A state of mind, we all have them days…. it’s how you deal with them

Last updated June 23rd, 2014

Over the last few years becoming a full-time trader it’s not just been a case of learning about the markets but a road of personal development. In fact I’d argue it’s been about me more than the market! And I can now see why Adam Heathcote went down the route of awareness development – a lot were cynical but it makes perfect sense to me now.

Understanding what is going on, why prices move, whats behind the movements, supporting indicators to enter a trade, knowing when to get out or hold on to ride profits that bit further is all very important and is an absolute must for sure. BUT if you can’t transform that into £££’s then it becomes utterly useless, whats the point?

Now im sure many can relate to sitting and watching a market and having their own set of thoughts on what will happen and lo and behold bang! everything they just thought, as it was logical after all happened! you’re left in a daze, thinking if only I’d placed a trade here and there a couple of times on a fair stake I’d be sitting on a tidy profit now, and you would! but you didn’t.

On the other side of the fence it works just the other way around… ok so X,Y and Z have happened; this tells me its a no brainer situation to enter the market…. and you do, you watch the price go against you 2 ticks, you red up because you was on your max stake for a painful loss and then… bang it goes back past your entry and another 8 ticks – your analysis was good, it was great! but you completely messed up the execution through your own lack of awareness and fears about loosing money. Now you’re staring at the screen dazed again, feeling rather infuriated like you really just missed out! Sounds pretty accurate right?

Don’t worry… this is pretty easily solved, it doesn’t happen over night so often but it’s not a hard one to get your head around – this is what, market reading aside is the key…. it’s what separates a break-even trader from a profitable one, a moderately profitable one to a very profitable one! It’s a state of mind, and that is quite literally it! (once you have the basic market reading skills obviously)

It takes me back to the Thomas Edison quote I really like on the About Me page. Often people don’t know quite how close to success they are, so for god sake don’t give up! Just the other day I had an email from a chap Simon who sound’s as though he’s pretty close to that point where things change, although I could also tell he really didn’t realise how close he was! hopefully I gave him enough of the boost he needed having related to my own experiences to get stuck in and carry on… the point im trying to make is:

It’s how you view things, your beliefs and perceptions on what you’re doing – the confidence that comes from it that, in turn really is the ‘Eureka moment’… it’s not really an edge in the market, a mythical ‘free cash’ button but more a point of where you start to trust your own understanding and behaviour through knowing yourself!! – that is the final piece of puzzle that makes things become, mind-blowing!

I’m fully aware of the tone of this post although it has to be this way a little to get the point over, so I make no apologies… here is an example from my very own trading just the other day:

Race 3 of the day, the 14.30 at Ayr. I lost a huge sum of money in one race, for a couple of stupid reasons (we all do it, even those that do well – even if not everyone documents it publicly). Theirs no way around it, I had a bad race, I made a mistake and to make it worse I didn’t do what I advise after such event. I didn’t take a break I carried on and traded a bit more aggressive on larger stakes than I should have! the end result was the market went against me and due to it not being the best race in the world there wasn’t enough liquidity to get out safely – so there, -£211.70 in one race. Proof that we all do it.

What happens next is the crucial bit, the part that separates the good from the bad. So at this point we are all presented with a few different choices. Which one would you take?

  1. Stop trading for the day completely and freak out, frustrated, angry etc.
  2. Beat yourself up about the loss and how stupid it was while carrying on, possibly making it worse still
  3. Stop for a short break, make a drink maybe and come back with the attitude of ‘this is not a problem’ like it never happened – still having faith in yourself with a positive attitude.

Now its pretty clear what the natural selections may be, but it’s just as obvious which ones going to help us most! And option 3 is exactly what I did. admittedly it wasn’t a great day and had I not had the lost I’d of only made £280 but still I wasn’t bothered as all it would do is not help my mindset – im aware of my own behaviour and the effects it can have, I don’t claim to be invincible obviously! but i whole heartedly believe it’s the difference… it would have been so easy to take option 1 or 2 after all!

 

So in summary it’s not what happens or being super human but its more how you deal with the situation in hand. This applies to everyone even those that haven’t developed the understanding of how the markets function just yet.

All this is great but how do you go about this journey of personal development and self-awareness? Again, it’s easier than you may think – its something I’ve spoken about in the past and am becoming increasingly passionate about again, im not sure yet but I think ill make a series of clips to add to the YouTube channel to explain my thoughts along with some ways to make small changes that bring out the best in us mentally when trading. I’ll do it this way as I would quite literally be typing all day if I tried to explain here.

It may seem a little heavy or some may even think it’s not true, but I guarantee you it is… try it! and if you don’t you’ll be the only one that missed out!

 

8 thoughts on “A state of mind, we all have them days…. it’s how you deal with them

  1. Well fancy me being in the blog! Now I am pushing forward. Had a poor day today but doing just as Caan says, taking a break for a cuppa and some food. Taking responsibilty for my actions and using ‘Trading in the Zone’ Mark Douglas at all times now.

  2. Hello Caan thx for your blog it’s really interesting. I have a couple of questions, (if you want!):
    Do you think that the type of the race (short race with maiden horses) can reduce the ease to close (in loss) a trade?
    You never speak about big bots on the market, i think that there are 2-3 bots with a bank equal or greater than the sum of all others account’s banks. I’m really interested to know the point of view of an experienced trader about that. Will you post something about this argument?
    Thx again!

  3. People hate it when you tell them it’s the mindset angle that will decide if they’re ultimately successful though Cann, they all assume there’s some little tricks we’re hiding from them. Some sort of x does this, y do that strategy. Even if we simply guessed we’d be right 50% of the time it doesn’t take too much skill to tip that 50% in your favour, trouble is people have unrealistic expectations of how much they can take out of the market and react badly when things go wrong and poorly when things go right so they don’t make the the most of their winners and lose too much from their losses. Plus they have no patience to wait til opportunities arise, you see it all the time with youtube videos of people sticking in far too many trades with no real reason why they’re doing it other than wanting to be in the market.

  4. Hi Caan,

    interesting view on responding to a “significant” losing trade, demonstrating great mental discipline. I’ll add my approach, in case you, or any of the blog followers are interested, but before I do I’ll point out a couple things about the way I trade. I only have one strategy which I apply to all races; I get very few trades so a significant loss creates serious longish term damage to my trading bank.

    My preference for dealing with that unwelcome beast known as the significant loss is to stop trading for the day, but I’m seasoned enough and profitable enough not to experience the frustration side of things.

    I use this approach for three reasons :-

    1. Whilst not frustrated my mental balance is impaired, as the losing trade remains imprinted on my mind.

    2. Experience tells me that the “make up” of the market is such that the anomaly which created my loss is likely to still be present in later races.

    3. I try to trade whenever there is racing which means practically every day, so I look on the few hours off as a “holiday”.

    cheers, Alan

  5. You should really consider adding a forum to your blog Caan, it’s a great way of creating traffic and keeping traders in touch . Be good to have one that’s not biased and tied to a software vendor

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