Skills for Gaining Control
When you're trading with a green light consistantly keep doing what you're doing or think about sizing up or trading more markets. But I'm not writing about that now. Today I want to focus on what to do when you're trading with a yellow light or even worse a red light. When you've lost control or are about to lose control its imparitive to your wealth and mental capital you get back to your green light. The following ideas I've taken from athletes like Michael Jordan, coaches like Phil Jackson, various articles I've read over the years on performing at a high level, and various traders I respect.
1) Recognize when You Aren't in Control
Accross the board this is brought up. Recognizing you aren't in control of yourself and that you're not releaxed and facused is often enough to get you back to where you want to be. Always look for "intersections" in the game where a yellow light could pop up. Most athletes/traders/etc don't spell out what yellow and red lights look like so they often recognize they are out of control after its to late. Complacency kills.
2) Use Your Breath
Taking a breath is a powerful tool for gaining control. Take a good deep breath right now; relax your body as you exhale. Where you tense? That's the first place to look when you have a yellow light while trading. 10 minutes before the market opens it is in my trading plan to take a deep breath, mentally see my self trading well, and go over my markets.
3) Take Some Time
Time is money in trading. So if you can step away with no risk... do it. If you're in a trading slump maybe take a few days off and reevaluate yourself and your trading. The quicker you can get your head back in the game the more time you can be making money.
4) Use a Release
Create a routine to symbolically "release" negative thoughts and feelings. I personally take a deep breath, say the serenity prayer, and stand up. Other times I squeeze a stress ball a few times. After ward I throw the stress ball and all my negative thoughts and feelings in the corner and get back to what I know I'm good at. Another technique I do is that I'll eat a granola bar and when I throw the wrapper away all my negativity goes with it. Its really not important what your symbolic release is but it is really important that you do something.
We're not robots; it's ok to be a little upset when you make a mistake or catch a bad break. Develop a routine to use when you run into a yellow or red light. Develop a physical action that helps you turn negative thoughts into positive ones.
5) Pick a Focal Point
I read a quote on my desk or stare at the corner of our office. You can pick anything but make it something that reminds you of all the work you've put in to get where you are today. When you look there while trading it ought to remind you that you've paid your dues and you're ready to preform. It should remind you to trade one trade at a time and to focus on trading.
6) Carry Yourself to Confidence
You can tell when a trader has lost confidence or control of himself by the way he caries himself. Traders in a dry spell usually shuffle around with their shoulders hunched, head down and chests sunken. Maybe this is where the tern slump came from?
A simple and effective way to regain control is the carry yourself as if you were extremely confident and in control. Thinking confident thoughts makes you feel confident; carrying yourself in a confident way does the same thing.
To understand the power of this idea, try this exercise; slump down in your chain like you're depressed after making a horrible trade. Get your head down, lower your shoulders and breathe very slowly. Read the following:
"You are a loser. I can't believe you screwed up that trade. All you had to do was cut your loss. You can't trade well so why do you even try? Why don't you just quit? Hang it up! You can't do anything right and you never have, so why bother?"
Depressing right? If you got into it all, you probably started believing it.
Now sit up or stand up straight and tall. Take a good, deep breath, lift your chest and hold your head proudly like you are the most confident guy you've ever seen. Act like the most confident trader you know. Think about your best trading day and carry yourself the way you did that day. Remain in that position and read the passage again.
Is there a difference? People often find that words seem to bounce off if they are carrying themselves confidently. The words don't get to them as they did when they were slouched over and depressed.
Experiment with these skills for gaining control so you have something to go to when you start spiraling out of control. There's no guarantee they will get you back to a green light, but they can give you your best change of trading one trade at a time.
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*Special thanks to Option Radar, BMO Capital, MEB Options, LiveVolPro, CBOE, Option Monster, T.O.P. group, and all of the options desks and traders we work with to provide the option flow!
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