THINKING LIKE A TRADER

• Market analysis is used to identify patterns, define risk, and determine when to take profits.
• The trade either works or it doesn’t.
• To operate in a state of not having to know, you have to properly manage your expectations.
• To properly manage your expectations, you must realign your mental environment so that you believe without a shadow of a doubt in the five fundamental truths.
• There are three stages of development of a trader: the mechanical stage, the mental stage, and the mastery stage.
• In the mechanical stage, you build the self-trust necessary to operate in an unlimited environment, learn to flawlessly execute a trading system, train your mind to think in probabilities, and create a strong, unshakeable belief in your consistency as a trader.
• In the mental stage, you learn how to monitor your susceptibility to make the kind of trading errors that are the result of any unresolved self-valuation issues.
• Sensing that something is about to happen is a form of knowing that is very different from anything we know rationally.
• The only way I know of that you can try to be intuitive is to work at setting up a state of mind most conducive to receiving and acting on your intuitive impulses.
• The skills are psychological because each one, in its purest form, is simply a belief.
• Creating a dominant belief that “I am a consistently successful trader” requires adherence to several principles of consistent success.
• His technique was simple: He tried as hard as he could to stay focused on what he was trying to accomplish and, little by little, he de-activated the conflicting belief and strengthened the belief that was consistent with his desire.
• When it comes to personal transformation, the most important ingredients are your willingness to change, the clarity of your intent, and the strength of your desire.
• Choose consistency over every other reason or justification you have for trading.
• The first step in the process of creating consistency is to start noticing what you’re thinking, saying, and doing.
• Everything we think, say, or do as a trader contributes to and, therefore, reinforces some belief in our mental system.
• Learn to become an objective observer of your own thoughts, words, and deeds.
• The most difficult to detect is a distracting thought that causes a momentary lapse in focus or concentration.
• On the surface, this may not sound significant, but, as in the analogy of the bridge over the canyon, when there’s a lot at stake, even a slightly diminished capacity to stay focused can result in an error of disastrous proportions.
• Acquire a belief that mistakes simply point the way to where they need to focus their efforts to grow and improve.
• De-activating internal conflicts is not a function of time; it’s a function-focused desire (although it can take a considerable amount of time to get to the point where we really make up our minds).
• Remember that every thought, word, and deed reinforces some belief we have about ourselves.
• If, by repeated negative self-criticism, we acquire a belief that we’re “screw-ups,” that belief will find a way to express itself in our thoughts, causing us to become distracted and to screw up.
• You can work on acquiring a new set of positively charged beliefs about what it means to make a mistake, along with de-activating any negatively charged beliefs that would argue otherwise or cause you to think less of yourself for making a mistake.
• If you find this first choice undesirable, you can compensate for the potential to make errors by the way you set up your trading regime.
• This means that if you’re going to trade and not monitor yourself, but at the same time you desire consistent results, then trading exclusively from the mechanical stage will resolve the dilemma.
• Have rid yourself of negatively charged energy associated with mistakes.
• The more willfully you engage in this process, especially if you can do it with some degree of conviction, the faster you will create a mental framework free to function in a way that is consistent with your objectives, without any resistance from conflicting beliefs.
• Define self-discipline as a mental technique to redirect (as best we can) our focus of attention to the object of our goal or desire, when that goal or desire conflicts with some other component (belief) of our mental environment.
• Consistency is not the same as the ability to put on a winning trade or even a string of winning trades for that matter because putting on a winning trade requires absolutely no skill.
• In a state of illusion, you are neither objective nor connected to the “now moment opportunity flow.” Instead, you become susceptible to committing all the typical trading errors such as hesitating, jumping the gun, not predefining your risk, defining your risk but refusing to take the loss and letting the trade turn into a bigger loser, getting out of a winning trade too soon, not taking any profits out of a winning trade, letting a winning trade turn into a loser, moving a stop closer to your entry point, getting stopped out and watching the market trade back in your favor, or trading too l
• To be a consistent winner, you need to objectively identify your edges, predefine the risk of every trade, completely accept the risk or be willing to let go of the trade, act on your edges without reservation or hesitation, pay yourself as the market makes money available to you, continually monitor your susceptibility for making errors, and understand the absolute necessity of these principles of consistent success and, therefore, never violate them.
• If there’s anything in your mental environment that’s in conflict with the principles of creating the belief that “I am a consistently successful trader,” then you will need to employ the technique of self-discipline to integrate these principles as a dominant, functioning part of your identity.
• Consistency is a state of mind that, once achieved, won’t allow you to “be” any other way.
• The instant you either decide or assume you know what’s going to happen next, you will automatically expect to be right.
• Beliefs can be changed, and if it’s possible to change one belief, then it’s possible to change any belief, if you understand that you really aren’t changing them, but are only transferring energy from one concept to another.
• Everything we think, say, or do contributes energy to some belief in our mental system.
• Saying that I wanted to be a runner was great, but what did that mean? I really didn’t know; it was too vague and abstract.
• I committed myself to running at least one step farther than the last time I ran.
• It was certainly all right if I ran more than one step further, but it couldn’t be less than one step, no matter what.