Using the “Trader Focus” Tool

Where is Your Focus?

As I mentioned last time, it is important to know where your focus is when trading. Are you making decisions on the fly? Is your stomach wrought in knots? Are you “winging it”? Or, do you have a clear, winning plan, that you FOLLOW?

Where Should the Focus Be?

It should be on your trading plan. Just like a robot, or a pilot following his step by step instructions, you want to be following your plan. A plan that is clear, successful, and do-able.

Here is the exercise I created for a client to use while trading. The intention was to gain awareness of his focus. Please try it at home. Here is how it works. . .

Test Your Focus 

Specifically, the exercise involves  awareness of your state of mind while trading. It uses a “spectrum” of thought. . . identifying where you are on the spectrum.  If you imagine a spectrum from 1 to 10, with “one” being that your sole focus is on money  (profit/loss) and the good/bad feelings in the trade. You are reacting to the red/green of the trade.

While a 10 on the spectrum is a sole focus on correctly executing the trading plan. Here, you are focused on following your plan. That is it. So, a well executed plan, would equate to a high number on the scale. Even a trade that resulted in a calculated, limited loss is a GOOD trade, if you followed the plan.

Just as I asked my client to check-in a few times during the day and notice where he was on this spectrum, I’d ask you to try doing the same.

Do not necessarily even try to change your focus. . .just notice where it is. On this spectrum from 1-10, where are you? I believe this is a first step and a powerful exercise you can do to help correct faulty trading.

So, to Recap. . .

Ask yourself several times during the day, “Where is my focus now–in this spectrum from 1 to 10?”

Awareness is the first step. Learning to trade well, and to focus on skill, discipline, and consistency is key to becoming a profitable trader. Not chasing money on each trade.

I hope it helps! Let me know how the exercise works for you. . .And, don’t forget, the offer still stands for your individualized one-on-one coaching session with me.

Wishing You Awareness,

Andrea Wylan

Are You a Trading Junkie?

The Ups and Downs

I was talking with a (trader) client the other day, as we discussed how good he feels in the middle of a winning  trade, with green showing on the platform matrix. And, conversely how bad he feels when a trade goes against him. Can you relate? As he described these good feelings, watching the green grow on the Tradestation matrix (or “ladder”) I was reminded of someone experiencing a sugar or drug high, and then crash from the high, as perhaps a similar experience. I haven’t had the drug experience, but it seemed like a fitting metaphor!

Watching your P&L go up and down, can create those up and down feelings. It can feel out of control, wrought with “hope” and relief, elation, pain, etc. This isn’t a stable feeling experience. It comes and it goes and is based on hope and feelings, rather than on following a plan.

Where is Your Focus?

Yet how many of us trade this way? If you are having good feelings in reaction to a positive P&L or bad feelings toward a negative one, then your focus is not in the most effective place. Where should the focus be? On your trading plan. How well are you executing the plan and what do you need to do to execute correctly? That’s it. That really is all that there is to focus on while trading. (This assumes you have a plan–we’ll talk about that in a later post!)

A second focus perhaps, is how well is your plan performing? Is it effective, profitable, solid, repeatable, etc. But, even those questions are better asked at the end of the trading day, as you review your trades. Not, while in the midst of trading.

As my client and I discussed this question, I realized how core this focus is to successful trading. So, I created an exercise for him to do while he trades, to gain awareness of his focus.

Test Your Focus–Try This at Home!

I’m sharing this exercise with you in my next  blog, “Using the Trader Focus Tool”. Please check it out and let me know how it works for you.

Wishing You Awareness,

Andrea Wylan

Website

LinkedIn Trader Psychology Group

How Important Is Psychology to Your Trading Success?

For traders, it seems there is a continual search for how to trade better, how to find the instruments that will make the trading successful. Some call it the search for the Holy Grail. But, has anyone found it?

The Holy Grail

My conclusion from my own experience and that of other traders, is that the holy grail IS your trader’s mindset. The traders who know this and work on themselves, are the ones with the highest chance of succeeding.

Where is Your Focus?

I find it interesting with local trading groups I run, that the meetings people attend are those that promise a new way to trade. They offer a new setup, an indicator, a chart, or other way to get ahead. On the other hand, the meetings that focus on “trade plans,” “journaling your feelings during trading,” or “understanding your psychology” are slimly attended. I can only guess the reason for this–that it isn’t as easy or enjoyable to focus on yourself!

My message in this blog is simply to consider the impact of your mindset while trading. Be willing to work on you, while you also work on the market aspects. While you review charts for the day, review yourself as well.

How Do You “Review Yourself”?

• Record and review your thoughts and feelings while entering, managing, and exiting your trades.
• The more detail you are aware of, the more clearly you’ll see what is going on in your mind during the trading day.
  (How are your thoughts and feelings affecting your trading?)
• Read the psychology books, participate in classes on the topic, seek out ways to understand your mind and its impact.
• Learn tools like deep breathing and mindfulness training to assist you.

When you realize the importance of your mind, you are able to shift your focus to healing your psychology and growing your mind’s capacity for successful trading. It is a journey. But, just having an awareness of its importance is a great start.

The Pressure to Trade

Do You Need to Trade?

Do you find yourself needing to be in a trade? As long as you are in front of the charts, is it hard to stay out of the market? (I know some of you have a hard time pulling the trigger to get into a trade. I am not talking to you folks here!) But for those of us who have no problem taking a trade, we may have a problem not taking one.

The other day, I came to the computer to look for my trade of the day, the gap fill. There was no gap, so there was no gap fill trade. I told myself, “I won’t be trading for a while, until another really good setup presents itself.” And I didn’t trade. But I had that anxious feeling inside, like I was missing out on something.

Are You AFraid of Missing Out?

By the end of the day, I had taken several trades. Honestly, I didn’t wait for the really good trades—I jumped in too soon. I notice, when I take a trade that isn’t great, it tends to go into the red fairly soon. Then I feel anxious; I can feel it in my stomach. Conversely, when I wait for a good trade, one that follows my rules, often it goes green first and never goes into the red. These trades obviously feel much better. Can you relate? So I ask myself, “Why wouldn’t I wait for the good trades?” After all, they feel better!

Why do we enter trades prematurely? The reasons are different for each of us, and yet similar. I hear from clients of the awkward feeling they have when they’re not in a trade.  This is especially true for newer traders. There is an anxiety one experiences sitting there, waiting, thinking you are “missing out.”  Or, you may have lost money, which also creates anxiety. Then the goal is to win back the lost money, as soon as possible.

What To Do with Anxiety?

If this phenomenon affects you, try to start noticing how you feel in your body during these times. Notice the butterflies or the pit in your stomach, or whatever it is you feel. In times like these, what you do with your anxiety (after a losing trade, for example) represent the decision points that separate the winners from the losers. It is critical to be able to tolerate the uncomfortable feelings that compel you to get revenge–taking trades that aren’t in your plan.

As you learn to trade, you are training yourself to be a robot, to repeat appropriate actions over and over. You learn to plan a setup, wait for it, execute it according to plan, and be prepared for a loss— should that be the outcome. Trading should be boring. . .

So what can you do if you tend to be impulsive? First, make sure you become aware of your feelings trading. Journal about these feelings along with recording your trades. It is helpful to write down your feelings before you take a trade, during a trade, and even when you don’t take a trade. Recording feelings helps you to recognize them.  I know this is not appealing to most traders. But, your feelings can be like a little devil inside you, making you do things you don’t want!

Create Some Structure

Creating structure and accountability can also help. One client has a rule that after every losing or impulsive trade, he does 20 pushups followed by a 5-minute rest away from the market. This is not punishment; it is a tool to disconnect the impulsive sequence and get distance from the market. It helps him to regain clarity. For another client, when he was able to deeply associate compulsive trades with pain, he stopped taking them.

What tool can you create to support yourself in taking only planned trades?

Andrea Wylan

http://awylan.com/

Keeping the Simulator Pristine

How Do You Use the Simulator?

Do you trade on a simulator? If so, what do you use it for?

1. Are you practicing learning a trading platform?
2. Are you perfecting strategies and testing them?
3. Are you going wild to see how much $ you can make in this “safe” environment?

I got to thinking about my use of the simulator these last few weeks. In the past, I have fallen into number 3 above–going wild–on the simulator. I realize now, I was only training myself for failure. Let me tell you why. . .

My Training

When I learned to trade, we were taught to use real money. The simulator was just for learning the platform and maybe testing a strategy. (But, even the platform and strategies were learned using real money.) The message was, just trade really small share sizes until you “get it.”

Now, this same school teaches students to use the simulator first. Thank God. They teach students to simulated their trading for several months through “stage 2” of a 8 stage progression. (Each stage requires having a certain level of competence before moving to the next stage.) This way to start trading make so much more sense to me.  I wish I had learned this method when I was trained.

So, fast forward to now. I am back on the simulator as I progress through stages 1 and 2, on my way to trading live again, when I reach “stage 3″. I have no issue with this. I have lost enough trading live money, that I am happy now to show competence first!

Reflections on Simulating

Now, I am reflecting on using the simulator. Up until recently, I didn’t give it much thought. The simulator for me was more of a game. I suspect that is why we were taught not to use it. Because if you don’t have real money in the game, you don’t take is seriously, right?

Most of us take simulated trades we would never take with live money. It is challenging to trade simulated trades the same way we trade live money. Haven’t you traded thousands or millions of dollars, doubled down, been crazy with your simulator trades, just to see how much money you could make? I sure have. I remember one student in my class making $60k-100k “playing” on the simulator. . . I think it is a mistake.

The simulator is not a game, even as much fun as it can be to play with. I think it should be taken with utter seriousness and only be used as though it is live money. This may seem harsh to some, and like a no-brainer to others. For me, it wasn’t a consideration. I was trading live money even when I was losing money on the simulator. No one taught me differently, and I didn’t figure it out on my own.

From now on, I will make sure to be profitable on the simulator before I trade live. If my live trading starts to go South, I will go back again to the simulator for “training.”

Practice Makes Perfect

I suspect that what we practice on the sim is training us. Period. So, if you practice being carless, it can carry over to your live trades. As much as you can, try to believe it is real money you are trading. Practice until you have profitable days consistently. Train your mind and subconscious not only how to make money, but also to be comfortable making money. It prepares you for the real thing.

The Upper Limit

We all have an “upper limit” tolerance level for “good” in our lives. Beyond this limit, we may not be able to tolerate any more good coming to us. This might sound counterintuitive. “Of course I want more good, more $, etc.” you might say. But that isn’t how the subconscious works. There is a level beyond which we are not used to, or are comfortable with, more good.

When we hit our upper limit, our behavior changes and we “correct” for the situation. Things have become too good and need to be brought back into our comfort range. We sabotage ourselves, almost like a resistance level acts as a ceiling for a stock’s price upward. Price reaches the resistance levels and retreats. . .

How to Expand Your Upper Limit

The good news is your upper limit level can be expanded. That is the goal of practicing, of visualizing (I will do a blog on this soon), of journaling, etc. These tools let you grow your comfort zone. (See the book, The Big Leap, for a great read on the subject of The Upper Limit.)

So, I invite you to practice expanding your upper limit using the simulator.

My client “Bill” had traded successfully for years. However, he “played small.” Although he had been profitable, had winning strategies, and had great self-discipline, he hadn’t let himself trade more than 100-200 shares per trade. If you are in a similar situation, try expanding your comfort zone. Use the simulator first for practice. Let yourself assimilate growth slowly as you expand share size, stop size, how far you let your winners run, or wherever you are playing small.

I advised “Bill” to try trading 300-400 shares in the simulator. To treat it like real money as much as he could. He was to notice discomfort or other feelings or thoughts that came up when trading the larger share size. Pretty soon, he was able to “stretch” his comfort zone with increased share size and try it live.

This is a great use for the simulator. Just make sure you keep it “pristine.” If you goof around using it, and you go for those big wins, your brain gets trained that way.

What is your experience with the simulator?. . . let’s hear your comments.

Wishing you enlightened trading.

Andrea Wylan

http://awylan.com/

Welcome!

Welcome to the Enlightened Traders blog!

I have created this blog to assist you with the “inner game” of trading (the psychology). Through posts, questions, and stories, you can learn about your psychology, mindset, and beliefs affecting your trading.

Enlightenment, a key to trading success

It seems in the trading world of seminars, books, classes, and other educational information, that the main focus is learning about charts, strategies, platforms, systems, and so on. These are all important to master, no doubt. However, you can use the best of the best tools and information, and be a losing trader– if your inner thinking is sabotaging you.

So, in my mind, an enlightened trader is one who is self aware, and has used their awareness to stop sabotaging themself.

Have you struggled long enough?

Trading is one of the hardest professions to get right. If you’ve traded for any length of time, you have probably experienced this. Why is this? I believe it is for no other reason than the subconscious activity that goes on in our head while we trade. If you are not self-aware, chances are you are subconsciously self sabotaging, and your likelihood of success is limited.

The blog will share examples of real traders and experiences, and how they came to see their mental patterns, to be able to change them.  I believe this is the most important aspect of trading.

Help is available!

I hope to lend support to traders in cleaning up your mindset so you can be free to trade your plan and your strategy, with success. Awareness is the first step. Some of you can come to awareness by reading books, journaling, self reflection, talking with a spouse, and so forth. Many of us, however, can greatly benefit from the objective observation of a coach or other support outside ourselves.

That is my role as a trader coach. Specifically, I assist you in:

1. identifying where you are stuck–the unconscious places.
2. gaining a clear vision of what you really want for your trading career.
3. achieving your vision for trading through numerous coaching tools and techniques.

I look forward to sharing stories, ideas, and encouragement, and hope. Feel free to send questions and if you are considering hiring a trading coach, I am happy to talk with you.

Wishing you enlightened trading,

Andrea Wylan

http://awylan.com/