanour
- Active Engagement
- Loving Fun
- Managed Anxiety
- Effortlessness
- Automatic Responses
- Alertness
- Confidence
- In Control
- Focus
As you think about the ideal performance state, see how it relates to your own trading. Ask yourself the following questions:
1. When you trade, do you feel relaxed and loose?
2. Do you feel a sense of inner quiet and calmness?
3. Do you trade anxiety-free?
4. Do you have a high level of energy and feel vibrant?
5. Are you trading in the moment?
6. Are you optimistic?
7. Are you having fun?
8. Is your performance effortless?
9. Is your trading automatic?
10. Are you totally focused?
11. Do you trade with a string feeling of confidence?
And I feel most importantly..... 12. Are you in control.. of yourself?
Please be truthful and honest with yourself, and aim to get a positive answer to each of the above, when you do you will be in the FLOW J
Consistency in Trading is a natural expression of who you are
Traders who are consistently successful are consistent as a natural expression of who they are. They don't have to try to be consistent; they are consistent. This may seem like an abstract distinction, but it is vitally important that you understand the difference. Being consistent is not something you can try to be, because the very act of trying will negate your intent by mentally taking you out of the opportunity flow, making it less likely that you will win and more likely you will lose.
Your very best trades are easy and effortless. You do not have to try to make them easy; they are easy. There is no struggle. You see exactly what you needed to see, and you act on what you see, feel and hear. You are in the moment, a part of the opportunity flow. When you're in the flow, you don't have to try, because everything you know about the market is available to you. Nothing is being blocked or hidden from your awareness, and your actions seem effortless because there's no struggle or resistance.
On the other hand, having to try indicates that there is some degree of resistance or struggle. Otherwise, you would just be doing it and not have to try to be doing it. It also indicates that you're trying to get what you want from the market. While it seems natural to think this way, it's a perspective fraught with difficulties. The best traders stay in the flow because they don't try to get anything from the market; they simply make themselves available so they can take advantage of whatever the market is offering at any given moment. There's a huge difference between the two perspectives.
Your very best trades are easy and effortless. You do not have to try to make them easy; they are easy. There is no struggle. You see exactly what you needed to see, and you act on what you see, feel and hear. You are in the moment, a part of the opportunity flow. When you're in the flow, you don't have to try, because everything you know about the market is available to you. Nothing is being blocked or hidden from your awareness, and your actions seem effortless because there's no struggle or resistance.
On the other hand, having to try indicates that there is some degree of resistance or struggle. Otherwise, you would just be doing it and not have to try to be doing it. It also indicates that you're trying to get what you want from the market. While it seems natural to think this way, it's a perspective fraught with difficulties. The best traders stay in the flow because they don't try to get anything from the market; they simply make themselves available so they can take advantage of whatever the market is offering at any given moment. There's a huge difference between the two perspectives.
The Psychology of Risk: Mastering Market Uncertainty
A variety of recent behavioral economic studies have shown that
most people are willing to accept risks in order to avoid losses but
have a built-in tendency to avoid risks when seeking gain. My own
observations after 40 years of psychiatric practice is that it is hard for
most people to summon the nerve to take risks and to live their lives
in the creative realm of possibility where there are no guarantees or
certainties and where you can become only what you are willing to
commit yourself to becoming. Although the willingness to take risks
and manage them is the quintessential activity of trading, traders often
suffer the same lack of courage.
Most traders are willing to accept risk in order to avoid a loss
(e.g., holding on to losing positions) and are more cautious when
dealing with potential gains (e.g., reluctant to add to winning positions).
In other words, a trader would be more willing to take a
greater risk in an effort not to lose $500 than he would to gain $500.
Given this propensity, you might understand why a trader would stay
in a losing position in hopes that the tide will turn. Known as
Weber’s Law, this and many other principles of human behavior
highlight the importance of understanding the psychological underpinnings
of risk taking.
Put another way, many people prefer to make decisions related to
a certain gain (as in holding on to losing positions) over decisions that
might lead to something better but have the element of a gamble (as
in getting bigger or adding to winning positions). Whereas most of us
tend to avoid the adrenaline-producing rush of risk taking, as a trader
you cannot avoid it. The very essence of trading involves risk taking,
and how you manage your risk is what defines the line between success
and failure.
In an effort to contain our fears, we establish certain perspectives
early in life that stabilize the world for us but that eventually constrain
us and distort our view of reality. As a result, most of us don’t create
our lives independently of the life principles developed in the past. As
shown throughout this book, the same holds for traders—many of
whom must learn to function independently of their own constraining
influences in order to survive and to succeed in the face of the
unpredictable and random swings of the marketplace.
Taking risks, from my point of view, means being willing to create
a vision from which to trade to increase your capacity to interact
with reality without being limited by your fears or your past perspectives.
This means looking at reality without the constraints of
prior rationalizations or self-justifications. When you view reality this
way, you begin to tap the hidden potential that enables you to become
more fully engaged in your life.
In the trading arena, being fully engaged means making realistic
assessments of the market and being willing to face the truth about
your positions (your gains as well as your losses) without being caught
in the throes of rationalization and denial that are so readily triggered
by events.
You must get this book it had an amazing effect on my trading career, and really helped me embrace Risk with ease, and therefore take High Probability trades with ease and without hesitation, You can get it here at Amazon:
The Psychology of Risk: Mastering Market Uncertainty
most people are willing to accept risks in order to avoid losses but
have a built-in tendency to avoid risks when seeking gain. My own
observations after 40 years of psychiatric practice is that it is hard for
most people to summon the nerve to take risks and to live their lives
in the creative realm of possibility where there are no guarantees or
certainties and where you can become only what you are willing to
commit yourself to becoming. Although the willingness to take risks
and manage them is the quintessential activity of trading, traders often
suffer the same lack of courage.
Most traders are willing to accept risk in order to avoid a loss
(e.g., holding on to losing positions) and are more cautious when
dealing with potential gains (e.g., reluctant to add to winning positions).
In other words, a trader would be more willing to take a
greater risk in an effort not to lose $500 than he would to gain $500.
Given this propensity, you might understand why a trader would stay
in a losing position in hopes that the tide will turn. Known as
Weber’s Law, this and many other principles of human behavior
highlight the importance of understanding the psychological underpinnings
of risk taking.
Put another way, many people prefer to make decisions related to
a certain gain (as in holding on to losing positions) over decisions that
might lead to something better but have the element of a gamble (as
in getting bigger or adding to winning positions). Whereas most of us
tend to avoid the adrenaline-producing rush of risk taking, as a trader
you cannot avoid it. The very essence of trading involves risk taking,
and how you manage your risk is what defines the line between success
and failure.
In an effort to contain our fears, we establish certain perspectives
early in life that stabilize the world for us but that eventually constrain
us and distort our view of reality. As a result, most of us don’t create
our lives independently of the life principles developed in the past. As
shown throughout this book, the same holds for traders—many of
whom must learn to function independently of their own constraining
influences in order to survive and to succeed in the face of the
unpredictable and random swings of the marketplace.
Taking risks, from my point of view, means being willing to create
a vision from which to trade to increase your capacity to interact
with reality without being limited by your fears or your past perspectives.
This means looking at reality without the constraints of
prior rationalizations or self-justifications. When you view reality this
way, you begin to tap the hidden potential that enables you to become
more fully engaged in your life.
In the trading arena, being fully engaged means making realistic
assessments of the market and being willing to face the truth about
your positions (your gains as well as your losses) without being caught
in the throes of rationalization and denial that are so readily triggered
by events.
You must get this book it had an amazing effect on my trading career, and really helped me embrace Risk with ease, and therefore take High Probability trades with ease and without hesitation, You can get it here at Amazon:
The Psychology of Risk: Mastering Market Uncertainty
What is the expected Market Partcipants Behaviour?
The key to L2ST's profitable Trading Approach is to:
- Stay Adaptive and
- Understand the EXPECTED Market Participants Behaviours by identifying Price Value Relationships Intra-Day.
If you think of the Market as an auction its is really quite simple:
Buyers will look to Buy Below Value
Sellers will look to Sell Above Value
The trick is to identify Value and be aware of where Price is in reference to Value at ALL times!
This is the case most of the time from the Days Value perspective, and we see this day in day out. Market Participants respond to prices above and below The previous day\s value and today's Developing Value. When this is backed up by a High probability Set-ups such as a Volume Break Down Divergence and confirmation off the Market Delta Footprint you just have to go with those trades!
When trading these set-ups it is easy to also define your Risk to Reward before you pull the trigger, by simply using the Previous Days Value area reference levels as pre-defined profit targets, or simply using the Developing Value Areas Levels, such as the Developing Value Area Low and High and the POC (Point Of Control). In the L2ST live Trading Room we have actually found that the VWAP indicator provides us with even more reliable Developing Value Area levels than the the Tradition Market Profile alone. The traditional approach to trading market profile mainly involves using the previous days levels, however with the L2ST Art Of Adaptive Trading Method we use the Developing Value Areas, mostly after the 1st Hour of trade. We have a unique approach to Trading with Market Profile and the Market Delta Software, which is ahead of most of our competition! Learn the new way to trade with Market Profile and Market Delta in our Live Trading Room at http://www.l2st.co.uk/livetrading/livetrading.html
- Stay Adaptive and
- Understand the EXPECTED Market Participants Behaviours by identifying Price Value Relationships Intra-Day.
If you think of the Market as an auction its is really quite simple:
Buyers will look to Buy Below Value
Sellers will look to Sell Above Value
The trick is to identify Value and be aware of where Price is in reference to Value at ALL times!
This is the case most of the time from the Days Value perspective, and we see this day in day out. Market Participants respond to prices above and below The previous day\s value and today's Developing Value. When this is backed up by a High probability Set-ups such as a Volume Break Down Divergence and confirmation off the Market Delta Footprint you just have to go with those trades!
When trading these set-ups it is easy to also define your Risk to Reward before you pull the trigger, by simply using the Previous Days Value area reference levels as pre-defined profit targets, or simply using the Developing Value Areas Levels, such as the Developing Value Area Low and High and the POC (Point Of Control). In the L2ST live Trading Room we have actually found that the VWAP indicator provides us with even more reliable Developing Value Area levels than the the Tradition Market Profile alone. The traditional approach to trading market profile mainly involves using the previous days levels, however with the L2ST Art Of Adaptive Trading Method we use the Developing Value Areas, mostly after the 1st Hour of trade. We have a unique approach to Trading with Market Profile and the Market Delta Software, which is ahead of most of our competition! Learn the new way to trade with Market Profile and Market Delta in our Live Trading Room at http://www.l2st.co.uk/livetrading/livetrading.html
Sunday, 29 November 2009
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