Home > Beginner education > $Deb Says: Why and how should traders condition the mind?

$Deb Says: Why and how should traders condition the mind?

The best analogy that I can find for this topic can be found in the sports world. Professional athletes do a tremendous amount of physical conditioning and mental conditioning in their training to become and be the best at their game. Traders, much like the professional athlete, must work toward conditioning themselves to become the best trader possible. This post will focus on mental conditioning as opposed to the physical for the obvious reason that much of the trading “game” is mental.

I have found that once I developed a system of mental conditioning for myself that my trading improved exponentially in a very short period of time. The following describes what I do as a trader in my “batting practice” which is intensely focused on my mental conditioning.

I started with the following sentence that I tell myself at the start, middle, and end of each day and anytime in between when I need to hear it. That sentence is:

“I am a professional trader sound and act like one”.

Following that everything that I think, do, and don’t do must stem from and depend on that one statement. By using this statement I am constantly affirming what I believe about myself, what I expect from myself, and what I need to do based on that belief and expectation.

Next, each day and each week I study my trader report and although I look at all components of the report, I focus heavily on the following:

  1. Stocks traded & which stocks I was net profitable in and which stocks I lost money on.
  2. How many trades I traded actively and passively.
  3. Trader performance. Specifically I spend a considerable amount of time following my “BAT” and “W/L” columns.

Notice that P/L is not mentioned. I do not focus on P/L; rather, I look at it daily just to know where I am so that I can put it into my money/risk management plan for the week, day, or moment.

Last, every Sunday I have a meeting with myself for actual “batting practice”. This includes the following.

  1. I analyze at least 2/3 good trades and 2/3 poor trades.
  2. I go through the actual aforementioned trades identified using the tick replay function on the trading platform.
  3. I act as if I were trading it all over again and I use the stop loss parameters that I have so I can identify what would happen if I increased risk or decreased risk. This allows me to see where I would be stopped out, what loss I would take on that particular trade, and how many like it I could take before I reached my daily stop loss. This has helped me to be able to take the risk so that on good trades I can hold on longer and on bad trades I can cut them fast. And, if I do happen to take a big hit, it is not traumatizing rather, I conditioned myself to accept it and move on.
  4. I use the tick replay as well in my planning of future trade scenarios. If you know what happened before in price action then planning for future price action is a natural next step.

This mental conditioning has been essential in my development as a trader and I believe that without it I would not have made the progress that I have made. In short, building mental stamina to intensely analyze yourself and your actions as a trader, practice over and over again, and get your mind to feel comfortable with the risk that one must take to make gains is a must to being a successful, professional trader.

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  1. Qamar S.
    August 30, 2009 at 12:06 pm

    Deb,
    If nothing you are a great student. And I can only imagine of you being a great trader in the near future.

    Recently I got back into the trading game (read practice and learning). In a forced investment I decided to sell this stock after months of studying. I made notes of my trading plan, put the trade on, then watched. This is where the psychological gyrations take place for me: “Should I get out now?” “Should I hold?” “Watch that volume.” and on and on.

    But then I got a hold of myself. I had been reading “A Rich Man’s Secret” along with constantly studying technical analysis. I stopped beating myself up and remembered that I am a trader and making decisions, sticking to your plan, preserving capital, accepting losses, and moving on to the next trade is exactly what you should be doing.

    In the end I made a profit on the trade. Did I do everything I was suppose to do? I’m sure I didn’t. And the stock did continue to rise with out me. But I am mostly happy with myself because I was able to experience myself beginning to really think and act like a professional trader and make profits like one (following a plan). Thanks for your posts.
    Best regards, Qamar

    • August 30, 2009 at 9:27 pm

      Qamar,

      “Psychological gyrations’…..I like that because it is so true. Those can be deadly! I am glad that you stopped the self beatings and grabbed onto those professional trader thoughts…”I am a trader and making decisions, sticking to your plan, preserving capital, accepting losses, and moving on to the next trade is exactly what you should be doing”.
      All that leads to the Green!!

      • Qamar S.
        September 3, 2009 at 5:23 pm

        Deb,
        Thanks for your encouragement.
        Qamar

  2. Mike
    August 30, 2009 at 8:34 pm

    Nice job Deb, I enjoy reading your thoughts.

    • August 30, 2009 at 9:29 pm

      Mike,

      Thanks!! Success is not achieved in isolation:)

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