Category Archives: Mindset and Purpose Guides

I dealt with the following situation…

Yesterday, I had early profits, but it was so early I was still in my 100% trail mode. That initial move was it, nothing else. And so, between the market hitting a top for the day and me getting occupied with the Daily Meeting and two coaching calls, I missed an opportunity to profit. This resulted in a $1000 swing from peak unrealized gains to total loss.

In other words, had I unrealistically taken the early morning profit of $600, I would be $1000 higher in my total equity. I know it is unrealistic to think this way, but I like to get fumed over not having a better plan.

The best I can do is log and journal and see if there was an opportunity to have made a better decision where at some point in the day, I could have left with a break-even trade.

Dealing with the psychological challenges that arise from trading is a critical aspect of becoming a successful trader. The situation I have described—where you had unrealized gains that eventually turned into a loss—is common and can be emotionally taxing. Here’s how you might approach this from a psychological perspective:

Acceptance of Uncertainty:

• Understand that trading is inherently uncertain. Every decision made in the market is based on probabilities, not certainties. You had a plan in place, and even if the outcome was not as expected, it doesn’t mean the decision was wrong at the time.

Journaling:

• Continue to journal these experiences in detail. This will help you identify patterns or areas of improvement and serve as a therapeutic way to process emotions. Over time, you might see that certain scenarios repeat, providing you with data-driven insights on whether a tactical change is needed.

Reframe Your Perspective:

• Instead of viewing it as a missed opportunity, consider it a learning experience. Acknowledging what you learned from the trade turns a negative outcome into a positive lesson.

Avoid “What If” Thinking:

• It’s natural to think about what could have been, but avoiding getting stuck in that mindset is essential. The market will always have ups and downs, and hindsight is 20/20. Remember, there will always be another trading opportunity.

Seek Feedback:

• Discuss your trades with a trusted mentor, coach, or trading group. They might provide a different perspective that you hadn’t considered, and this external viewpoint can be invaluable.

Establish Clear Rules:

• If you find yourself consistently in situations where you’re questioning your hold-or-sell decisions, it might be beneficial to set clearer rules or criteria for when to exit a trade.

Mindfulness and Emotional Regulation:

• Practices like meditation, deep breathing exercises, and even physical activity can help manage the emotional highs and lows of trading. These practices can assist you in staying calm and making decisions based on logic rather than emotion.

Continuous Learning:

• Use this experience to review and possibly refine your trading strategy. Remember, no matter how experienced, every trader will have losing days. What differentiates successful traders is how they learn and adapt from these experiences.

Lastly, give yourself some grace. Trading is challenging, and even the most seasoned traders face similar situations. The key is to keep learning, adapting, and refining your strategy based on successes and failures.

Our true edge is the emphasis on a holistic approach that extends beyond market dynamics into continuous improvement and personal well-being. It aligns with best practices in professional trading. This comprehensive approach creates a strong edge, encompassing the technical aspects of trading and the human elements that can significantly impact decision-making and performance. Let’s explore these facets:

Continuous Improvement Process

• Routine Evaluation: By regularly reviewing and analyzing trading activities, you create a feedback loop that allows for the refinement of strategies and the correction of errors. This iterative process is essential for adapting to changing market conditions and personal growth as a trader.
• Learning and Adaptation: A commitment to ongoing education and the flexibility to incorporate new insights and techniques ensures that your trading strategy remains robust and relevant.

Underlying Values and Principles

• Discipline and Consistency: Strong underlying values prioritizing discipline in adhering to trading plans and consistency in applying risk management principles are crucial. These values support a trading approach that is less susceptible to the whims of market sentiment and more grounded in a reliable methodology.
• Integrity and Honesty: Maintaining integrity in your analysis and honesty about your trading outcomes fosters a culture of trust and reliability within personal trading practices and when working with clients or colleagues.

Physical and Mental Health

• Mental Resilience: Trading can be psychologically taxing, and mental resilience is vital for enduring the inevitable ups and downs. Practices such as mindfulness, stress management, and maintaining a work-life balance* contribute to sustained performance. Really, or is this a delusion hampering true performance? See below.
• Physical Well-being: Good physical health supports mental acuity and emotional stability, essential for trading demands. Regular exercise, adequate rest, and a healthy diet can improve decision-making abilities and endurance.

Trading as a Professional Practice

• Ethical Standards: Upholding high ethical standards ensures that trading activities contribute positively to the integrity of the markets and the trust placed in market practitioners.
• Professional Development: Continuously seeking professional development opportunities, including certifications, mentorship, and networking, enhances your knowledge base and keeps you connected with the broader trading community.

Summary

Incorporating these elements into your trading practice enhances your edge not through market manipulation or prediction but through self-improvement and professional conduct. By focusing on continuous improvement, adhering to strong values, and maintaining physical and mental health, you create a sustainable and ethical framework for success in trading. This holistic approach recognizes that the trader’s most significant edge is derived from within — through personal discipline, ongoing learning, and a balanced lifestyle.

Work-Life balance caveat

Reframing Work-Life Balance Delusion

Here’s an important perspective on pursuing exceptional performance in trading or any high-level professional endeavor that challenges the conventional wisdom of work-life balance. The commitment to standing out and achieving peak performance often requires extraordinary dedication and effort, as championed by Coach Ernie. Let’s approach this from the perspective of uncompromising commitment to excellence:

Unyielding Pursuit of Excellence

• Total Commitment: A total commitment to your craft is necessary to excel and achieve at the highest levels. This means prioritizing trading and related activities above other interests and recognizing that every decision should contribute to your ultimate goals.
• Relentless Work Ethic: A relentless work ethic, as advocated by Coach Ernie, is about pushing through challenges, continuously learning, and constantly striving to be better. It’s not merely working hard; it’s working smart, with a laser focus on activities that yield the highest return on effort.
• Strategic Self-Care: Taking care of your physical and mental health is not about seeking comfort but about maintaining the machine that is you. Adequate rest, nutrition, and exercise are not compromises; they are strategic decisions to ensure you can operate fully.

Reframing “Balance”

• Balance for Performance, Not Comfort: In high performance, balance is not about comfort or relaxation but about doing whatever is necessary to perform at your best. If that means taking time to recharge, it’s because it serves the larger goal, not because it’s a retreat from hard work.
• Sustainable Intensity: Sustainability, in this sense, doesn’t mean moderation; it means finding a level of intensity in your work that you can maintain over the long haul without burning out.

Excellence in Trading

• Precision and Discipline: In trading, this uncompromising attitude translates into precision in your strategies, discipline in risk management, and an unwavering adherence to your trading plan.
• Continuous Improvement: The journey to trading excellence is continuous improvement, never settling for current knowledge or past successes.

Conclusion

The path to standing above the rest is paved with hard work, strategic focus, and an unrelenting drive to be the best. It’s about making every hour count, deliberate decisions, and purposeful action. Ultimately, achieving a standout success requires a mindset that sees beyond conventional notions of balance to a dynamic, performance-driven equilibrium and relentlessly focused on excellence.

The distinction between a ‘need to be right’ attitude and a ‘zenlike,’ no-mind approach to trading is crucial, particularly in the unpredictable environment of 0-DTE trading. Let’s expand on that:

Persistence and Consistency Over Prediction:

• In the realm of trading, especially with such a short time frame, persistence and consistency in applying a tested strategy are far more important than the ability to predict market movements. The market is a complex, adaptive system that is inherently unpredictable on a day-to-day basis.

The ‘No-Mind’ or Zen Attitude:

• A Zen approach to trading focuses on being in the present, responding to the market as it is rather than as one thinks it should be. It requires a calm, disciplined mind that does not react emotionally to market movements but instead adheres to a well thought-out trading plan.

Limitations of Over-Analysis:

• Paralysis by analysis occurs when a trader overthinks or overcomplicates their strategy to be precise. This often leads to missing trading opportunities or failing to act when necessary. In contrast, a Zen attitude values simplicity and the capacity to make decisions in the moment based on clear, predefined criteria.

The Need to Be Right:

• The desire to be right can lead to ego-driven decisions, where the trader’s self-worth becomes entangled with the success of their predictions. This need can skew risk assessment and lead to taking on undue risk to prove one’s intellect rather than making decisions based on sound risk management principles.

Superiority of a Process-Oriented Approach:

• A process-oriented trader, often seen as less ‘smart’ in the conventional sense, does not strive to be right on every trade but to be profitable over time. They understand that some trades will lose, and they accept this without letting it disturb their equilibrium or adherence to their strategy.

Mindfulness and Detachment:

• Practicing mindfulness and emotional detachment allows a trader to view wins and losses objectively, learning from both without becoming complacent or despondent. This balanced mental state is conducive to long-term success in trading.

Resilience Through Routine:

• Establishing a routine that encompasses market analysis, trade execution, and review without the pressure of needing to predict the next market move builds resilience. It fosters a robust trading practice to market whims and personal biases.

Advantage of Emotional Equanimity:

• The trader who approaches the market with emotional equanimity and a focus on executing their strategy with precision, regardless of the desire to be seen as ‘smart,’ often experiences better outcomes. Their ‘nomind’ approach allows for clear-headed action, free from ego distortions.

In summary, a ‘no-mind’ or Zen attitude, characterized by persistence, consistency, and emotional equanimity, is superior to a need-to-be-right or over-analytical mindset. This approach leads to better trading outcomes by fostering a focus on process, risk management, and adaptability to market conditions, essential for successful 0-DTE trading