Turn Around Your Trading – Part 3

This three-part series has been focused on improving your trading for 2017. My goal in this series of articles is to help you take your trading resolutions and make them stick for the new trading year. Part one was about establishing control in your trading. Part two was about trading process and focusing on the adaptive learning portion of trading process that most traders fail to do.

This third article will present the “focus” of a trading mindset. If you are constantly thinking about a prior loss, how much you are down, that you don’t have time to fill out your trading journal, then you need to learn to shift your focus. You may just see your energy and trading change for the better.

Focus on Opportunities

Behind each obstacle in trading is an opportunity – to grow, to learn and to profit. The difference between successful traders, and those not profiting is the successful individual sees an obstacle in their trading, looks for a way to remedy it, and take advantage of the situation. Continuing to do what you always have done and you will continue to produce the results you have gotten. You need to start by identifying and focusing on the solutions to the obstacles you are experiencing. Take them one at a time.

Focus on ALL aspects of the Game

The most popular aspects of trading are technical analysis and any discussion or blog or trading room that discussed price action of any kind.

Least popular are trading psychology and trade/money management. You need to have a well-rounded game and all three are important to making money consistently in the financial markets.

To be successful at trading, you must do things outside the norm, because most are not successful in this game. Most traders spend their time looking at charts, trading strategies, studies and indicators that will solve all their problems. Most spend less than 10% of their time building up their mental capital and trading mindset which we have written about on many occasions, see the article here.

Perhaps the very reason why you are not trading profitably now, has a direct relationship to where your focus is?  Are you focusing on your mindset, trading psychology and money management? These are essential to making money and failure to focus here is detrimental to your P&L and financial goals.

Focus on Solutions to your trading style

So you have trouble with fear or greed? What is your solution? Don’t have good money management? What is your solution? Having a difficult time sticking to your trading plan or even worst don’t have one at all? What is your solution?

A clear pattern I see among traders who are struggling is that they focus on problems or worst they talk about what is out of their control – the market is rigged, etc. Those who are successful and making money are focused on solutions and are improving each day.  Which camp do you fall into? The point here is that your focus or “zone” that you are in has a direct correlation to your performance. Ask any successful athlete and they will tell you the same thing.

Focus on Trading Process

Do you focus on making money? How many times a day do you look at your P&L? Are you unable to walk away from the terminal while the market is open?  Instead of being overly concerned with money, focus on your trading process and trading well. The second article discusses this in some detail. Following your trading plan, on knowing its strengths and weaknesses and on your mental process.

To become successful at trading – you must focus on the process need to trade well to achieve your goals. Focusing on results first is both a distraction and mistake.

Protect Your Mental Capital

What happens when you make a loss? Do you beat yourself up? Are you focusing on all the things you do wrong? Are you afraid to push the button to make a trade?

These are examples of not protecting your mental capital. This starts with setting realistic goals and when you achieve them being satisfied. Have you ever punched out of a position for a profit and then watched the market continue? Do you beat yourself up for getting out of the trade too soon? Being satisfied with your trading and yourself and accepting your skill level, what you can do and can’t is essential. Is there something to improve? Maybe. Go back to focus on solutions above.

Protecting your mental capital is essential to trading. This includes knowing when there is too much risk to place a trade. This is risk management but it also about managing your mental game. Confidence does not just come from successful results, it comes from you believing you can trade successfully.

Written by:

Stan Nabozny

Stan is a 20 year retail trading veteran, CTA (Commodity Trading Advisor) and Co-Founder of The Art of Chart. His specialties include using futures and options to trade Energies, Precious Metals, Equities, Currencies, Bonds, Softs, Grains and other commodities. Stan believes that Risk Management and Trader Psychology are more important that technical analysis and spends his time teaching and coaching other traders on these topics. Stan uses various trading systems and technical analysis approaches that integrate time and price in his work. See his latest articles here and www.huffingtonpost.com.

25th Jan 2017

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