When trading there are only two types of thinking that goes on. There’s “Task oriented thinking” and what I call “Outcome oriented thinking”. Task oriented thinking focuses on what is the next right thing to do. It is focused on what is happening in the moment, right now, with the market and your current position. Task oriented thinking goes along the lines of “We broke support, the indicators are in agreement, timing is good for a reversal, we need to pullback to proper resistance to take a short position, etc.” That is what goes on in the mind of professional traders, the ones who win 90% of the time.
Losing traders take the “outcome oriented path” in their thinking process. Their inner dialogue goes something like “Is this going to be a winner? I was just stopped out maybe I should just sit this trade out. I am risking 2 points on this trade, man I don’t want to be stopped out for a full stop, I better move my stop up a bit just to be safe.” Do you see the difference? The professional is focused on the task at hand, the mechanics of trading, taking the best trades, doing the best job, making sure all conditions are met to take the trade set forth by their trading rules. The amateur trader focuses on what might happen or what did happen. They live in the past or the future, both resulting in fear, which will lead to sub par performance if not out and out losses. This type of thinking is what has been called “trading your wallet”. The solution to this is to refocus your efforts on the task and not on the outcome.
Your method should have already quantified and qualified your probabilities. Your method should have a positive expectation of profit if you have put together a solid method or are trading a proven strategy. If the above is true, then you have no reason to worry about the next trade being a winner or a loser, you just need to do your job. And your trading plan is your job description. It tells you what to do, when do to do it, and how much to risk. Yet in spite of having a proven method that has a positive expectation of profit, most traders still focus on the outcome.
It comes down to trust. Trusting themselves to follow the rules. Trusting the method to actually produce the positive results in real time. The best way to gain this trust in confidence is to spend some time going back over the charts, validating your chosen method based on your rules. Many traders believe that “after the fact” serves no purpose because you can see what has happened. But that is not the point. The point in going over charts in hindsight is to prove to yourself when you follow the rules, 7 out of 10, 8 out of 10, 9 out of 10 times, the market moves enough to gain profit, move your stop to close to break even and you have a free trade. Your risk is removed. then you look for profits. The more you see this on the chart by following your rules the more you will begin to trust. When you begin to trust you will be more likely to focus on the task at hand rather than the outcome.
Take some time, go over some historical charts and put your mind at rest. Then come to your trading desk with the confidence you know your trading, if you follow the rules, will produce profits in the long run. Remember, money is not the goal of trading, it’s the byproduct of doing your job and following your rules. If you do, the money will be there. If you are unsure about your method, or about your expectation of profit, let us show you a simple way to trade the ES that has a high expectation of profit and how you can reduce your stress levels by knowing you are trading a proven method. Sign up for your FREE TRIAL to our trading room and see for yourself what a proven method you trust can do for your bottom line.
Good Trading!
JC
