For the most part, a typical trader’s perception of the risk on any given trade is dependent on the outcome of his most recent two or three trades.
But the most successful trader’s perception of the risk is not affected by this personal, psychological variable. As you may believe, these traders did not initially have these inherent design qualities in their minds that account for this phenomena but rather they have had to learn them. The most effective traders know that from the market’s perspective, anything can happen, therefore, they execute their trades without the emotional turmoil that most traders experience.
Most Important Building Block
The most important and fundamental building blocks to your success as a trader:
1. Trade without fear or overconfidence
2. Perceive what the market is offering from its perspective
3. Stay completely focused on the “now moment opportunity flow,” and
4. Spontaneously enter the “zone,”
You will need an unshakeable belief.
You have to have a virtually unshakeable belief in an uncertain outcome with an edge in your favor. If you believe, without a shred of doubt or internal conflict, that “anything can happen” then how could you be upset when the market doesn’t give you what you wanted.
Here is how Douglas puts it,
“Successful traders don’t just suspect that anything can happen or give lip service to the idea. Their belief in uncertainty is so powerful that it actually prevents their minds from associating the “now moment” situation and circumstance with the outcomes of their most recent trades. By preventing this association, they are able to keep their minds free of unrealistic and rigid expectations about how the market will express itself. Instead of generating the kind of unrealistic expectations that more often than not result in both emotional and financial pain, they have learned to “make themselves available” to take advantage of whatever opportunities the market may offer in any given moment. “Making yourself available” is a perspective from which you understand that the framework from which you are perceiving information is limited relative to what’s being offered.”
Without an unshakeable belief that anything can happen, the fear of admitting we are wrong causes us to place an inordinate amount of significance on information that will prove to us that we’re right. Then when a trade is plopped right in front of us with ample information indicating it has an edge, it will be overlooked if it goes against our preconceived notions.
When you operate out of fear, opportunities become invisible even if those opportunities are as clear as BUY MSFT tomorrow at limit 23.01, for example.
Remember back when you first started trading and saw a price chart. Do you remember the feeling? Do you remember how foreign a chart looked with all those lines, bars, candlesticks and weird studies like stochastics or MACD? You had to train your brain to comprehend what the chart was telling you. When you operate out of fear, it’s like your brain goes back to where it was before it was trained to understand a price chart.
Make Yourself Available
With an unshakeable belief that anything can happen and a perspective of making yourself available, you know your edge places the odds of success in your favor but at the same time, you completely accept the fact that you don’t know the outcome of any particular trade.
By making yourself available, you consciously open yourself up to find out what will happen next, instead of allowing your automatic mental process to take over causing you to think you already know.
Adopting this perspective sets up the mental condition most conducive to entering “the zone.”
We’re the Plan in “Plan your Trade and Trade your Plan” – TraderJanie
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