Learn How to Train Your Trading Mindset, Instinct, and Reaction

September 17, 2017 05:00

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Dear traders,

Many traders believe that trading psychology, mind, and mindset are aspects we need to manage or cope with rather than train.

I believe that the opposite is true – training is much more valuable than coping because it allows us to improve rather than accept the status quo.

This article will explain why training your mind is important as well as share tips and tricks on how you can improve almost instantly!

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Training Emotions

It's not surprising that analysis and trading cause emotional waves because money and ego are on the line, being tested. Hope, regret, fear, and greed all play their nasty parts.

I'm sure that you recognise the emotional ups and downs… It feels like a wild roller coaster ride where you feel annoyed, relieved, and fearful all at the same time within a matter of minutes.

How to deal with emotions?

In my view, there are two solutions:

  • Build up experience by testing, learning from our webinars and analysis or from your winning and losing trade setups, etc.
  • Train your emotions by refining your responses to market movements and price action.

Training your emotional responses is better than ignoring, managing, or hiding them. Why?

  1. Hiding your emotions doesn't work because emotions are a natural part of being human.
  2. Ignoring or managing them is the same because you will keep the status quo, meaning the same emotional responses could surface anytime.

Training is all about improvement. I don't believe that trading psychology is a fixed, unchangeable aspect. I think that all of us learn on a daily basis and have the ability to change (watch the video below).

Refining our responses to the market as well as your analysis and your trading leads to gradual and positive changes. Here's how:

  1. By focusing attentively to each situation;
  2. By drawing the best lessons from them.

How to Improve Instinct and Reactions

Traders gain the best mileage by looking at the charts. Screening time is a key part of learning and sharpening our ability to react.

I'd like to emphasise that there needs to be a loop of proactive feedback as well. Staring at the screen and hoping that the price will go down helps little to none with building experience.

Here is the process to follow:

  1. Analyse Forex, CFDs, commodities, indices, or crypto pairs of your choice.
  2. Set up a trading plan based on the analysis.
  3. Manage real trades, or demo trades as if they were real.
  4. Review your trades, decisions, and responses, but also be aware of what you were thinking about during the process.

With focused and dedicated practice, we can refine our instincts, step-by-step. This can be best done by building a routine that re-enforces positive habits and works on changing less positive patterns.

What is the ultimate benefit?

Eventually, we will be able to handle more information quicker and with less conscious attention than before. We have trained our instinct to work for us, at least partly.

All traders use their instincts or bias when trading, but it needs to be based on experience, not fear. It is futile to remove bias, but we can improve that instinct by improving our analysis of the market structure and trading skills.

How to Keep Inner Calm and Positive Mindset

The next step is to analyse and trade the Forex and financial markets with more inner peace and a positive mindset.

Inner peace, or calm, allows us to recognise when our own thoughts are derailing our trading plan. It's hard to imagine that our own mind and self-talk might be sabotaging our analysis and trading plan, but unfortunately, it's true.

A calm state of mind allows traders to recognise thoughts that are damaging to our trading, rather than productive. You will also feel more confident in the trading decisions that you take.

There are numerous ways of improving inner calm, for instance, by practising meditation, and consciously analysing our thoughts and their origins.

The last step is to also create a positive mindset. According to Matthieu Ricard's book Happiness, people with a positive mindset are better equipped facing problems, overcoming challenges, and prioritising issues.

It seems like a positive mindset will create a can-do attitude, which opens doors that others might not be able to see.

Conclusion: Training Makes Your Mindset Perfect

All in all, I think traders shouldn't approach trading psychology passively. The goal is to be proactive and seek constant improvement.

In my view, the best way to improve is by continuously:

  1. Refining our responses to the market, trading, and analysis;
  2. Training our instincts via habits and patterns;
  3. Creating a calm and positive mindset.

Cheers and safe trading,

Chris Svorcik

(*) Happiness a Guide to Developing Life's Most Important Skill by Matthieu Ricard, publisher Atlantic Books in London, 2003, page 123

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