I’ve often talked about the importance of the mental state.  Your mind and brain work to some degree like hardware and software in a computer, without either it would be difficult to impossible for the computer to function…and that’s where the analogy breaks down.  The brain/mind is so much more sophisticated than that.  In fact, suffice-it-to-say that the sheer number of things that the brain/mind can do without direction from the conscious mind is staggering. The brain is the hub for maintaining the viability of a system with trillions of connections, inciting the system to action in protecting against microscopic and gigantic invaders, coordinating the organs, ensuring that the heart is beating and the lungs are breathing. In addition, to maintaining the hardware, the brain also regulates the software, emotion.

Chart

Now, the mindset or the state of the individual, which includes thought, mood, emotion and disposition, come together as the thermostat or regulator that ultimately determines how the system will respond in a given situation.  Let’s consider the guy who is in a trade and has just experienced a small profit; however it is not even remotely close to his target.  That trader might be saying, ‘I haven’t had a profit since Lassie was a pup and I am going to take this profit.’  It is likely that, not pulling in a profit for an extended period would be wreaking havoc on his emotions, causing him to feel inadequate, sad, frustrated, frazzled, confused and fragmented.  Due to the situation that is beginning to descend around him like a cold wet heavy blanket, the corresponding state of mind might be distraught, distracted, irritable, highly anxious and fearful. This state of mind would be unprepared and ill-equipped to go toe-to-toe with his own bad patterns of thinking, feeling and doing.

As a result of the state and not the situation, the trader’s decision making becomes increasingly impaired because their state is greatly compromising the trader’s ability to coherently and critically evaluate the variables.  If the trader’s judgement has been reduced, then the information that comes to him is filtered through a faulty lens and is therefore bad information that will cost the trader a lot, and not just the loss of profit; but as well doing something else that works against the interests of the trade.  So, your state is often the final, and sometimes the only, thing standing between you and keeping your A-Game at the platform.  It is imperative that you become aware of this and begin to create a fail-safe protocol for the trade.

So, you see, there are so many variables and residual situations that can and do leave a trader totally unprepared when they begin to ruminate about long held limiting and irrational beliefs that fly in the face of logic and self-management.  One way to affect change is to train your brain towards greater objectivity, clarity and accuracy in identifying chart and market movements. By deliberately choosing to pay attention and track your progress or lack-thereof through documenting the mechanical and internal aspects of the trade over time, you will become more aware of the minutia of items that affect your state; for example, relationships, work, family, recent stress challenges, illness, accidents, etc.

When you begin to take stock of your physical, mental and emotional environment, you will begin to scan for issues that are flagrantly positioned to be in the way of your trade. You are aiming to work yourself out of this onslaught of negative forces that ease forth from not only your trading environment, but as mentioned in the above, the forces emanating from your core beliefs, biases, faulty values and destructive proclivities. This is a process known as introspection, self-reflection and appreciative inquiry. It is a position that aims to maximize focused attention, being in the now, tracking errant emotions and aligning body, mind and emotions to go in the same direction and for the same goals.

You can’t change what you can’t face and you can’t face what you don’t know! It is so easy for stuff to get out of control and blow up in your face.  It has happed to just about every high achieving trader that I know; so remain steadfast, diligent and vigilant in your process of transforming yourself into a lean, mean, trading machine!  This is what we teach in Mastering the Mental Game online and on-location courses.  Ask you representative for more information; and get my book From Pain to Profit: Secrets of the Peak Performance Trader.

Read the original article here - Your Mental State: Where Trading Power Shows Up or Blows Up

 


Learn to Trade Now

This content is intended to provide educational information only. This information should not be construed as individual or customized legal, tax, financial or investment services. As each individual's situation is unique, a qualified professional should be consulted before making legal, tax, financial and investment decisions. The educational information provided in this article does not comprise any course or a part of any course that may be used as an educational credit for any certification purpose and will not prepare any User to be accredited for any licenses in any industry and will not prepare any User to get a job. Reproduced by permission from OTAcademy.com click here for Terms of Use: https://www.otacademy.com/about/terms

Education feed

Editors’ Picks

EUR/USD hits two-week highs near 1.11 amid trade hopes

EUR/USD is rising toward 1.11, trading at the highest since November 5. Hopes that a US-Sino trade deal may be reached are improving the market mood and weighing on the safe-haven dollar. 

EUR/USD News

GBP/USD reverses and hits fresh lows near 1.2910

The GBP/USD pair dropped from the highest level since Monday at 1.2969 to 1.2912, slightly above Asian session lows. The reversal took place amid a stronger US dollar across the board.

GBP/USD News

USD/JPY bounces-off 50-DMA but lacks follow-through

USD/JPY has bounced up from the 50-day MA support of 108.28. China's Vice Premier Liu He is cautiously optimistic about the prospects of the US-China trade deal. Related markets, however, are not buying Liu He's optimism, keeping the recovery in check. 

USD/JPY News

Editors’ Picks

EUR/USD hits two-week highs near 1.11 amid trade hopes

EUR/USD is rising toward 1.11, trading at the highest since November 5. Hopes that a US-Sino trade deal may be reached are improving the market mood and weighing on the safe-haven dollar. 

EUR/USD News

GBP/USD reverses and hits fresh lows near 1.2910

The GBP/USD pair dropped from the highest level since Monday at 1.2969 to 1.2912, slightly above Asian session lows. The reversal took place amid a stronger US dollar across the board.

GBP/USD News

USD/JPY bounces-off 50-DMA but lacks follow-through

USD/JPY has bounced up from the 50-day MA support of 108.28. China's Vice Premier Liu He is cautiously optimistic about the prospects of the US-China trade deal. Related markets, however, are not buying Liu He's optimism, keeping the recovery in check. 

USD/JPY News

Slow-motion Bitcoin battering continues amid interesting Tron chart, Pomp's PayPal comment

Bitcoin plunges below $8,00, dragging cryptos down. Thursday's trading is marked by a sea of red, without a single downward driver, but with an accumulation of downbeat developments. 

Read more

Gold: Remains vulnerable below 100-day SMA

Gold seems to have stalled its recent corrective bounce from three-month lows and witnessed a modest pullback from previous support, now turned resistance near 100-day SMA.

Gold News

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

Strategy

Money Management

Psychology