As many of you know, I had a chance to visit the Chicago Board of Trade last week… and it was awesome! Visiting the S&P 500 pit has been on my to-do list ever since I started trading. Apparently, the trading pits were a lot crazier back in 2002 (when E-minis were just becoming popular).
We took my newest trader Carlee (3 week old neice) with us… she had some good calls on the S&P and corn! Just kidding, but it was a great time having the family there too.
As you’ll see in this video, the trading floor was pretty much dead. It was the Friday before labor day at about 3pm. Our connection from Atlanta was delayed by a couple of hours, so we missed the morning action. Also, it was the week before the contract rollover, so the volume was even lower. Thanks to Shannon with MF Global, we were able to get in behind the lines (with a camera)…
If you read my previous post about David Goggins and the Badwater 135-mile race in death valley, then you know this race is one of the top 10 hardest things to do in the world!
Another hero of mine, Frank McKinney, is going to be running the 135-mile "death race" in about a week. If you know Frank, then you know he's a HUGE philanthropist… this guy builds self-sustaining villages with running water, homes, and food sources for families in Hati.
Through Frank's iron will and awesome foundation, you can feed a family of eight for 2 months! All you have to do is donate $1.00 for every mile Frank runs at the Badwater race. Watch his video for more info…
Have you ever had a time where you felt like you were in the flow of the market, executing every trade perfectly? On the other hand, have you felt no matter how “hard you try”, you can’t seem to beat the market?
If you’ve had any experience day trading, you may have experienced both of these states of mind… In a state of flow, you feel in sync with the market. You’re confident and making decisions based on “humble boldness”. You’re not forcing trades or chasing the market… rather, you’re pinpointing your entries, letting your winners run, and cutting any losses quickly and efficiently.
In struggle, you feel at odds with the market. It seems like no matter what you do, you can’t seem to win a trade. You hesitate and miss the big winner, you get in too early and get stopped out by a tick… it’s just damn frustrating!
There are many exercises one can do daily to make sure they stay in the flow with the market. For example, I’ll take 10-15 minutes prior to trading to prepare myself for the market open. First, I’ll turn on some relaxing music, sit back, relax and envision myself trading effortlessly. I look at myself from a third person point of view and see myself relaxed and confident, alert and ready to execute a trade. I then see myself enter, beautifully manage, and then exit my trade.
Once I get through the first part of that exercise, I’ll see myself take a trade that gets stopped out almost immediately. I’ll allow myself to feel what it would be like to “lose” a trade… I’ll focus on the feeling of great execution and immediately start looking for another opportunity. The key hear is to practice “losing” and to feel ok about that. One of the worst things you can do in trading is to get mad or emotional when you lose a trade.
Think like a casino… it’s all about the odds and probabilities. The more confidence you have in your trading system, and the more you practice proper mental programming, the less the emotional stress of trading will play out in your business.
A very common problem among traders is Revenge trading. It’s when a trader continues to trade although he knows he should shut it down for the hour, day, or longer.
This almost always works like the snowball effect. First, the trader loses a trade or two and starts thinking (consciously or sub consciously) that he is down and needs to make the money back. Next, he starts to take more and more trades that often don’t fit his trading system’s trade criteria. The more he trades, the more frustrated he gets. Before he knows it, he’s lost 8 out of 8 trades and can’t find a reasons why he took the trades in the first place!
I’ve been here and I know how frustrating it can be. In the past, there have been times where I was up 4 or 5 days in a row, then gave back half the weeks profits on a “revenge day”.
The only way to get past this is by continuously focusing and working on your discipline as a trader. It’s not a sexy answer with a quick fix, but definitely takes time and effort. The rewards are way worth the effort. It’s such a great feeling to trade effortlessly- to be in the flow with the market and executing like a pro! To get there, you only need two simple little things:
1. A strategy that shows a potential “positive expectancy” – In other words, that you expect to make money over time.
2. Confidence in your ability to execute the strategy.
Remember, there is no holy-grail to trading other than the 6 inches between your ears. Stop focusing on the latest and greatest hype and start paying attention to your thought patterns and trading plan.
An important part of your “mental game of trading” is the art of not caring. For a lot of traders, the harder they try the worse their results. The reason is because trading goes against what comes natural for most people. As children, we’re taught to run away from things that cause fear. In trading, however, traders have to act boldly in the face of the unknown.
When you get in a trade, consider saying something like, “I entered this trade based on the rules of my strategy, and I know losing is a part of trading so I won’t worry about the outcome”. The more someone triesto trade, the harder it becomes.
Trading should get to the point where it’s boring. The absolute worst thing someone can do is cheer on their trade or “hope” for it to hit their target. When that happens, the trader is no longer thinking objectivly and can miss important information being given to them by the market. You have to be able to change your opinion in a fraction of a second and not let it have any affect on your ego.
So the next time you’re in a trade and you feel your blood pressure rise and your hands start to shake, just sit back and relax. Take comfort in the fact that you’re following a strategy that you’ve tested and practiced trading.
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