This guest blog post is written by Chris Capre. He is the CEO & Head Trader for 2ndSkiesForex.com, specializing in Trading Forex Price Action. As a Buddhist, trader & philanthropist, Chris brings a unique perspective to trading, based on 20 years of studying Neuroscience, 45,000 hours behind the charts, 5,000+ live trades & doing over 6,000 hours of meditation. ------------------------------------------------------------------------------------------ THIS ARTICLE IS QUOTED FROM FOREXMAGNATES. THE LINK IS AS FOLLOWS: http://forexmagnates.com/parts-trading-mind-never-train/ After working as a broker on Wall Street for 2 years, at a hedge fund for 1 year, trading my own money for 15 years, as well as training traders for the last 8, I’ve seen one consistent pattern amongst struggling traders. By and large, they spend 90% of their time training with the charts, reading books, watching videos, leaving approximately 10% for their trading mindset. The Thinking-Analytical Brain Regardless of how their currency of time is spent, one variable tends to be constantly present – they are training only one part of their ‘mind’, particularly the ‘thinking/analytical’ part of their brain. While we are doing analysis, looking at the price action context, determining the impulsive and corrective moves, the type of trend and what levels are key, it is this ‘thinking’ brain we are using by and large. This is our ‘conscious mind’, the internal thoughts we are ‘aware’ of, all done inside the neo-cortex (latin for ‘new brain’). Technically, the neo-cortex is the most ‘evolved’ portion of our brain. All of our choices on what to trade, calculating risk, or doing our price action analysis is done via the conscious mind. Most of this type of thinking is done in the PFC, or the ‘Pre-Frontal Cortex’. One would think that using the most ‘evolved’ and ‘analytical’ portion of our brain would be the best weapon for trading. And herein lies the great twist and irony. Only 5% On average, each person has about 60,000 thoughts a day. This translates to about 41 thoughts per second. But of these 60,000 thoughts we have from one waking morning to the next, ~3,000 (or 5%) we are actually ‘conscious’ of. If you think about it, this makes sense in our everyday lives. Who needs to consciously ‘think’ about how to brush your teeth, go to the bathroom, turn on the computer? Most of us don’t, and this is because the neural networks for such actions are ‘subconscious’ and thus automatic, i.e. a ‘skill’. On top of this, the most ‘evolved’ portion of our brain can only think one conscious thought at a time. It can do this really fast, but only one. How Does This Relate to Trading? Tying all this back into our trading reality, if you spend most of your time analyzing price action in the now, reading trading books and watching trading videos, by and large, you are only training one portion of your mind (the conscious mind). The problem with this formula is that it leaves an imbalanced trading mindset. A subconscious mind that is not properly trained, never digging into our unconscious mind and self-image, will leave us vulnerable to a) repeating the same trading mistakes, and b) inconsistent execution (which in turn hurts performance). Both of these mental errors could be due to not properly training our subconscious mind, but they can also be caused by our unconscious mind and self-image. These are the parts of your trading mind you never (or rarely) train. Where Consistency in Execution Comes From There is only one place consistency in execution comes from – the mind. To have consistency in your execution, you’ll need balance and consistency in your mind. By training only with our ‘conscious’ mind, we’ll have an imbalanced trading mindset, and that by itself will not lead to our trading goals. Hence, I’ll end this creative with two questions: 1) How much of your training time do you focus on your trading mindset? 2) From this time you work on your mindset, how much is dedicated towards your subconscious and unconscious mind? - See more at: http://forexmagnates.com/parts-trading-mind-never-train/#sthash.9S2ERGch.dpuf
You can only develop balance and consistency when you have faith (faith in your system), when you understand how to play a probabilities game (you do not focus on the results of individual trades, but rather on trading your system correctly) and when you trade small enough (you are at or below the sleeping point instead of getting greedy). In my opinion there is too much talk on these forums and elsewhere about "controlling" your emotions. Emotions do not require controlling when you are sure you know what you are doing. It boils down to getting a system you really, truly believe in and starting by trading it small, then gradually increasing. It also helps to know what your particular Achilles heel is. Mine was fear: not taking the trades I was supposed to take according to my system because they seemed crazy. I attacked the fear by first trading at my sleeping point, gradually becoming more confident, and increasing my size by a tiny fraction each month. I made a schedule/timetable of how much risk to take each month. I put Yoda on my desktop and bought a Yoda refrigerator magnet. Every day he said to me "Do or do not: there is no try." After some time, it became clear to me that there was almost no correlation between fear and outcomes; if anything, the scariest trades often turned out to be the most profitable. Other people have greed as their Achilles heel. It's probably going to be some form of one of those (fear or greed) for everyone. To fix your problem, you must see it. Once you correct your biggest problem, you will relax and start to see all your little problems, which you can then easily fix. In short, trading so that the emotions are not an impediment requires that one first go through the grind of backtesting and developing sound money management strategies. Fear is easy to control when you know what the worst case scenario is for your system and you know how to dial things up or down to make it manageable. I like mechanical systems. You can program and automate them, but you don't have to. You just have to act like an automaton yourself. Crave excitement? Fine. Use a tiny fraction of your account to experiment or do something crazy--but trade the rest responsibly.
Snake oil, if your so passionate drop your prices or do it for free, I think he may be a good salesman perhaps
I'm not interested in following highly houred people be they meditators, number of "live trades" (WTF?), time in front of charts, or study of neuroscience. It is the proper application of everything that matters====profits! Put performance figures on the byline, then I will read the mental masturbation article.
I'm very agree that a good emotional management will help traders become better. Sometimes we need to make decisions under pressure and although you're sure about what you are doing if you are not trained for this probably you will end up making the worse decision.