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Spend at least one part of time focusing on your thoughts and emotional reactions for every three parts of outward focus on data and information. So, if you are watching the monitor for an hour straight, at least 15 minutes of that time should go to quickly accessing your inner world, observing your reactions. If you think this is a lot of time to give to your inner world, then you are underestimating the power this inner world has on your trading decisions. |
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2. Identify and combat all negative thoughts. Begin to notice which negative thoughts tend to arise the most. See if you can trace where they may be coming from and why they come up repeatedly. Are they triggered by certain events? If so, try to identify exactly what events trigger your negative thoughts. Then see if you can imagine another way to interpret the events so that the associated negative thoughts can be made neutral or turned positive. |
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For example, if the S&P futures are way down before the market opens, and this is the trigger for your negative thoughts about how badly the market will be that day, come up with an alternative scenario for the market that allows for neutral or positive thoughts. You can do this by remembering that often the market opens with the futures down and then recovers in the first hour or later in the session. Simply remembering your own previous experience is often enough to neutralize negative thinking. |
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3. Mediate all-or-nothing thinking. Make sure you are not thinking in extremes. Always try and find some gradations, or steps in between the end points of one extreme or the other. |
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For example, instead of telling yourself you must either make $500 in a day or you've failed, see the increments from 0 to 500 and assess what is a realistic amount to try and make. Then evaluate based on your actual average what makes sense to set your goal at. All-or-nothing thinking is not using what I have called the discriminating mind to see the components that fill in the spaces or gaps from one end to the other. When you can't see the gradations yourself, ask someone you trust to help you fill in the mental gaps. The more attached we are to one position, the harder it is to see various alternatives and to seriously entertain them. |
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4. Refuse to allow strong emotion to dictate your course of action. Whether you feel exhilaration or fear, do not allow yourself to make any trade until it has been processed through your critical mind. Get up and walk away from the computer if you are feeling you must make a trade based on strong emotion. Learn that you can tolerate |
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