Please Remove Yourself: The Art of Day Trading in The Zone
Series: Mental Roadblocks of Day Trading
Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment - Buddha
Hopefully, throughout this series, Overcoming the Mental Roadblocks of Trading, you have had the opportunity to address some habits that have held you back from being a great trader. Day trading is like anything that requires great effort and offers great rewards. The farther you go on this path, the more you will find to learn. In this way, this is one of the most exciting and gratifying careers. This week, I wanted to get a little more theoretical than usual. Philosophy is a huge part of how I trade. And having been able to develop other areas of my life through the symbolism in trading, I would feel as though I were cheating my readers to not get a little philosophical for at least one blog. I still hope that it can impart a bit of long-learned experience even if you are not the theoretical bantering type.
The better you get as trader, the more you will battle one of the biggest nemesis’ in trading – yourself. In this sense, the word self is loosely defined as ego – that old friend and foe.
Day trading is one of those special careers that can bring your emotional demons to the table where you must metaphorically break bread with them. One of the biggest demons I see in traders, and still battle with myself (and probably always will) is the ego. Through your career, if you are like most, you will vacillate between two extreme displays of ego. I remember being indecisive, under-confident, afraid to take profit off the table and feeling undeserving of great trades. Conversely, I have battled with feeling too strongly I was right and refusing to accept being wrong, over-confidently putting more capital behind trades than I should have and getting greedy and emotional. If trading does one thing, it erodes the ego over time both softly and painfully until eventually, it plays no part in your trading. Essentially, we must learn to take our self out of the equation.
This, at first, sounds a bit contradictory. After all, trading requires a good amount of self-confidence just to manage your day-to-day decisions. How do we let the ego we stand on fall away?
This delicate balance of ego is one that can only be compared to a zen state of being. In this state of humility, we do not react so much as act. Where, with a Buddha like patience and wisdom, we execute trades and accept their outcome (regardless of the outcome itself) with peace. Many of the best traders spend a good deal of each day in meditation and visualization.
1. Spend your first 30-60 minutes of your trading day meditating/visualizing. By spending this first part of your trading day in a peaceful state of meditation - before the coffee; before the computer goes on; before you start reading the news – you will mentally prepare for a barrage of emotionally challenging decisions.
Note: I am toying with the idea of writing a blog specifically on meditation and visualization but would like to take the temperature of my readers. If you would find a blog like that helpful, let me know and I would be happy to write it.
2. Keep your trading journal consistently and with great discipline. Your trading journal has many purposes, most of which we discussed in the blog entry “Dear Diary…” – The Importance of a Well-Kept Day Trading Journal. But your journal is also a place where you leave the trade. In psychology the purpose of a journal is to vent. In trading, letting go of your trades is a huge part of becoming emotionally undetached of your trading.
3. Pass on the guilt and the champagne. It has always been tempting, after a great day of trading, to give myself a big ole pat of the back and take my wife to a nice dinner. On the other hand, I also have had the urge to wallow in a bad day, long after the trading day is over. The fact is – this is my job. My goal has always been to be great at it but I leave it at the office where is belongs. I am a day trader by profession and have finally mastered the art of divorcing myself from it – on a daily basis.
