Mind Tools

Discussion in 'Psychology' started by cipher4d, Aug 24, 2008.

  1. cipher4d


    The purpose of this thread is to discuss tools and positive beliefs which help traders experience more peace of mind, confidence and joy when trading. More profits and less losses are the bi-product of a calm and confident state of mind.


    In my opinion, there is no gap between the traders mind and their method or system. Your beliefs determine your method. For example, if a trader believes that you should never "catch a falling knife" they will not perceive buy opportunities where price is falling quickly and then their method will not include capitulation plays. Your beliefs determine where you perceive opportunities and ultimately how you create your methodology or system. Another example is if you believe, "the markets are a difficult beast to understand" you will have a difficult time understanding the market you are trading. Your beliefs determine the spectrum of opportunities you will perceive.

    A very helpful question an individual can ask him/herself is: What would I have to believe to be experiencing this? This question can illuminate your current beliefs as well as help you imagine a belief system that allows you to experience the reality you prefer.

    If it isn't clear at this point, I will explicitly state that your reality is a 100% reflection of your beliefs. Of course this itself is a belief which you may find empowering or not helpful at all.


    One other topic I want to discuss is emotions or state of mind. Some traders have the experience of making consistent profits in paper trading and then experiencing consistent losses when switching to live trading. I have heard people say, "Well of course I made money on that trade, I took it in sim." This experience might lead some traders to think their methodology or system is flawed which might be true, but often times it is their beliefs that cause these losses.

    A trader might experience the emotion of fear when entering a trade and this fear could result in many behaviors that don't follow the original methodology or system the trader outlined. Emotions act as a mirror to help you illuminate beliefs that are causing that reaction. A situation will occur (entering a trade) and you will feel a certain way (emotion) and this feeling will cause a behavior which you will define as positive or negative.

    The linear pattern of this experience goes as follows:
    Beliefs > Emotions > Actions/Behavior

    Again the helpful question in this situation would be, "What would I have to believe to be experiencing this emotion?" There might be many answers as the trader might have many beliefs which support that emotion resulting in that behavior.

    Believing is Seeing

    The few successful traders I have talked to all seem to have beliefs that support their experience of making a lot of money. Of course this leads many individuals to reason, "Well of course they have those beliefs, they are experiencing awesome profits all the time, I would think the same way if I was making that money!" Well I would suggest that their money making is a result of their beliefs and not the other way around. Simply put, believing is seeing.

    If you imagine yourself as a successful trader, what would you believe? What would you be thinking about? Successful people know they are successful, not because they have a history of being successful (although that might help some) but because they choose to believe in a version of themselves that is naturally and effortlessly successful. A successful trader has no doubt because doubt is believing in the negative. If you doubt you are putting your trust in negativity and your reality will reflect it.

    Negative Experience

    Most traders encounter situations in their trading career that they would define as a positive or negative experience. A trader might take a loss and define that as negative or they might blow up their account and consider that extremely negative. In these situations there is the opportunity to define your losses or "negative" situation as neutral or positive. To some this may sound absurd, but one way to look at this is that your reality reflected back to you your beliefs and this is positive. To paraphrase an NLP saying, "There is no such thing as failure, there is only feedback." Everything is feedback and with the right questions and tools, can be used in a positive way. This means that every experience has a positive use, you simply have to acknowledge that the positive aspect might exist to experience it.

    All of these ideas are simply suggestions which I believe to be empowering and most of them are not new. I am not saying I am right. If these ideas don't work for you then find something that fits you better. Hopefully this perspective can help people in some way and they will feel motivated to discuss their ideas and experiences.

  2. vikana

    vikana Moderator

    Here's a technique that worked well for me when i started out. I noted that I trade worse when I was stressed out or anxious (typically due to one or more losing trades). I started monitoring my pulse and chose not to enter new trades if my pulse was above 75-80. Just monitoring my pulse gave me lots of info on what I was (subconsciously) comfortable with, and what I wasn't.

    A little practical technique that most definitely helped me.
  3. Brett Steenbarger used a temperature reading on his forehead
    to give him a ( NO PUN ) heads up as to his anxiety level
    when he traded

    If it works do it !!
  4. sho-tim


    I agree with just about everything you said, except about the simulation trades. Way back when I used a simulator, 99-2000, it was easy to make lots of money on the simulators because of the executions they gave you, then when you traded live, you were left wondering what happened. Couldn't get the same executions.
  5. RAY


    I believe that you are representing yourself as a "Wizard," but you are not there yet.

    What would someone have to believe in order for that/this to be true?
  6. Great thread, Cipher.


    What do you use to measure your hear rate as you trade? Is there anything that you can plug in the computer and have a graphic of your heart rate (for comparison purposes, with say your P/L).


    Yes, I asked Dr. Steenbarger about that, but he got the device custom-made by an engineer. Any ideas on a workaround?

    Best trading to all,

  7. vikana

    vikana Moderator

    For pulse, i used one of the wrist band blood pressure/heart rate monitors you can get at any drug store or Amazon.

    I've recently switched to http://www.heartmath.com/. That's what I use now.
  8. Hi Vikana,

    Thank you for the input.

    Best trading,

  9. zdreg


    The purpose of this thread is to discuss tools and positive beliefs which help traders experience more peace of mind, confidence and joy when trading. More profits and less losses are the bi-product of a calm and confident state of mind. More profits and less losses are the bi-product of a calm and confident state of mind."

    by cipher 4d


    another thread is needed for those who believe that a nearly opposite state of mind brings more profits.
  10. I always remember that when it comes to the battle within

    There is no spoon.

    (really, I do say that :cool: )
    #10     Sep 2, 2008