Occupy your mind so your body can carry out your Trading Plan

...cont'd from yesterday...

The most effective method I use currently to prevent my mind from talking me into a bad trade and to prevent my mind from talking me out of a good trade is to keep my mind busy with other things in between glances at intraday charts.

While in a profitable trade where I want to let the winning trade grow, I listen to vocabulary building audios. Each segment of the audio is perfect for the time interval in between bars on the intraday chart I currently use for intraday trading. When a bar is almost finished, I glance at the chart to see if I need to move my Trailing Stop.

In addition to listening to these audios while waiting for the intraday chart to give me a signal to move my Trailing Stop exit, I also listen to them while waiting for the chart to give me the next Entry Signal when I don’t yet have an open position. This keeps my mind occupied so that my body can follow the Trading Plan that my mind previously created.

Also, on the occasions that I glance at the intraday chart, I have a script prepared and use the same routine every time. Before I look at the chart, I condition myself with the Affirmation that “If I see the authorized setup, I take it. If I see that the authorized setup is absent, I stay back”. Then I glance at the chart and say “Is this an authorized setup?” If yes, I enter an order. If not, I stay back.

Hope this week’s blog helped.

...back next week...

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Copyright 2008 Raymond T. Lee. All rights reserved.
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News afterhours only

...cont'd from yesterday...

Reading news, especially financial news. This really screws up trading. You’ll get suckered by the news into taking trades not in your Trading Plan; or, you’ll skip out on cues from your Trading Plans because the news contradicts the entry cue in your Trading Plan. Stay away from the news during trading hours. Delay exposure to news until after trading hours.

....cont'd tomorrow...

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Glance and go

...cont'd from yesterday...

Glancing at charts only at specified times. For example, when trading using hourly charts, just glance at the charts only each hour (just before the hourly bar is completed and before the next one starts). Don't look at the charts at any other time. And don't linger when you glance. The glance should lasts for just a few seconds to see if an Entry or Exit cue pursuant to your Trading Plan has appeared. I find this works very well. Interfering self-talk doesn’t have time to get started when I do this.

...cont'd tomorrow...

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Meditate on this

...cont'd from yesterday...

The process of meditation involves quieting the mind. Practiced frequently and regularly, you might well get into the habit of always having a quiet mind. I find it enjoyable but not directly helpful in trading.

Doing meditation before trading has not worked for me. When I come out of meditation and address a trading platform, I find that I need to review my Trading Plan as to what I’m supposed to do. Then my self-talk kicks in and starts interefering with my trading.

Doing meditation while in the middle of a trade is not something I have tried. But I don’t think it would help. You need to be alert to detect exit cues.

I guess it might be worthwhile to learn meditation for the purpose of quieting your mind in general because that’s what happens when you do practice meditation for a long time. I emphasize “long” in “long time”. But then by the time you train your mind through meditation to keep quiet while you trade, you might have burned up all your trading capital.

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DQSP - Direction, Quantity, Symbol, Price

...cont'd from yesterday...

Price. Check the price of your order. Compare the price to a chart, a handwritten note, or whatever instead of relying on memory.

There you have it, DQSP, a mnemonic tool I find very handy for saving money lost to keyboarding errors. Small amounts do add up.

To help remember DQSP, make up an unusual and outrageous phrase. The more unusual and the more outrageous, the better. For example:

Drunk Queens Sticking Pins
Diary Queen Sundae Pies
Don't Question Silly People
Do Quickly Sit Please
Dangling Quebec Secret Police
Etc.

...back next week...

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Symbol check

...cont'd from yesterday...

Symbol. Check your order to see if it is for the symbol you want to trade.

...cont'd tomorrow...

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Mnemonic

...cont'd from yesterday...

...a mnemonic and acronym for:

Direction. Check whether you are buying or selling and enter the appropriate trade direction.

Quantity. Check the number of contracts or shares you are ordering.

...cont'd tomorrow...

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Tool for saving money from keyboarding errors

Do you keep a record of how much money you lose (or make) due to keyboarding errors? Those can and do happen, especially when you switch to a new trading software platform. Even small amounts lost due to keyboarding errors add up.

Here’s a tool to help you minimize and possibly eliminate keyboarding errors. I call it DQSP.

Whenever you are about to send an order in for execution, check the DQSP, ...

...cont'd tomorrow...

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Skipping out

...cont'd from yesterday...

Here's one final thing to watch out for while you're trying to figure out precisely how you deviate from your Trading Plan and thereby wreck your account.

Trading exactly pursuant to your Trading Plan, experiencing several losses with trades pursuant to the Trading Plan and then skipping the next trade, which of course turns out to be a huge winner that more than makes up the losses in the immediate preceding trades. To counteract this, try re-conditioning yourself after each trade to follow your Trading Plan.

...back next week...

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Tell your mind to shut up

...cont'd from yesterday...

.., more things to watch out for while you're trying to figure out precisely how you deviate from your Trading Plan and thereby wreck your account.

Staring at a price chart and talking yourself out of a valid trade within the parameters of your Trading Plan. Try this: Remind yourself before you look at a price chart that you’re supposed to only glance at it for less than one minute. And maintain a quiet mind while looking at the price chart. Take some lessons on meditation so you can get some practice quieting your mind.

...cont'd tomorrow...

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Late for work, then chasing price

...cont'd from yesterday...

Here's some more things to watch out for while you're trying to figure out precisely how you deviate from your Trading Plan and thereby wreck your account.

Not showing up on time at your computer to check for Entry Signals pursuant to your Trading Plan. And worse yet, chasing price after showing up late and entering into a trade at a price too far into it’s profitable move and near time for an exit required by your Trading Plan.

Try writing down the time for your next viewing of the price chart you are supposed to be stalking. Then keep an eye on your watch and show up for work on time. Set an alarm.

...cont'd tomorrow...

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Spreadsheets and chanting

A second popular way to wreck a trading account is by putting more money on a position than allowed by your Trading Plan. Try using a spreadsheet which shows how much you are supposed to be using on each trade. Then use the method in the "Replace Discipline"
page of this website to get yourself to use that spreadsheet.

A third way is by looking around at other trading instruments and symbols when the one(s) you are supposed to be stalking pursuant to your Trading Plan haven’t given an Entry Signal. And then taking trades in those other instruments or symbols using the price pattern Entry Signal from your Trading Plan instead of just focusing on the instruments or symbols authorized by your Trading Plan for use with the Trading Plan.

Try reminding yourself constantly while stalking an instrument/symbol that you must stay with that instrument/symbol and not stray from it. Make the reminder a form of chant that you use while trading. You can chant out loud or silently to yourself. Both forms of chanting work in my experience.

...cont'd tomorrow...

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Losing by failing to follow your trading plan

Common wisdom among trading gurus is that failing to follow a valid Trading Plan is a sure-fire way to wreck your trading account. Precisely what you do to fail to follow such a Plan is the topic of this week’s series of blog articles.

One of the most popular ways is by failing to use the Stop Loss order required by your Trading Plan.

Antedote: Try using the method from the page of this website entitled "Replace Discipline to get yourself to use a Stop Loss order every time you enter into a new trade.

...cont'd tomorrow...

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Surveillance cameras

…cont’d from yesterday…

A third method you might try is to set up a surveillance camera at your trading desk. I don’t do this. But it’s well known that athletes video record and review their performance. So traders can do the same.

...back Monday next week...

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Detecting imminent alien abduction

…cont’d from yesterday…

One method of detecting alien abduction is by noticing your thoughts while you trade. Write down what you are predominantly thinking about before you enter a new position and while you are in that position. Also, write down what is going on around you in your environment. You can key your note to your trades by simply recording the time of the events you are writing notes about. I call this the “Narrative Journal” method.

A second method is to make a list of usual suspects. These usual suspects can be based on some of your observations in your Narrative Journal. Put the list on a spreadsheet (Excel). Then throughout the day, especially as you enter and exit a trade, note which item on the checklist applies. Some examples from a checklist I currently use myself include:
-doing Incantations to get myself into proper emotional state before looking at a price chart
-refusing to enter a trade if an authorized pattern is not present
-asking myself “Is this an authorized pattern?” when I first look at a chart
-entering a stop loss immediately upon getting a fill
-refusing to chase price

I keep a count of how many times each of the items in my checklist applies throughout the day as a way to spot where aliens might try to take over my body and force me into trades not authorized by my trading plan or force me to skip out on trades that are authorized by my trading plan.

...cont'd tomorrow...

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Alien abduction by Implanted cues

…cont’d from yesterday…

Another method by which aliens can take control of your body is with visual or auditory cues inside your body. These include:
-thinking about the profit quota you have to meet today/this week/this month
-thinking about your need for achievement and success

In the end, regardless of how aliens take control of your body and cause you to take trades not authorized by your trading plan or to skip out on trades that are so authorized, you can counteract them. But first you need to discover the means by which aliens are taking control of your body.

...cont'd tomorrow...

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Abduction by external cues

…cont’d from yesterday…

So how do these aliens abduct and take control of your body?

One method by which aliens take control of your body is with visual or auditory cues outside your body. These include:

-viewing your Profit/Loss position intraday
-reading trading newsletters while trading
-reading or listening to news, especially financial “news” and comments while trading
taking phone calls
-interacting with toxic people
-getting into an emotional state different from what you usually have when you are trading properly, such emotional state changes being triggered by reading emails, -participating in chat rooms, surfing the internet, etc.
-feeling tired due to sitting and/or starring at your computer screen for several hours

...cont'd tomorrow...

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Forced by aliens to deviate from trading plans

A frequent problem that traders experience is feeling like aliens have overtaken their body and then proceded to enter trades not authorized by their trading plan and/or skipping trades that are so authorized.

I’ll suggest some effective ways to deal with these alien abductions in this week’s series of blog arrticles.

...cont'd tomorrow...

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