Recap “Mental Strenght Part 1”:
What you learned from the last part:
Start observing your behavior and write down any patterns you notice in a journal.
Identify patterns that are good or harmful to your profitability and work on expanding/changing them.
Recognize patterns that you were not aware of and try to adopt them.
Try to adopt a position of a neutral observer and document facts, not emotions.
Aim to improve your trader personality and mental strength day by day, this will lead to improve your profitability.
Intro
You know no one can predict the future, we can only prepare for certain likely developments. Even if we make thorough preparations, our decisions based on these preparations will be wrong sometimes. The best models will not save you from that.
It’s a big mental challenge for us humans, in general, to design our development in any field in such a way that all the experiences you make - whether good or bad - bring you to the next level.
When you do not take personally any errors or setbacks, but rather constructively analyze such errors and setbacks and draw the right conclusion from them, that’s when you know you are on the right track.
In any way, you should avoid blaming yourself. It leads you to focus on your weaknesses rather than your strengths. Your self-confidence and the image you have of yourself will suffer.
Self-confidence in your abilities is crucial to reach your goals. I made the experience that to develop self-confidence it’s best to think in small steps. Today I want to show you small steps and strategies to reach your goals in trading and any other field you work in.
Contents
Working towards your goals step-by-step
My way of dealing with stress
Working towards your goals step-by-step
Setting small achievable goals has proven to be a big help for me.
Two strategies make sense here from my point of view:
Think in different time frames: Set daily, weekly, and/or monthly goals
Process levels: Set task-oriented goals
associated with implementation strategies, trading setups, and trading plans
Set yourself some subgoals as well to experience regular experiences of success.
I think that’s one of the best ways to improve your self-confidence and mental strength in general. Small planned successes have a greater impact than the normal, positive experience someone has in everyday trading life.
Examples of goals/habits I have set to improve my profitability in trading:
Daily: Read books for 15 - 30mins about trading psychology
Weekly: Watch videos of my trader mentor for 1 - 3 hours and do backtest and paper trading sessions
My way of dealing with stress
Because you’re risking money in trading you will experience psychological stress.
When you trade you are in an environment of risk. You can’t avoid stress in there you have to deal with it.
But stress is not generally bad for you. Stress can sharpen your senses and inspire you.
Positive stress can help you keep your focus and mobilize your mind in the highly volatile trading environment.
The market is a good ground for negative emotions and stress factors to take control.
These stress factors usually have a deeper origin within ourselves. For example, in wrong beliefs and ideas.
Examples:
Only a winning day is a good day
I must trade a lot to earn a lot of money
I must earn money by trading every day and week
These beliefs lead to negative stress. You will dependent on winning days.
If you believe you NEED to earn money you will get yourself on a negative ride on the market.
You will get into a rollercoaster of emotions every trading day. How will you be able to stick to your plan under these negative emotions when the market kicks you down?
You need to shift your beliefs and ideas about trading to take out the negative stress.
Examples:
A good trading day is when I stuck to my plan
If I’m patient I’m most likely more precise and objective
The number of trades doesn’t determine my success
I don’t have to trade every day to be profitable
So here are my action items for you this week:
Think about why you trade. What do you want to achieve?
Write those beliefs and ideas down and study them with these questions:
Do these beliefs put pressure on me?
Do they help me to grow or do they make me a slave?
Do they pressure me to go into trades?
Consider carefully how realistic your goals are that grow out of these beliefs
Learn what’s important in trading to be successful in my newsletters
I will cover more of it later on how to set aside wrong beliefs.
In my next newsletter, I will write about:
Strategies to reduce stress while trading
Become more resilient
Just in the last week I've found myself doing the exact negative thinking you highlight above.
'I must create content by this day every week'
Have taken a step back and set up some micro-goals which I will work towards every day, and if I achieve my big weekly goals that's awesome, but also if I don't then it's not the end of the world!
Enjoyed reading and like the continuity in the format. Look forward to the next one!
Another great post, Mr. Meme!
This definitely brings back a lot of haunting memories from my days as a day trader. I tried to stick to my rules (and usually did) about having a $200 stop loss for the entire day, but one day I was really stupid and held on to a sinking trade before I stopped myself out at - $1K...but what did I learn from that?
STICK TO MY OWN DAMN RULES
But you are spot on when you talk about how much of this boils down to mental preparation and focusing on the facts. To trade well one must be dispassionate, but it can be difficult when you have a massive win and feel exuberant after that financial windfall. Slow and steady definitely wins the race...
Also, fun fact, the Midjourney created trader looks like he's reading my crypto portfolio on his screen LOL!
Keep up the great work, sir!