The Trader and the Trade

When you think of the market, you probably think of the two main elements: you and the market.

When you think about you, what do you think about? How much money you want to make? If you’re going to have a successful day trading? What strategy to use? What’s the market going to do today?

When I work with traders, I have them start thinking about this a little bit differently. Let’s take a look. The way I see it, the two main elements are the trader and the trade.

The trade is the easy part. This consists of all the familiar elements. Your computer screen, your charts, your strategy, the news, the candlesticks, the indicators, the market direction, the trends, and on and on and on. All pieces that you are probably somewhat familiar with. This is where our attention goes primarily as traders.

My suggestion is to focus some of your attention here and then to start to move your attention onto the state of “the trader.” That’s you!

What do I mean by this? To start to have awareness and curiosity about all the indicators and signals that are actually inside of you rather than just focusing on the chart. Indicators and signals inside you would include things like fear, negative thoughts, anxiety, regrets from previous days of trading losses and negative associations with them, or physical sensations like a pit in your stomach or headache.

When negative behaviors start, such as chasing trades, doubling down, or not taking your stop, this is a prime opportunity to focus within yourself and start to notice and become aware of what’s happening. For those of you who meditate and have done mindfulness training this will make sense. For some of you this will be a new concept. What I’m talking about is a deeper awareness of your physical and emotional state.

The reason that I suggest traders focus here is because the state of your emotions and the way you feel inside your body is actually going to have a large effect on whether you are able to follow through on your trading plan. And, therefore your success.

My recommendation is to put 50% of your awareness into your trading activities and 50% into noticing your own thoughts, feelings and sensations in your body. It may be helpful to keep a journal about what you notice. Awareness is the first step to change.

Next time I’ll talk more specifically about tools to help you find balance between the trader and the trade.

Happy Trading