The Noetic Trader

Fighting to Climb Out of a Rut

noreply@blogger.com (Reynaldo Soriano Jr) — Tue, 05 Oct 2010 18:22:00 +0000

When you first start out trading, becoming a winning trader can seem impossible. Somehow you have to build up enough talent to trade markets that aren’t cooperative most of the time. When you are thrown off balance as a trader, it can be hard not to get in a rut. You might think, “Why bother trying again? I’ll just lose even more money. I want to give up.” If you aren’t careful, you can develop a “psychological complex.” Rather than look at the markets objectively, you can start placing too much emotional significance on setbacks and trading outcomes. Suddenly, routine setbacks are a big deal; each trade has more personal meaning than it should. When you make a trade, it’s as if your self-esteem and identity are on the line with your money. If you don’t do something fast, you may feel so anxious and overly emotional that you can no longer think logically. And then losses begin to mount.

In their book, “The Innergame of Trading,” Robert Koppel and Howard Abell outline a strategy for getting out of a slump and regaining your mental edge. A slump may reflect conflicts and issues that you have not yet resolved. It’s vital to identify these issues and find some resolution. Let’s review five major issues discussed by Koppel and Abell. First, make sure that you fully understand your motives for trading. Rather than trading for the money, it is important that you truly love the game. If you merely trade for the money, you will often feel disappointed by the endless setbacks you must overcome, but if you trade because you love the independence trading offers, and are stimulated by the intellectual side of trading, you will take setbacks in stride. Second, it’s also necessary to make sure that you trade with a trading style that suits your personality. Many traders make the mistake of trying to trade an approach that doesn’t suit their style. For example, they may have an overly anxious temperament yet take big risks on short-term trades that are inherently uneasy. This style of trading stresses them out to the point that they can’t enjoy trading. Instead, they vacillate between frustration and stagnation. In the end, you can only trade with the skills and resources you have available, and this may mean finding a trading style that suits you, rather than a style that is the most popular at the time. Third, trading should make you feel good. You should think it is fun. When you wake up in the morning, you should feel as if you can’t wait to trade. If it doesn’t make you feel good, you should wonder why you should even bother. And if you don’t wonder explicitly, it will gnaw at you and overpower you when you least expect it. Fourth, make sure that you acknowledge how difficult it is to learn to become a profitable trader. Don’t mistakenly think that trading is easy. It is not. It takes hard work to become a winning trader. People become upset when they forget how much time and effort is required to learn to trade. When you underestimate the difficulty of trading, you will feel frustrated when your performance does not meet your expectations. But when you remember that trading is extremely difficult, you will feel less disappointed when your hard work and effort do not always pay off. Fifth, build up a sense of confidence. You may not trade up to par at first, but it is vital that you believe that your hard work and effort will eventually pay off.

When the markets don’t cooperate with you, don’t despair. Work through personal issues that prevent you from living up to your potential. If you stay focused and cultivate a positive state of mind, you’ll recover from setbacks quickly and hone the trading skills you need to trade like a winner.

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If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 begin_of_the_skype_highlighting +1 650 320 1714 end_of_the_skype_highlighting begin_of_the_skype_highlighting +1 650 320 1714 end_of_the_skype_highlighting or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Maximizing Tendencies: When More Is Less

noreply@blogger.com (Reynaldo Soriano Jr) — Thu, 23 Sep 2010 04:01:00 +0000

In the trading business, the more profits you make, the better. But mediocrity rarely leads to maximum profits. Winning traders must constantly search for novel, high probability setups. And finding these setups isn’t enough. One must also trade these setups in a peak performance mental state. A study by Dr. Sheena Iyengar at the Columbia University School of Business, however, suggests that searching for the “best” alternative may undermine feelings of satisfaction. And when you don’t feel at your best, you will have difficulty trading the markets with the proper mental edge.
When it comes to making decisions, some people are maximizers while other people are satisficers. Maximizers seek the best alternative when making a decision. They make an exhaustive search of all possibilities. Traders who are maximizers put in extra time and energy to search for the most novel and profitable trading opportunities. They want to maximize their profits, and that means searching exhaustively for all possibilities, considering them, and choosing the best option. Satisficers, in contrast, seek the decision alternative that is “good enough.” They don’t make an exhaustive search. They merely look for a potentially profitable trading opportunity and they trade it

Maximizing usually pays off, but there are disadvantages. It takes a great deal of extra psychological energy to search and consider all possibilities, depleting limited psychological resources. Maximizers also tend to compare themselves to others and tend to feel regret and depression while making decisions. In a study by Dr. Iyengar and colleagues (Iyengar, Wells, & Schwartz, 2006), for example, maximizers did better financially in terms of yearly salary as a result of their decision making strategies, but they felt worse. They tended to fixate on realized and unrealized options. There may be an advantage to reviewing all possible options when making decisions, but mulling over them too much can be a distraction, and maximizers tend to get too wrapped up in fantasizing about the potential rewards of making the “best” decision. Although maximizers were better off financially than satisficers, they were less satisfied with their decisions, and felt more pessimistic, stressed, tired, anxious, worried, overwhelmed, and depressed while making decisions. At first glance, this finding is puzzling. How could people who do financially well feel so unsatisfied? Striving for perfection has its costs. Because they search for the elusive “best” option, maximizers increase the potential for feeling regret. By thinking and re-thinking potential opportunities, they put added pressure on themselves to make the “right” decision. But no decision is perfect, so they end up feeling uncertain and unsatisfied with any decision they make.

Trading profitably in the long term requires one to maximize profits. A thorough search of all possibilities will pay off in the long run, but it can also stress you out if you are not careful. The challenge is to find the balance between finding a high probability setup on the one hand and accepting the fact that it may not be the “ultimate” setup on the other hand. If you are a maximizer, it may be useful to ease up on yourself occasionally. Tell yourself that you don’t have to be perfect. Remind yourself that you have done much more than other traders in terms of searching for a profitable trading opportunity, so you might as well feel assured that you’ve done your best. You can relax a little. After you’ve made your decision, stop deliberating and take decisive action. It’s important to just execute the trade and see what happens. In all likelihood, you’ll make the profits you are seeking.

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If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 begin_of_the_skype_highlighting +1 650 320 1714 end_of_the_skype_highlighting or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

The Right Place at the Right Time

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 23 Aug 2010 07:09:00 +0000

Over the weekend, Tom received a call from his friend Andrew. "Hi Tom, did you take a look at Google last week?" Tom replied, "It was a rough week for my short positions. I didn't anticipate the buying surge and it hurt me a little. No, I didn't look at Google closely. I was caught up trading my own positions." Excitedly, Andrew says, "Well, on Monday I bought at 345 and sold at 370 on Friday. I made almost $4000 on that one trade alone." Have you ever received a call from a friend in the trading business bragging about a great trade that he or she made? If you aren't doing as well, and can also bask in the glory of success, it's hard to avoid feeling a little resentful, envious, and somewhat disappointed in yourself. You may think, "It's just a matter of being at the right place at the right time, and unfortunately, I was at the wrong place at the wrong time."

Trading can indeed be a matter of luck. When events aren't going your way, you can get thrown off, and become overly consumed with how poorly you are doing, that you can't think clearly. Trading the markets skillfully requires a clear, focused mindset, however. You can't get thrown off. But when your money is on the line, it's hard to think clearly. There's a powerful human need to trade with perfection. You want to be at the right place at the right time and make a huge win. One of the worst fears of many traders is missing out on a significant trading opportunity. It's natural to want to search for a once in a lifetime trade and make a year's worth of profits in a day. But constantly searching for such trades can be distracting. You spend the majority of your time searching for the ultimate trade setup, and when you do that, you start placing demands on yourself that you just can't reach. You think illogically. You lose focus, and you can no longer think clearly and astutely.

Ironically, if you become overly consumed with being at the right place at the right time, you will probably be at the wrong place at the wrong time. You won't think freely and creatively, and you will miss the potentially profitable opportunities right in front of you. From a god's eye view, they may not be the absolute best opportunities out there, but they may be good enough to profit from. If you devote all your effort to trading them, you will make profits. Remind yourself that you don't have to be perfect. You don't have to trade the best opportunities at all times. You just need to trade the best way you know how with the resources and opportunities you have available to you. You need to trade freely, rather than stagnating under the pressure to trade to perfection. Trading can be a matter of probabilities. Sometimes you'll be at the right place at the right time; at other times you won't. That's all right. If you are consumed with perfection and finding the ultimate trading opportunities, though, you will tend to put off making trades. And when you don't trade, you can't make profits. So don't limit yourself. There are many opportunities out there for you to take advantage of. The more trades you make, the more likely you will increase the odds of success, and take home profits.

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NEW! Trading System Integration Workshop Will Start August 18, 2010! Click here for more information!

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

The Calm, Perceptive Trader

noreply@blogger.com (Reynaldo Soriano Jr) — Tue, 17 Aug 2010 00:01:00 +0000

When your money is on the line, it's hard to avoid feeling a tinge of fear with every minute you're in the trade. Some traders crack under the pressure. They panic and lose the ability to read the markets with unfailing accuracy.

A study by Ingmar Franken and Peter Muris (2005) suggests that your approach to making decisions can strongly impact your ability to read the markets accurately. In the first phase of the study, participants were asked to describe their style of decision-making. Some people described a panicked approach to decision-making. They indicated that they tended to panic when they had to make a quick decision, felt they were under extreme pressure whenever they had to make a decision, could not think clearly when making a decision in a hurry, and tended to change their mind whenever there was a possibility that something might go wrong. Another group of participants described themselves as remaining calm while making decisions. These individuals not only made astute decisions while under pressure but also tended to feel upbeat and enthusiastic while making decisions. They enjoyed the thought of winning, and felt excited and energized by a win.

Participants' decision-making style influenced the way they played a game of chance. In the second phase of the study, participants were presented with two profitable and two losing gaming strategies (similar to a trading strategy) that varied on how much and how consistently they produced a win. The two losing strategies produced immediate, huge wins but over the long term, produced large losses. The two profitable strategies produced only modest wins initially but the wins were more consistent and the losses were smaller. Participants were allowed to use any of the four strategies they wished in order to make as much money as possible. Just like trading the markets, a participant could use a strategy, see how well it did, and then decide to use it again or try a different strategy. Making the most money required a person to accurately perceive how well the strategy worked and choose the strategy that produced the greatest profit. The ability to make this decision accurately was related to decision-making style. People who were easily panicked while making a decision tended to choose the less profitable strategies.

These findings suggest that if you are easily stressed while making decisions, you will be less likely to perceive market conditions accurately. You will tend to seek out immediate rewards even if it means you will end up losing overall. You may be at a disadvantage compared to other traders, but all is not lost. You can take preventative steps to work around your shortcomings. First, admit you are at a disadvantage and that you must make an extra effort to overcome your weakness. Second, limit the amount of risk you take. If you are prone to panic while making trading decisions, your judgment will tend to be clouded. Reducing stress and psychological pressure will help matters. Trade smaller positions to ease pressure. Use protective stops so that you feel you have an added sense of safety and security. In addition, increase your time frame. Taking these precautions can help you stay calm, and when you are calmer, your perceptions of the markets will be more accurate. Finally, pay particular attention to your win-loss ratio. If you easily frazzled, you will tend to seek out setups that provide immediate profits, but overall tend to put you in the red. By carefully monitoring your win-loss ratio, you will be able to see whether you are making more money on your winning trades than losing money on your losing trades. If you are losing too much money on losing trades, you will be aware of the situation, and be able to change your approach so that you make more consistent profits overall.

The calm trader is the winning trader. If you have trouble controlling your emotions while making trading decisions, you will tend to let panic, distress, and anxiety take over and cloud your perception. If you are vulnerable to panicked decision-making, don't ignore the problem. By limiting risk and doing whatever you can to ease the pressure, you'll increase your profitability.

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NEW! Trading System Integration Workshop Will Start August 18, 2010! Click here for more information!

Extreme Patience

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 02 Aug 2010 06:57:00 +0000

Did you invest in stocks during the rally earlier this year and now regret your decision? If you are a short-term trader, you may want to just accept the loss and close the position, but longer-term investors may want to wait to see if their original hunches about their positions were right. For the past few months, stock prices have generally fallen, and long-term investors may have been tempted to sell. But long-term investors may need to wait a few months to see if some of their positions will eventually reach their profit objective. It may be hard to wait for the long term. As you wait, you may start obsessing about how your positions have lost value. It's easy to start thinking you are deluding yourself, hoping against hope that a losing position will make a profit. Only you can determine whether a long-term position will recover and make a profit, but many analysts view the economy as strong and so there is tremendous potential this year if you can afford to wait it out.

If you are a buy-and-hold investor, patience is a virtue. But many investors have trouble waiting, and if you have trouble waiting, you may impulsively decide to close out your positions too early. Few people would think of selling their house just because of a slump in the real estate market, but most investors don't apply this thinking to holding long-term positions. One obvious reason is that the media doesn't cover the daily change in your personal home every day. You can't go to the newspaper every day and look up the current daily value of your house, and thus, you can't worry about how much its value has decreased compared to last week. Unfortunately, you can look at the value of your stock position every day, and every minute for that matter. And when you see the current value rise and fall, you'll watch your emotions vacillate from euphoria to disappointment. If you look frequently, you increase the odds that you'll take action, and if you act out of frustration, it is usually the wrong action. When you see it fall too far, you may feel frustration and close your position impulsively.

How can you wait patiently? You could simply stop looking at the stock price every day. If you could just avoid looking, you'll be able to stay away. This is easier said than done, though. The evening newscast covers the stock market and when you see the change in the indexes, you'll be tempted to see how your positions are doing. And if you read the daily newspaper, you'll be tempted to look up how well your positions did. If you don't have a problem with patience, there's no harm in watching the news or reading the newspaper, but if you do have a problem waiting patiently, it's worth taking extreme precautions. Stop watching the news and never pick up a newspaper! Now, your first reaction to this advice may be that it sounds a little silly. But if you have a problem with patience, it's vital that you take precautions. If you are trying to patiently wait for the next six months for a trading plan to come to fruition, for example, you must wait patiently. And if waiting requires taking special precautions, it is worth it. Reading the newspaper or exposing yourself to any information about your positions is like sitting in front of a bowl of candy and trying to avoid eating a piece. If you put the bowl in a cabinet, it's that much easier to show restraint. And it is the same with long-term investing. So if you are a long-term investor, try not to think about your positions so often. Don't think about how well they are doing. Realize that if you think about your positions too much, and check and recheck how well you are doing, you will have trouble patiently waiting for your long-term trading plan to come to fruition. When it comes to long-term investing, the longer you can wait, the more profits you will reap.

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NEW! Trading System Integration Workshop Click here for more information!

Regaining Poise, Focus, and Profitability

noreply@blogger.com (Reynaldo Soriano Jr) — Tue, 27 Jul 2010 08:32:00 +0000

Have you had one of those days where nothing went right? Perhaps you thought that Monday's malaise would drag into Tuesday, but unexpectedly saw the markets surge. Perhaps you were a little unprepared and the sudden change in market conditions ruined a few trading plans. Maybe you lost a little more than you had planned. Throughout the day, you were frazzled, frustrated, and dazed. If only there was a magic pill that you could swallow and regain your composure. Unfortunately, there isn't.

Trading the markets requires a focused, calm mindset. You have to look at the markets objectively, and gauge the ebb and flow of the market action. It's hard to do when you are thrown off balance. Since there is no magic pill, what can you do? It may not happen instantly, but you can practice regaining your composure with thinking strategies. In some cases, it is easy to regain composure: You can just take a quick walk around the block to get away from it all, calm down, and you will snap back into the proper state of mind. At other times, however, it isn't that easy. Your mind is engulfed by self-doubt. You feel frustrated and unable to think clearly. At times like these, a simple walk around the block usually doesn't work. In these cases, you need to actively use thinking strategies to release you from grip of distracting psychological issues.

Each person has his or her own psychological issues that surface during a frustrating day of trading. Some traders are undercapitalized and new to the business. When things don't go their way, they are consumed with self-doubt, unable to take decisive action. For other traders, it's a nagging feeling that they could always do better. They set high performance standards, and they are constantly searching for new trading ideas. Others have unrealistic views of the markets. They don't want to go where the markets take them. They want to dominate and control the markets. They look for certainty that just isn't there. A related expectation is a belief in an American work ethic. They believe they put in a good day's work, and they should be rewarded in proportion to their time and effort. But time and effort alone doesn't always pay off. All these expectations are reasonable in everyday life, but not when trading the markets. It's easy to allow them to intrude into your consciousness and take over.

Combating psychological issues, no matter how small, takes effort. You must actively engage your mind to counteract them. When you are consumed with self-doubt, for example, you have to tell yourself over and over that you can trade profitably. And you must use your off hours to convince yourself that you can truly do it. If you can't because you don't have the skill to trade in the trading style you are trying to master, or you are clearly under-capitalized, you will know it, and you will waste your time trying to fool yourself into believing something that isn't true. But if you truly believe you can make it, and are merely thrown a little off balance because a few things did not go your way during the trading day, then you can get back on track if you change the internal dialog you have with yourself and repeat over and over that you can make it if you try harder. Similarly, if you strive for extreme perfection, it's useful to remind yourself over and over again to ease up. When you do, you will calm down a little and will regain your objective state of mind. The markets won't live up to your expectations at times. They won't treat you fairly, and you are bound to face setbacks. It's important to remember these facts of trading and remind yourself over and over again of their validity. If you do, you'll stay calm. And when you are throw off your game, repeating these facts of trading will allow you to regain your objective state of mind. And once you are back in a focused, objective state of mind, you'll be ready to take advantage of the many market opportunities available to you.

Recommended Reading:

The product of a five-year collaboration between Dr. Ari Kiev, a leading psychiatrist renowned for his success with Olympic athletes, and top equities trader Steve Cohen, Trading to Win gives you the essential tools to overcome outmoded, self-limiting beliefs and mindsets that may be keeping you from a higher level of success. Illustrated with real market scenarios and applications, this powerful program will help psych you into a less stressful, more self-possessed mastery of the trading game and help you reach goals you may never have thought possible.

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NEW! How To Create a Proper Trading Business Plan! Click here for more information!

NEW! Join our Trader's Support Group! Click here for more information!

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Win or Lose: You Are A Winner Every Day

noreply@blogger.com (Reynaldo Soriano Jr) — Tue, 20 Jul 2010 00:41:00 +0000

Have you ever spent the day making trade after trade and gotten nowhere? You may have wondered why you woke up that morning, or even bothered trading that day. Perhaps there have been a few days where you've felt this way this week. It's been a hard week so far. If you aren't doing very well, it is understandable. Uncertainty abounds. On days when you are feeling unproductive, it's vital to have an upbeat attitude, though. You need to lift your spirits. So what if a given trading day wasn't fruitful? Who cares if you lost money today? Take it all in stride. How can you be so carefree, you ask? Real money was lost, so how can anyone convince himself or herself to feel good? There are trading days when your rewards are tangible profits and you can bask in the glory of success, and then there are those days where you must chalk the day up to experience. You settle for saying, "Perhaps I learned something valuable today. Let's figure out what I learned and be grateful that I got something out of the day."

What did you learn today? What did you experience? Did you make it through the day relatively unscathed? That's worth something. Maybe you learned that you could stand aside when you wanted to and get out of harm's way. It is something worth learning. Maybe you jumped into the markets too soon, and felt a little bit of regret from losses. Were the losses justified? Did you follow your plan, but the plan didn't work. If you lost because of a faulty plan, it's still valuable knowing that you could follow a plan. Losses due to impulsive decisions are another matter, however. If you traded impulsively, perhaps you learned how you might prevent impulsive decisions in the future. No matter what happened, though, you learned a valuable lesson.

In the modern, competitive world, we are obsessed with winning races. We want to make more profits than the next trader, and when we fail to make profits, we feel beaten. But the only benchmark that should matter is your own. So what if you don't make profits every single day? Maybe you do not yet have the skills or financial resources to make a profit every day. Even if you consider the metaphor of winning a race with other traders, would you try to run a marathon without the proper amount of practice? Would you feel disappointed if you couldn't reach an athletic goal that you knew would take more training than you had? You definitely would not, so why make such high and lofty trading goals? Give yourself a break. Sometimes it is wise to just do your best and accept what you've achieved. When you set high goals that exceed your skills, you will usually feel discouraged, and that may make you feel like giving up. Rather than kicking yourself for not performing up to par, consider the fact that you have learned a valuable lesson today and every day, win or lose. You may not have achieved a high performance goal, but you have achieved a learning goal. In other words, you have moved one step closer to fully mastering the markets. Every little experience counts. So rather than beat yourself up for failing to reach your standards, pat yourself on the back for making it through another trading day. Remind yourself that you are a winner. Don't set overly high performance goals that you can't achieve. Focus on skill building, rather than on making huge profits. When you focus on skill building, you will feel better, and you will keep trying. And in the end you will make the huge profits you desire.

Recommended Reading:

The aim of the book is to help you become your own trading coach, its broader purpose is to help you coach yourself through life.

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NEW! How To Create a Proper Trading Business Plan! Click here for more information!

Confident In Uncertain Times

noreply@blogger.com (Reynaldo Soriano Jr) — Sun, 04 Jul 2010 05:48:00 +0000

The markets can be uncertain at times, and these past few months may be particularly fraught with uncertainty. For example, we had disappointing jobs data last week that sent the U.S stocks lower last Friday. The Dow Jones Industrial Average was down seven straight days in a row last week and its longest losing streak since the eight-day period that ended on Oct. 10, 2008. It was the worst pre-July 4th week for the Dow in percentage terms since 1896. Everyone is a little on edge and waiting to see what happens next. It's at these times where you have to be more confident than ever. It's vital to have a detailed trading plan and to stick with it.

Uncertainty can throw us off balance. We don't want to believe that we may be helpless and powerless to the whims of market sentiment. In his book "Investment Psychology Explained," Martin Pring notes, "we do not like uncertainty. The need to have a firm opinion of where prices are headed is therefore a mental trick that many of us use to eliminate this uncertainty." During uncertain times, it's tempting to believe that we can control anything that comes our way. Feeling that we have control allows us to believe that we are more powerful than we actually are. Some people feel more powerful by rigidly making a firm opinion of where the market is going. They may read market indicators wrong and look for information that backs up their opinion while unconsciously ignoring information that contradicts it. It is vital, though, to stay as open and flexible in terms of your opinion as possible.

During uncertain times, a trading plan can be especially useful. It can keep you on target rather than distracted by biased perceptions of the markets and a powerful need to be right. Set a profit objective and visualize the way the trade may go as you develop your plan. As you imagine executing a trade, think of how the market may go against it. What indicators may signal that the market is going against you? If you clearly specify what you will do and when, you'll be able to fight the tendency to rigidly stick with a biased opinion of the markets.

We can't control everything, but during uncertain times, it's best to control what we can control. We can delineate a detailed trading plan and follow it. We can manage risk to insure that we can survive a few losing trades and allow us to feel assured that we can recover should we face a severe drawdown. We can also try to anticipate adverse events, such as media reports or market news that may go against our trade. That said, it is important to face the fact that you can't control every possible adverse event. In the end, it's wise to accept uncertainty. Don't get fazed by it. Instead, control what you can control, accept what you can't, and if you do, you'll trade calmly, skillfully and profitably.

Recommended Reading:

"The one, only, and by far the best book synthesizing psychology and investing. In addition to providing modern, scientific knowledge about psychology, this book provides a mirror into the mind and wide breadth of knowledge of one of the leading practitioners of brief and effectual cures. Will help to cure your trading and your life."
–Victor Niederhoffer, Chief Speculator, Manchester Investments

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NEW! How To Create a Proper Trading Business Plan! Click here for more information!

Grounded and Objective

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 24 May 2010 06:21:00 +0000

Last week, tech stocks took a dive. Mark lost $15000 on his AAPL position alone. It's Friday morning, but he still feels guilty. He can't get the losses out of his mind. He has been trying to scan through a series of charts, but his heart isn't in it. He has seen a few possible setups, but when he tried to execute a trade, he flinched. All he can think about is the losses he mounted yesterday. He feels afraid as he thinks about the money he could lose today if he isn't careful. When you trade the markets, however, you can't be fazed by setbacks. You have to trade calmly, objectively, and decisively.

It's difficult to be objective when you have lost a significant amount of capital. It's human nature to feel disappointed after a loss. But if you want to trade profitably, you can't let it bother you. Somehow you have to truly believe it doesn't matter. Several steps can be taken to trade more objectively. You can trade with money you can afford to lose so that losing won't hurt as much. You can also make smaller trades with tight stops to minimize the amount of money you will lose. In the end, however, you must find a way to make the whole trading experience impersonal. When it isn't personal and just business, you trade more freely, creatively, and decisively. The best way to stay free and objective is to ground your identity in an alternative reality. Trading should not be viewed as your reason for living. It is merely a profession. If you make it your reason for living, you will have your ego on the line along with your money, and the extra psychological pressure placed on you can make you buckle. If you ground your identity in another source, though, you will be able to take trading setbacks in stride. You won't be stressed by trading. You will feel free and be able to analyze the markets objectively, and act decisively.

Trading in the end should just be business. Don't let it define your identity. Your identity should be grounded in other areas: your family, your friends, or the leisurely pursuits you find most important. If you have a solid foundation outside of the trading realm, the events that occur during the trading day will have little impact on your identity. You'll feel calmer, and take stresses and setbacks in stride. Why should you take it seriously? If you ground your identity in other areas, losses, setbacks, and the uncertainty of the markets can't hurt you. You'll be free to trade the markets with a creative spirit that will eventually ensure long-term profitability.

Recommended Reading:

Conflicts, contradictions and paradoxes in thinking can spell disaster for even a highly motivated, astute and well grounded trader. Mark Douglas, a trader, personal trading coach, and industry consultant since 1982, sends the message that "thinking strategy" will profoundly influence a trader's success rate. Douglas addresses five very specific issues to give traders the insight and understanding about themselves that will make them consistent winners in the market.Trading in the Zone offers specific solutions to the "people factor" of price movement.

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Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

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"Helping You Achieve Your Goals"
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The Little Things That Get In The Way

noreply@blogger.com (Reynaldo Soriano Jr) — Tue, 18 May 2010 08:03:00 +0000

A common complaint of novice traders is that they can't stick with their trading plan. They wonder why, and after they think about it long enough, they come up with fanciful explanations. For example, they start believing a motive to self-sabotage their efforts lies behind their failures. They may also start to think, "Maybe I secretly don't deserve success." Most traders, though, underestimate the power of the little things that get in the way. Specifically, they underestimate how much psychological and physical energy it takes to trade, or they don't appreciate how much practice it takes to follow a trading plan. And even though they think they are striving for modest goals, they stymie themselves by trying to reach unrealistic standards. For many novice traders, secret, unconscious motives are not at the root of the problem. They merely forget to appreciate how little things can get in the way.
When you can't seem to follow your plan, try looking at the little things that may interfere. Perhaps you didn't get enough sleep or maybe you are hungry. Don't believe me? Try sleeping extra time just for a week. Decide to miss part of the trading day for a week, and see what a difference it makes. Extra sleep can increase your ability to stay alert and will give you the extra energy you need to focus on your plan. You may need to change your life around and get to sleep earlier so that your biological clock is in a different time zone. Get the sleep you need, no matter what it takes.

Trading is stressful, and coping with stress requires psychological energy, and psychological energy is more limited than most people think. Getting angry, frustrated, or even disappointed, saps up precious psychological energy. Don't discount the impact of stress on the depletion of psychological energy. After stress depletes psychological energy, you need to replenish it before you can once again concentrate fully. When you are tired, and the market seems to move against you, it's hard not to want to just take a break. A tired, worn out feeling often lies below the surface of your awareness. You may think you are rested and alert, but you are not. Get rested, and you will be able to focus on sticking with your plan.

Sticking with a trading plan takes practice. Does this seem like an exaggeration? It isn't. Just like practicing a tennis swing, you have to learn to concentrate. You must practice focusing on your ongoing experience and controlling your emotions, and this takes practice. It isn't easy. Your money is on the line and a little bit of your ego, so you can't expect to be able to stay calm, alert, and focused without a lot of practice.

So when you can't believe you've abandoned your plan once again, don't jump to the conclusion that a secret, unconscious motive for self-sabotage lies at the root of your problem. It may just be a matter of reducing stress levels, getting plenty of sleep, and allowing yourself to develop the ability to practice following a trading plan.

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Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

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Learning to Defeat Past Learning and Instincts

noreply@blogger.com (Reynaldo Soriano Jr) — Fri, 30 Apr 2010 22:48:00 +0000

Are you having trouble mastering the markets? Do you have trouble taking losses? Do you react to potential losses with fear or regret? Do you find that you can't seem to methodically execute trading plans and take home profits? If you are having some difficulty accepting losses, and mastering the markets, you are not alone. For every one trader who becomes a Market Wizard, there are at least nine who don't. You can react to this knowledge in two ways: you can walk away in defeat or you can be determined to become one of the few who become a master.

There are two hurdles to overcome on the road to mastering the markets. You have to overcome your biological predispositions and override past learning experiences. Your biology and past learning in most cases protect you, but when it comes to trading, your natural biological urges and your past experiences may work against you. Biological reactions and past learning experiences work hand in hand to protect us, for example. Let's look at taking losses easily as one such example. When we touch a hot stove, we recoil out of fear to minimize damage to ourselves. Similarly, we carefully avoid spending money in our personal lives to avoid mounting debt that will be difficult to pay off. These past experiences protect us for the most part, but mastering the markets requires that you control biological reactions and modify past learning experiences. Rather than fear, you must practice staying calm in the face of danger. In addition, you must modify the rules you've followed throughout your life, such as taking chances with money and learning to think that losses don't matter.

Intellectually, you know you have to risk money, control your impulses and emotions, and make logical decisions to trade profitably. But this is easier said than done. You naturally will get excited when you make a winning trade, naturally feel disappointed when you lose money, and naturally close out trades when you perceive the market is about to move against you. You are human, and it is hard to fight human nature. Depending on your past experiences, temperament and personality, you will want to seek out solace from others when you lose, and if you have been successful in life, you have assiduously followed the lead of others and tried to adhere to social norms. Master traders, however, tend to act differently than most humans. They look inward for direction. They are not afraid of taking risks, even if it means hurting themselves in the end. Throughout history, famous traders, investors and business leaders have had tremendous ups and downs in their lives. Unlike most people, though, they bounce back and seem to take even the biggest setback in stride. You probably know this, but knowing this is often of little help. You are who you are. There is nothing wrong with that. Everyone has his or her own unique history and you have to appreciate yours. Unfortunately, that may mean that you won't be a winning trader tomorrow or even next year. But the good news is that if you work hard enough, you can overcome your biology and past learning experiences.

How do you do it? You must do it gradually and work hard at it. If you have trouble taking chances or recovering from losses, for example, minimize the chances that you do take. Accept your own personality. Don't make big trades where you risk twenty percent of your capital on a single trade, for example. Risk only two percent. Practice taking losses in stride; with every loss, practice telling yourself, "Losses should be expected. I'm not going to let it bother me." If you are like most people, this isn't going to work very well. The loss will gnaw at you. Again, it is natural to be bothered by losses. Your past learning has taught you to be bothered. If you were not bothered, you would have never been able to save enough capital to trade. These beliefs and biological reactions were adaptive throughout your life, so you can't expect to break free of them easily or quickly. It will take practice, and with enough practice you will change. With each small losing trade you will learn to accept the painful feelings of loss. You have to practice telling yourself that painful feelings of loss are a fact of trading life. Practice looking at the loss with a third eye, as if you are looking at yourself as if you are a character in a movie. Pretend it isn't real money but Monopoly money you are losing. Over time, your perspective will change, and you will start to learn to accept losses more easily. You can't overcome your natural inclinations over night, but with a commitment to change and with practice, you can make significant changes and become a master trader.

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Coping Skillfully To Achieve Success

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 26 Apr 2010 22:04:00 +0000

The markets are often unpredictable and uncertain. Some people collapse under the pressure, while others thrive on it. What's the difference between a trader who gallantly fights the stresses and strains of the markets and one who runs away in defeat? The specific approach you take to managing stress may be part of it. Traders who can weather the storm tend to make enormous profits, while those who succumb to the pressure end up losing. The market can be a mass of seemingly random movement, and vulnerable traders see chaos and uncertainty. They panic and act impulsively.
They ride a rollercoaster ride of emotions ranging from extreme disappointment after a loss to uncontrolled euphoria after a win. Winning traders, in contrast, see order in what others see as chaos. They believe that the odds are in their favor, and that if they make enough trades under ideal market conditions, they will come out ahead.

In "The Psychology of Trading," Dr. Brett Steenbarger describes a study he conducted with a group of 64 active traders. He discovered that the way traders coped with stress predicted profitability. He measured personality traits and the ways these traders coped with stress. Some traders were problem-focused copers in that they managed stress by developing specific plans for coping with stress. For example, they tried to find information to help them develop a specific plan to alleviate stress. They focused on their ongoing experience and methodically took a step-by-step approach to overcome stress. Less successful traders spent all their energy experiencing and trying to control unpleasant emotions. They denied that stressors were a problem instead of devoting their effort to finding solutions. In addition, they believed that the world should conform to their expectations rather than accept stressful events at face value. Their shortsighted focus on coping with unpleasant emotions clearly distracted them from trading the markets skillfully. Dr. Steenbarger's findings suggest that they tended to abandon their trading plans and traded less profitably than traders who were problem solvers.

It's tempting to succumb to the stresses and strains of the markets, but if you do, you will experience unpleasant emotions that will interfere with your ability to tackle the markets with a calm and focused mindset. Whether you are a novice or seasoned trader, however, you can learn to handle the uncertainty of the markets, and the stress it may produce.

The first step is to acknowledge that stressful events can interfere with your ability to perform. You'll waste more time and effort trying to avoid the potentially debilitating effects of a stressful event than if you just admit you may have a problem and try to work around it.

Second, it is vital to take an active, problem solving approach. Stay optimistic, yet realistic. If you put in the effort, you can overcome anything. Don't let the stresses and strains of the markets paralyze you. Think creatively and actively problem solve. You'll feel better, trade better, and take home more profits.

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Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
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False Hope

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 12 Apr 2010 05:32:00 +0000

In "The Disciplined Trader," Mark Douglas suggests, "Execute your losing trades immediately upon perception that they exist. When losses are predefined and executed without hesitation, there is nothing to consider, weigh, or judge and consequently nothing to tempt yourself with. There will be no threat of allowing yourself the possibility of ultimate disaster." This is sound advice, but studies by behavioral economists suggest that many traders have difficulty following it. When they find themselves in the midst of a losing trade, they persist with a losing course of action, rather than cut their losses.

Why do traders falsely hope that a losing trade can turn around? There are many possible reasons. Research studies have shown that investors tend to believe a loss is merely temporary and that if they wait it out, a losing trade will turn around. In the markets trading outcomes are often uncertain, and this uncertainty allows people to hope for the best.

Holding losing trades may also reflect what behavioral economists call the sunk cost effect. Sunk costs refer to the original amount that is paid to acquire a stock. Sunk costs increase when the losing position decreases in value. During a losing trade, some traders talk themselves into believing that the "true" value is higher than the market suggests. They convince themselves that the "true" value is closer to their initial cost, or entry point, rather than its current value, and can't see why they should sell at a loss.

Denial and unrealistic optimism may be another plausible explanation. Humans are naturally risk averse; they are afraid to gamble with their wins, but are very willing to gamble with their losses. While in a losing trade, traders are willing to believe that by taking a chance, and holding on to a losing trade, the odds will work in their favor and the loser will turn into a winner. Other traders believe they are special and that their special talents or good fortune will turn a losing trade into a winner. Many traders, though, are afraid to admit they are wrong. They have a natural human tendency to believe that they made the right choice. After people make a decision, they tend to search for evidence to support their choice.

All of these explanations are viable, but we propose a few other possibilities. We have conducted our own analysis of the situation. We asked a sample of traders if they tended to hold losing trades and falsely hope that the trade would turn around. About 50% of our sample admitted they suffered from this ailment. What were these traders like? They tended to show less discipline and self-control in their personal and trading life than traders who readily closed losing positions. In addition, they tended to base their trading decisions on their intuitions rather than specific facts, and they tended to experience unpleasant emotions, such as anger, fear, and disappointment more frequently. If you show these personality characteristics, you may be prone to hold on to a losing trade, but you can overcome this tendency if you try.

First, accept the fact that losses are commonplace. You should expect to lose. Don't take losses personally. Losses do not reflect on you or your personal worth. They are routine in the trading business and should be put in the proper perspective. If you take losses in stride, you'll feel better. Second, define your potential losses before you execute a trade. Third, practice exiting your losing trades with precision and accuracy. Visualize encountering a losing trade and exiting promptly. There's no point in falsely believing that a losing trade will turn around. Take losses in stride and move on.

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Don't Let Overconfidence Undo Your Winning Streak

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 05 Apr 2010 01:25:00 +0000

Skip has been successful in everything he has tried: sports, academics, and business. He recently started trading to prepare for his retirement. He's done well, and last week made huge profits after a long winning streak. He is psyched up and optimistic. At this point, there are two ways Skip can go. He can either stand aside, and let his optimism wane, or he can jump back in the markets, and potentially give back his profits. A study by behavioral economists Brad Barber and Terrance Odean showed that young traders like Skip tend to take unnecessary risks after a huge windfall. They overtrade and tend to end up with lower account balances than traders who did not have a windfall. Trading expert Martin Pring in "Investment Psychology Explained" notes, "after a long winning streak, almost every investor and trader falls into the trap of thinking that he is infallible." If you want to stay profitable, it is vital that you control your optimism.

Everyone wants to be good at trading. Not only will you have more money and status, but you can have pride in knowing that you've developed a skill that few possess. You are one of the elite who mastered the markets. Rewards usually go to the humble, though. The markets have a way of exposing the arrogant trader who feels omnipotent.
Martin Pring offers a few guidelines for how to control your optimism and stay profitable. The first step is recognizing that you may have a problem with pride and overconfidence. Admit that you are human, fallible, and can make mistakes. Once you admit that you are human, you will feel free and be willing to look at past trades more objectively. If you think, "I'm the greatest trader in a decade," you won't be willing to look for faults in your trading plans. But if you think, "I'm human; I'm fallible, and of course I make mistakes," you will look at your past trading plans with a critical eye and you'll surely find ways to improve.

Second, focus on potential risks before potential profits. Traders who are overly optimistic tend to focus on the positive aspects of a trade, specifically how much money they will make. It's more important to focus on how much money you may lose, however. If you focus on what you can lose, you'll avoid risky, low probability setups. You'll search for less risky trades that have a better chance of making a profit. Third, develop a clearly defined trading plan with a clear exit strategy. Determine either a point where you decide the market has moved against you or a profit objective where you take profits and close the position. Committing to a specific trading plan will help curb your over-enthusiasm.

Finally, it's useful to move profits out of your account occasionally. For example, once you reach a 20% profit objective, take the money out so you will have a feeling that you have to start over again. You may also want to take a break from trading to feel that you have to "start over," sort of like summer vacation at the end of the school year. When you come back, it will feel like starting a new school year with new challenges. This strategy will help you control feelings of overconfidence after a big win. Many traders allow overconfidence to wipe out the profits they have just made. Don't give profits back. If you stay humble, you'll increase your chances of staying profitable.

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The Future Is Never Certain

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 29 Mar 2010 18:13:00 +0000

When trading the markets, uncertainty is often a fact of life. Consider the plight of Jack who tried to add as much certainty into his trading as possible. He decided to invest in a solid retailer. Consumer confidence was high and sales had been high at the retail stores for the past two years. He looked closely at the five-year chart and noticed a clear, upward trend. When the price did temporarily drop, the most it had ever fallen in the past five years was about $3. It was currently trading at $40. He decided to buy 2000 shares and protected himself by placing a stop at $37. He reasoned that the past five years would be a good indicator of what might happen in the next year: the stock price should continue to rise and should only fall by $3 at the most. There was something psychologically pleasing about studying the fundamentals of the company and its past stock performance. He felt assured. Even though his risk was almost 8% of his trading capital, he decided the risk was worth taking.

Unfortunately, history only repeats itself when it does. A month after entering the trade, the stock price fell to $35. Jack couldn't believe what happened. He thought, "How could I have been so wrong? I had considered all possibilities." Many novice traders think like Jack. They seek out a level of consistency in the financial markets that just does not exist. They believe that the markets follow natural laws and falsely believe that there are some magical mathematical principles that underlie it all. Big time institutional investors may be able to forecast the market action in the long term, but they have mountains of capital and can attempt to hedge risk, and even they have great difficulty merely matching the yearly increases of the indexes. For the smaller investor or trader, there are no secret mathematical formula. The past is the past, and what happened in the past may not forecast the future.

Don't falsely think that you can forecast market action with the same precision a physicist can program a satellite to reach Mars. The markets don't follow natural laws. There are many unknown factors that underlie the price action. The best you can do is study all available information and make an educated guess. As long as you manage risk, you can make trade after trade and get the odds to work in your favor. You won't be right all the time, but you'll be right enough of the time to make a profit. It may be pleasing to think that you can add certainty to trading, but you can't. You'll feel better in the long run and trade more profitably if you accept the fact that the future is uncertain.

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Staying On Target

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 15 Mar 2010 06:24:00 +0000

After carefully studying the technical fundamentals of a tech stock, John decided to buy 1,000 shares at $50 a share. After a recent product announcement, however, it traded at $54. Although it was higher than he had preferred, he felt it was still a good investment and figured he might as well buy at the higher price before it went even higher. As is often the case after a product announcement price jump, the price fell to $50 a share a few days later. Jack started to kick himself, "Why couldn't I wait. I knew it would fall. I should have waited. I could have saved $4,000." Jack plans to hold the position for six months and he still thinks the stock has the potential to hit $60, but he can't seem to stop berating himself for buying too soon and spending an extra $4,000. His feelings are understandable, but it's distractions like these that often throw traders off target. It's vital to continue to focus on your trading plan and not be stifled by self-reproach.

Depending on your personality, you may be prone to kick yourself for making trading mistakes. In John's case, he may have bought a stock at a higher price than he had hoped, but it isn't a disaster. According to his trading plan, he can reach his objective of selling at $60 in six months, and making $6,000 as he had anticipated. Many traders, though, are overly perfectionistic. They can't stop obsessing about how they could have entered and exited a trade more skillfully. Striving for high ideals is noble, but when it distracts you from focusing on your ongoing experience, it can be detrimental. For example, if Jack continues to berate himself for buying too high on this trade, he may not be able to focus on researching the next trade and developing a sound, new trading plan. He may also feel less spontaneous and creative. His mind may become filled with self-doubt and his thinking may become clouded. Striving for perfection can be much more of a distraction than a benefit in the long run.

At times of self-reproach, it's essential to talk yourself out of it. It's necessary to move from a mental state that concerns obsessing about errors to a calm, focused mindset concerned with thinking creatively. Although they may sound trite, repeating a few common sayings about trading the markets may be quite helpful: "I'm going to trade my plan and stick with it. I'm going to go where the markets take me. I'm a mere mortal; I can't control the markets. I need to accept the fact that I'm human and may make mistakes." You don't have to trade perfectly. You just have to trade profitably. Put a single trade in perspective. It's just one trade of the many trades you will make in your lifetime. You may lose or you may win, but the outcome of a single trade does not matter. What matters are your overall profits across a series of trades, not just a single trade. Rather than beat yourself up for minor mistakes, stay on target. You may make a mistake here and there, but it's all right. Take a mistake or a setback in stride and move on. If you look at the big picture and accept your human tendency to make mistakes now and then, you will increase the amount of time you spend trading with the peak performance mindset of a winning trader.

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Remembering the Obvious

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 08 Mar 2010 05:53:00 +0000

Traders are notorious for making the same mistakes over and over again. They abandon their risk limits. They sell earlier than their trading plan dictates, or hold on to losing trades too long. It's human to make mistakes, but long-term profitability in the challenging field of trading requires steadfast discipline. Discipline is often hard to maintain, however. Humans are prone to falter and act on impulse. How can you fight impulses? One straightforward method is to develop simple plans and remind yourself as to why you need to follow them.

There are times when we try to make things more complicated than they really are. Humans tend to over-think matters and seek out complexity. We may wonder why we make common trading mistakes, and as we wonder, we may search for a "hidden," unconscious reason for it all. Perhaps we secretly feel we don't deserve the profits we make and want to give back what we've made to return everything to the status quo. Maybe we secretly see money as the root of all evil and have trouble accumulating wealth. If you do hold these beliefs, they can severely hamper your trading performance, but not all traders are influenced by such unconscious motives. Sometimes a lack of discipline merely reflects a very human inability to make simple plans and follow them.

Psychologists have long noticed that people have trouble following simple plans. Whether it is managing their time, losing weight, or trying to stop smoking, people have difficulty controlling their behavior. One effective strategy, though, is to take a few obvious steps: Make a simple plan, observe and write down the conditions that stop you from following your plan, and remind yourself of the benefits for following your plan.

For example, if you have trouble maintaining your risk limits, it could be for simple reasons. You may be tired during the trading day and allow your objective state of mind to waver. Or you may get bored during the trading day and want to seek out a little excitement. Whatever it is, it is necessary to outline the specific conditions under which you do the undesired behavior that you are trying to change or control. Once you know these conditions, it will help you anticipate when you are prone to fall prey to them. No one can know under what conditions you engage in an undesired behavior but you. Identifying the conditions under which you do an undesired behavior is harder than it looks. It may take time to observe yourself making mistakes and identify when mistakes happen. The next step is obvious: Write down why changing your behavior is important. If you want to avoid risky trades, for example, then you need to write down why it's important to avoid such trades. You might write down on an index card, "I cannot afford to keep losing capital or else I will blow out my account." Once you write this fact down, you will have to repeat it to yourself over and over again. Will repetition of this fact guarantee that you will change? Unfortunately, no! But it will go a long way toward making you change. There's something about human nature that is hard to change, but if you repeat the reasons you need to change over and over again, it may stick with you.

Sometimes self-control is just a matter of willpower and reminding yourself you can maintain control if you try. It's like standing in line at the grocery store. If the line is long and there is only one checker available in the whole store that is impossibly slow, you may be tempted to leave, but if you decide that you want your groceries no matter how long it takes, you can convince yourself to wait in line patiently. You can repeat over and over again, "I'll eventually get out of here if I just wait my turn. I'm determined not to leave." Repeating this mantra over and over again will help you stay in the line. But if you think, "I don't have to time to wait. Maybe I can walk out the door and go to another store," leaving will start to seem like a good idea and you will do it. A similar strategy can be taken with trading. If you want to avoid selling a trade prematurely, it is useful to repeat to yourself over and over again, "Stick with the trading plan. Don't sell until the price reaches my profit objective." Repetition is the key strategy. Repeat what you want to do and remind yourself over and over again why you want to do it. Focus only on the trade at hand, and repeat what you want to do over and over again. It may seem obvious, but it works.

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Handling Success

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 01 Mar 2010 21:50:00 +0000

In his book, “Trading to Win,” Dr. Ari Kiev notes, “winning days are often followed by plateaus and losing streaks.” Behavioral economist Dr. Terrance Odean observed that novice online investors who had a series of winning trades tended to have periods of overtrading. It’s as if they believed they could take more risks, and potentially lose profits, since they had just made more than they expected. If you want to be a profitable trader in the long run, though, you must learn to keep your profits rather than give them back to the markets.

Why are winning days often followed by plateaus and losing streaks? Loss of focus and concentration is a major reason, according to Dr. Kiev. In the back of their minds, most traders are thinking, “How am I going to find a profitable trading opportunity?” When you find it, and capitalize on it, you feel relieved. You may wrongly think, “Now I can relax. I can let my guard down.” When you relax, you might trade less carefully. You might take lower probability setups because you think you have the luxury of taking risks. Or you may become overconfident and move beyond your risk limits because you are ahead. This is where traders end up giving profits back to the markets. Just because you have a little bit of a winning streak does not mean you can be sloppy and lose focus. It’s vital at these times to maintain concentration. Stick with your method, continue to develop trading plans, and follow your trading plan.

A second reason losses may follow winners is that winning takes psychological energy. Winning may feel great, but as you are winning, your adrenalin is pumping. After a big, exciting win, your mind and body just want to relax. When you are worn out, you are prone to make poor decisions or trading errors. The solution to this issue isn’t clear. Dr. Kiev suggests regrouping, and to continue to face the markets in earnest. This may be hard to do for some traders, however. The mind is like a muscle. Once you expend psychological energy, you need rest. It’s like playing a championship game. Some players are so prepared mentally and physically that they can play the entire game with ease. For other players, the added stress of a big game wears them down. It’s the same with trading. If you are rested up, you can regroup, and continue trading after experiencing big wins. You just need to be aware of your tendency to let your concentration lapse, regroup, and then face the markets with a renewed focus. If you are so tired that you cannot recover quickly, however, you may want to stand aside until you feel you are fully rested. But whatever you do, don’t underestimate, or be completely unaware of, the psychological toll that winning takes, and how after a win, you may be prone to trading the markets with a sloppy, unfocused mindset.

Although some traders secretly feel they don’t deserve to make profits in the markets, and unconsciously sabotage themselves, for many, it’s just a matter of feeling that you need a big reward after the good fight. This reward usually manifests itself as a sloppy, unfocused approach to trading. Be aware of this tendency, so that after you experience winning trades, you will stay focused and maintain your momentum, rather than give profits back to the markets.

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Waiting Patiently For Your Financial Dreams To Come True

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 22 Feb 2010 08:49:00 +0000

If you are like most people, you want to make a fortune, and you want to make it now. It is a reasonable wish. Who wouldn't want to make enough money to make all their dreams come true? But such a future-oriented focus is often the undoing of many traders. Making money in the markets takes time. You have to wait for ideal market conditions and you have to build up the requisite trading skills to take home huge profits. And if you are like many traders, it will also take time to save up enough capital to trade on a scale that can make you wealthy. If you are serious about making it in the trading business, you will have to learn to be patient.

Many people can't wait to be rewarded. Depending on your style of trading, being unable to wait patiently can be a problem. For a long-term investor, for example, it is necessary to buy-and-hold long enough for a long-term strategy to play out. There may be minor fluctuations during the waiting period, but seasoned investors have learned to wait it out. Most novice investors, in contrast, impulsively sell as the masses panic and buy the stock back at a top, which usually results in a losing trade. If you are a long-term investor, it is necessary to be able to control your impulse to take a profit and allow the price to rise over time. Even shorter-term traders, such as a swing trader, must fight the urge to sell early. Although trades are held for much shorter windows, a swing trader must know how to wait patiently for the optimal time to sell.

Trading expert, Dr. Van K. Tharp argues that impatient traders tend to show a future-oriented focus. They dream of the profits they will make in the future, but at the same time, they desperately need them right now. Getting rid of impatience requires the trader to curb this future-oriented perspective and focus on the near future. Traders can become more patient by following a set of specific steps. First, it's necessary to admit that you are impatient. This can be difficult to do. It's hard to admit our limitations. One of the best ways is to make it impersonal. Pretend you are watching a television show about yourself. Pretend the character on television isn't you. Watch how impatient you are. See yourself as an objective observer would see you, and then, think about how you might change. Second, imagine you have two "tuning" knobs in front of you. Pretend that one of the knobs controls your focus on the future. If you turn the knob to the right, you will focus years into the future. If you turn it to the left, your focus will move closer to the present. When you are impatient, you are looking deep into the future. If you are extremely future-focused, you need to make an adjustment. Turn the knob to the left until you are focusing on the present. The second knob is the speed of your thoughts and behavior. When you are impatient, you are thinking too quickly and impulsively. Imagine turning the speed control down until you think and react more slowly. Third, realize that your impatience may be a signal that you need protection from the consequences of a trade, or trading, that you are afraid to face. When you are afraid of facing a potential loss, you may impatiently close a trade for fear of experiencing a bigger loss. It's better to face consequences head on. Can you afford to lose capital on a series of trades? Or, are you making up dire consequences that don't exist? It's necessary to consider the consequences of your actions and decide if you can deal with them. Finally, remember times when you showed self-control and were patient. What did you do? How did it feel? Implement some of the thinking patterns and behaviors that helped you maintain self-control in the past.

Don't let impatience thwart your long-term economic plans. Impatience can dash traders' hopes for economic success. Without the proper discipline, you will make losing trades that will eat away at your account balance. By trading with patience, you can build up your account balance slowly and surely and eventually reach your economic goals.

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Seeking Out Protection In A Risky World

noreply@blogger.com (Reynaldo Soriano Jr) — Tue, 16 Feb 2010 21:14:00 +0000

For the past few weeks, making a profit in the trading world is hardly a sure thing. How you deal with this fact of trading, though, depends on your personality. Some people take risks in stride, while others obsess over them. Which type of person are you, a natural born risk taker or an obsessive, fearful seeker of safety?

Life is a matter of taking risks, but some people embrace it while others superstitiously try to avoid it. For example, have you ever seen an extremely ineffective car theft device called "The Club?" One is fooled into believing that by putting a massive metal bar on your car steering wheel, you are protected. It seems like it would work until you realize it takes merely a few minutes to cut the steering wheel with a hacksaw and pull it off. Similarly, why do car stereos have removable faceplates? Do you think thieves are actually unaware that there isn’t an expensive stereo beneath a removed faceplate? These kinds of "protective" devices make us feel better, at least until we realize that they don't work. At that point, we think, "How could I have been so stupid?" That said, feeling protected helps take the edge off. Even if it is just superstitious behavior, like wearing your lucky shirt on the day of a big trade, you feel better when you do it. There's a psychological benefit to it, even if it isn't foolproof.

We can alleviate some of the uneasiness of taking risks through risk control. By risking a small percentage of your trading capital on a single trade, and looking at the big picture, you will feel more at ease. From a psychological viewpoint it is to your advantage to make a potential trading loss so insignificant that you may start thinking, "Why am I even bothering making this trade?" There is no universal rule for how to limit risk. Some experts suggest risking merely 2% of your capital, while others suggest 5%, and still others suggest using past market action to determine the amount of loss you can afford to take (for example, if the market is bullish with many opportunities for profit, then you can take a little more risk.)

The best way to control risk is to set a protective stop, but whether or not you set a stop loss or how you do it depends on your personality and attitude toward risk. If you are a natural born risk taker, you may not set a formal stop loss at all. You may keep an informal stop loss point in mind and close your position when the stock price reaches that point. At the other extreme, the obsessive-compulsive, worrier trader may set the stop loss too close to the entry price and end up getting stopped out too early. The middle ground seems to be reasonable for most traders. Again, it depends on your personality, but if you are afraid to take a loss, a stop loss can help. If you don't have a stop loss and hate taking a loss, you may not close out a position when the price falls hard. You may be prone to hope against hope that the trade will turn around, and watch your losses mount as you fail to take action. The stop loss order, however, guarantees that you will be out of the trade should the price take a dive. The trick is not to be overly rigid or rule oriented when setting a stop loss. The obsessive-compulsive trader, though, tends to make up superstitious rules for setting a stop loss. For example, suppose that a trader has a $100,000 account and does not want to lose more than 2% or $2,000 on a single trade. Suppose that the trader buys 1000 shares at $50 a share, a potential loss of $50,000. An overly rule oriented trader may mechanically decide that the price cannot fall below $48 and set a protective stop at that point to restrict the losses to about $2,000. But this is superstitious behavior to some extent. The stock may fluctuate between $47 and $51 as is rises over time. The trader is likely to be stopped out. It is vital to be more flexible. It may be necessary to purchase less than 1,000 shares and set the stop loss lower in order to minimize risk to about $2,000, or just risk more than $2,000 if the potential profit warrants taking a slightly greater risk. Whatever you do, it's necessary to accept uncertainty and make a reasonable decision than a superstitious one. Taking losses are difficult, and we all want to seek out protection to ease the burden of making tough decisions, but it's essential to make reasonable decisions rather than superstitious ones. Protect yourself, but don't be afraid to take a little extra risk when you need to. Risk is a fact of life, and in order to live productively, you must accept it.

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Regaining Emotional Control

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 08 Feb 2010 09:34:00 +0000

Imagine the ultimate relationship with the markets. You clearly see a stock reach your entry point; you execute your plan, patiently wait for your profit objective, and take a profit. In your imagination, it's all so easy. You are calm, patient, and disciplined. Sometimes we trade in such a peak performance mindset, but oftentimes, we don't. We may get thrown off by an adverse event, or for some unexplained reason, we feel irritated and just can't seem to see things clearly. Have you ever been so frustrated that you look at your screen and you just can't seem to concentrate easily? Once you are extremely frustrated, everything starts to get blurry. You look at the most simple indicator and it's hard to fully comprehend it. At these times, you have lost control of your emotions and you may be likely to make a trading error. It's vital to regain control.

Ideally, a peak performance mindset exists when you have nerves of steel. You are calm, focused, and able to fully attend to the markets. There are no distractions, and even if there are, they don't faze you. This ideal can be difficult to achieve at times. Sometimes, you are tired and you have difficulty concentrating. It may seem obvious, but the best way to make sure that you can enter and stay in a peak performance mindset is to get plenty of rest. Make sure you aren't hungry, sleepy, or physically uncomfortable. These factors in and of themselves may not always lead to trading errors, but they can contribute. You may be hungry and sleepy, and suddenly, an adverse event thwarts your trading plan. You may not react as you had planned if you are distracted by hunger and unable to concentrate because you are sleepy. The best way to prevent factors, such as hunger and weariness, from having a potential influence on your trading performance is to eat healthy and get plenty of sleep.

Ideally, you should love trading. You should trade because it is your passion, not because you need the money. That said, not everyone can always love this profession that much. Ideally, you may prefer to trade mainly for the inherent intellectual rewards, but the fact is, you probably want the money too. Everyone has pet peeves with trading. It's important to identify your pet peeves. Perhaps you are not adequately capitalized, but need to do the best you can with your available financial resources. Maybe you would like to trade in a completely carefree state of mind, as if outcomes don't matter, but you need to make money on trades to pay some of your bills. Perhaps you like to trade, but part of you (maybe only a small part) wishes you were able to do something else, such as real estate investing. Everyone has unique pet peeves, and these pet peeves can influence your trading at times. In the back of your mind, you mull over these issues, and when things do not go your way, you may be prone to think like a victim, "Why can't things go the way I had planned. I wish I had more capital to trade bigger. I should give up this pipedream." How do you deal with this issue? You can't entirely eliminate the impact that these pet peeves may have on your mood, and thus, your trading performance, but you can neutralize them. First, acknowledge that you have pet peeves. Make a list of every possible pet peeve during off hours. Second, acknowledge their significance and truly admit that they may bug you at times, but also genuinely acknowledge that in the end, you prefer to trade despite them. Once you take these two steps, you'll find that your pet peeves with the markets and the trading profession will impact you less during the trading day.

Our emotions can surprise us at times. We think we are calm and ready to approach the markets with discipline, but something distracts us. It seems to come out of the blue, and it often does. However, if you get plenty of rest and identify and resolve psychological issues that lurk in the back of your mind, you will be more likely to regain the ideal mental state you need to trade profitably.

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Trading Like a Warrior

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 01 Feb 2010 05:04:00 +0000

It's the middle of the trading day. You’ve been monitoring the market action carefully. Everything seems just right; you enter precisely at the point you had planned. Now it’s just a matter of waiting patiently for the price to rise to your profit objective. So you wait. It rises a little, but when it wavers, you start to lose confidence. You think, “Maybe I was wrong about this trade. The market seems to be going against me.” What do you do next? Some people panic. Out of fear, they freeze. While in a daze, they can’t take decisive action. Other traders get angry. They think, “The market isn’t supposed to move that way. What’s going wrong? Someone or something is manipulating the market unfairly.” Usually, thoughts like these make you upset and emotional. Emotions at critical moments of trading can knock you off your game. Rather than thinking calmly and rationally, you are overly emotional and on the verge of making a trading mistake. Rather than trade emotionally, though, it’s better to trade like a master warrior, a person who stays cool under pressure, and focuses on the process of trading rather than on the prize.

Psychologist, trading expert, and best selling author, Dr. Richard McCall is a good example of a trader who focuses on the process rather than the prize. He approaches trading the same way as he approaches the martial arts. As a master in the martial arts, Dr. McCall argues that the execution of a trade should be approached in the same manner as a martial artist fights an opponent. Dr. McCall argues that many traders react emotionally as they trade. They don't trade in the proper state of mind. In an exclusive interview, Dr. McCall advised, "instead of worrying about the money, you really must concentrate on creating an art form…get away from the reward issue…get away from the downside or the upside. You must learn to perform and execute flawlessly in a Zen like manner. Unfortunately, people execute a trade merely to make money. That trips them up. It makes them uninspired. It makes them confused, and it will ultimately interfere with their ability to be fluidly consistent." According to Dr. McCall, many traders are consumed with emotions when they should be focusing on their ongoing experience. "They just angst over how to get the very best execution and get the most money out of the market. They get mad and angry because they encounter slippage and things like that." Rather than trade emotionally, it's vital to stay calm and logical. Take your ego out of the picture and focus on what is happening moment by moment.

Research studies illustrate the benefits of taking decisive action rather than focusing on the prize. Compared to people who focus on executing a specific action plan, people who concentrate on the rewards they will receive upon completing their goals are less likely to achieve their goals (Powers, Koestner, & Topciu, 2005). A warrior doesn't focus on the benefits of winning a battle. The battle must be won first. A warrior who stays alive focuses on immediate, ongoing experiences and taking decisive action. If you want to trade profitably, you must do the same. Focus on the process of trading, and think about the prizes after they are safely deposited in your bank account.

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The Lottery Mindset

noreply@blogger.com (Reynaldo Soriano Jr) — Sun, 24 Jan 2010 08:30:00 +0000

Do you ever dream about winning the lottery? There are actually people who have such good luck that they repeatedly enter contests and win. They win so often that if they wanted, they could count on winning, even though they are essentially trying to capitalize on chance. They develop a "lottery mindset" in that they approach life by counting on rare chance events. The rest of us aren't so lucky, and we don't live our lives counting on a fluke like winning the lottery. We work hard, master a profession, and work steadily to make a living. In many ways, top-notch traders approach their profession in the same diligent way. They don't view trading as recreational gambling, and count on a fluke to make a profit.

That said, many people do experience key life-changing events. We have all heard of people who needed a lucky break and got it. You often hear of actors who with their last 50 bucks went on an audition and landed a job and ended up as a star of a hit sit-com. You probably know of friends who were desperately searching for a job for months, and needed a job fast! With only a week's worth of resources left, they found a job. It can also happen in sports. Olympic athletes may practice their entire life for "one moment in time" when they can perform at their best. But there is some luck involved. A family member may pass away or they may become ill, and it may throw them off their game. Sure, they have rare talents, but the Gold Medal winners are also lucky enough to have everything go their way. There are times when life can come down to a few key moments. It's a little like playing Lotto and hoping that you'll win.

Even though profitable traders don't approach trading as if they are playing the lottery, they all have at least one big winning trade in their careers. In a series of exclusive interviews, we asked traders to describe their biggest winning trades. Jesse described how he invested in Juno Online. "I bought about 3000 shares, and the stock went up 20 points in two days. It went up fast and there was really no reason for it. I had a feeling it was just hype and euphoria, so I sold out and made $60,000." Andy described how he used to trade currencies. "One day I was trading Yen, and made around $18,000 in just a day." Don's biggest trade was in the heyday of the dot-com boom. "A European auction company was upgraded one morning. It was touted as the next eBay. CNBC was playing it up. The stock had just split and they got the price target a little bit wrong. They quoted an ungodly high amount. This was merely a single digit stock. That morning it had traded up over 100. I shorted it as it was opening. It opened at 80 or 90 and it ran up to 120. I ended up covering the next day at half of what I shorted it for."

Do people make huge profits capitalizing on a once in a lifetime trade? Sure they do, but the question you need to ask yourself is, "Do I want to trade hoping to make all my profits on a fluke?" Do you want to approach trading with a lottery mindset? If you do, you'll always be on edge and you will have difficulty trading with discipline. You'll tend to take big chances, and you may end up losing big. It's better to trade more prudently. That doesn't mean never taking a risk or pushing yourself to invest a little more capital when you hit upon a winning streak. What it does mean, though, is controlling over-confidence. Don't seek out those one or two trades a year that will make up for all you've lost. There's an advantage to using a more methodical approach: Continue to search for solid, high probability trade setups, outline detailed trading plans, and trade prudently with unwavering discipline.

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Don’t Self-Sabotage: Think Optimistically and Take Advantage of New Market Opportunities

noreply@blogger.com (Reynaldo Soriano Jr) — Wed, 20 Jan 2010 01:32:00 +0000

There was no January Effect in 2010. No steady increase in prices on the last days of the year. Things looked very optimistic at the end of the year. The last day of trading for 2009 seemed to be a downer, but the first day of trading for 2010 seemed full of optimism. Retail sales weren’t so bad at the end of the year, and all indications suggest that the Fed will not raise interest rates anytime soon. The economy seems to be growing. Good trading times may be just ahead. Are you ready? It’s times like these when the right mental edge can make all the difference. If you want to take advantage of trading opportunities for the New Year, it’s vital that you approach trading with the proper mindset. Be ready to work hard and do whatever it takes to come out a winner.

Unfortunately, many traders aren’t up to the challenge. They don’t have the proper mindset. They don’t have rock solid confidence, and when they see a high probability setup, they flinch, make a trading error and end up with a losing trade. When market conditions are ideal, though, you must be ready to take advantage of them. Self-reproach is the biggest culprit. Many traders are ready to criticize their actions.

Some traders take setbacks in stride. Nothing seems to faze them. Why? They know how to put any setback into the proper perspective; they readily think, “It’s just business. It says nothing about me.” After years of experience, they’ve seen it all, lived through it all, and have learned that the markets are ultimately in control, and so there’s no reason to get unnecessarily upset about the uncertainty of it all.
Other traders, however, secretly fear that the markets will expose their inadequacies. Deep down, they believe they will eventually fail. A little voice in the back of their mind tells them so. This little voice isn’t correct, helpful, or accurate, but it has a subtle impact on the trader’s every move. These thoughts usually happen just below our awareness. Dr. David Burns in his book, “Feeling Good,” calls these thinking patterns “automatic thoughts.” An event happens, such as the market goes against you, and you “automatically” think, “The truth is out; I can’t keep trading profitably.” The old saying, “I think, therefore I am,” is apt here. If you think you can’t keep up your trading performance, you won’t be able to. You’ll start believing your little voice that tells you that you can’t trade. And you will find that even a minor trading error will upset you.

How do you defeat the little voice? Dr. Burns suggests writing down your automatic thoughts after they happen and analyzing them. Break them down, refute them, and convince yourself that they just aren’t true. For example, if you face a trading setback and think, “This setback shows that I’m not a natural born trader; I might as well give up,” you will actually feel like giving up. This automatic thought is inaccurate, however. When you look at it more closely, you can see that it is not true. First, setbacks happen to all traders. Setbacks should be expected. By thinking they are rare and significant, though, you are exaggerating their importance. You are “magnifying” the event into something bigger than it really is. A setback may reflect poor market conditions, and it may even reflect a lack of experience on your part to deal with a particular set of market conditions, but it is not so meaningful that it is a “sign” that you are not a “natural born trader.”

Keep things in proper perspective. In addition, believing that there is such a thing as a “natural born trader” is another fallacy. Maybe there is no such thing as a “natural born” anything. The philosopher John Locke argued that the mind is a blank slate. You can learn how to do anything if you set your mind to it. Granted, you may not ever be Paul Tudor Jones, but you don’t need to be a “Market Wizard” to make profits in the markets. Believing that only a top-notch trader can make money in the markets, and that you will never be one of them, just sets you up to feel bad about yourself. Forget about whether there are or are not “natural born traders.” Work under the assumption that you can go far if you work at your own pace to master the markets and work as hard as you possibly can.

No one really knows what the future will hold, but the start of the New Year looks promising. Don’t sabotage your efforts through self-doubt and unreasonable self-criticism. You can trade profitably if you put in the time and effort. Think optimistically, work hard, and take home the profits.

January Workshops:

* GOAL SETTING Workshop - Palo Alto CA
Jan 23 and 24, 2010 - "How You Can Create Your Future - 2010"

Click here for more information

NEW! Join our Trader's Support Group! Click here for more information!

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714

Plans for the New Year - 2010

noreply@blogger.com (Reynaldo Soriano Jr) — Mon, 04 Jan 2010 18:53:00 +0000

Happy New Year and may 2010 be a prosperous one! There are lots of exciting new things for this year and make sure to visit our website www.onlinetradingcfd.com. Enjoy!

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Are you going to make any New Year's resolutions for 2010? Whether it is a personal or professional resolution, here are a few tips for making your New Year's resolutions a reality.

Not to put a damper on your plans for making a significant change in your life, but research studies have shown that people have great difficulty keeping New Year's resolutions. Here are a few ways you can increase your odds of success, however.

First, set a realistic goal. Many people think they can do the impossible. They think they can radically lose weight, for example, without a heroic amount of commitment or effort. Any change, even a minor one is difficult, so it's vital to be realistic. If you are planning to improve your trading performance, don't plan on doing too much. For example, if you are a novice trader, don't plan on making a 30% profit. Trying to achieve such a high performance standard will usually lead to failure, and deep down, you know that achieving this goal is unlikely. Set your objectives lower. For instance, rather than aim for making a specific return, you might decide to learn about the trading field and settle for making a series of "practice trades" to learn about trading and develop your intuitive feel for the markets. Set learning goals, rather than performance goals, such as devoting a realistic amount of time each week to learning about the markets. Don't set unrealistic performance goals that will lead to failure and make you feel down and beaten.
It's also important to develop a specific plan for how you will achieve your New Year's resolution. Map out what you will do in a step-by-step fashion. Consider what you will specifically do and when, and anticipate any obstacles that may prevent you from reaching your goals. For example, determine when and how you will develop trading strategies to achieve your goals, and consider the fact that you may not have enough time to develop these strategies if you have too many personal obligations. It may be necessary to decide specifically how you will free up personal time to work toward developing your trading strategies. That said, in addition to following a specific plan, it is also important to maintain a carefree attitude.

A recent study on how people achieve New Year's resolutions illustrates that a carefree attitude is useful for achieving your objectives (Powers, Koestner, & Topciu, 2005). In the study, all participants tried to achieve New Year's resolutions, but some people were overly perfectionistic while others were carefree and independent minded. The participants in the study who were too exacting actually were less likely to achieve their resolutions, even if they had a detailed action plan. People who didn't even have a specific plan did better, as long as they were carefree and independent minded. Being carefree instead of being an extreme perfectionist made all the difference. When trying to achieve a New Year's resolution, major setbacks should be expected. The setbacks aren't important, but how you react to them is crucial. If you feel that you absolutely must achieve your resolution and that any setback is a sign that you will ultimately fail, then you will probably fail. But if you treat each setback as natural and expected, and if you let your own personal standards guide you, you'll feel more at ease. You will snap back quickly and keep working diligently toward your objectives

The start of the New Year can be a time to make exciting new plans. But it is often difficult to turn plans into reality. You can do it, though. Set realistic goals, outline a detailed plan of action, and commit to it. At the same time, be open to setbacks and don't let them beat you down. If you follow these tips, you'll increase your chances of reaching new heights in 2010.

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January Workshops:

* Trading Plan Implementation Workshop - Palo Alto
Jan 16, 2010 - For more information, click here

* Trading Plan Implementation Workshop - Online
Jan 17, 2010 - For more information, click here

* GOAL SETTING Workshop - Palo Alto CA
Jan 23 and 24, 2010 - "How You Can Create Your Future - 2010"

Click here for more information

NEW! Join our Trader's Support Group! Click here for more information!

If you need further coaching and mentoring, do not hesitate to contact our office directly at +1 650 320 1714 or email us at contactus@onlinetradingcfd.com

Michael Jordan, the best athlete of all time, had a coach. If trading is your business, do you have a coach? If not, how come? Please do not hesitate to contact me - I would love to be your coach!

Also, please feel free to share my blog with anyone whom you think it might benefit.

Good luck and happy trading!

Best wishes,

Reynaldo Soriano - Your Peak Performance Trader Coach
"Helping You Achieve Your Goals"
www.onlinetradingcfd.com
Follow me on twitter: www.twitter.com/supertrader72
AUS: contactus@onlinetradingcfd.com
USA: +1 650 320 1714