Your Mind is the Matrix

Your psychology, your mindset, your emotional state are all interconnected and will all be completely exposed as a trader.

As you develop as a trader you’ll likely learn more about yourself than you could have imagined.  Most of us begin by thinking the methodology we choose will have the biggest impact on your trading. But if you look around, I believe you’ll find professional traders don’t care what your methodology is, and they’re not paying much attention at all to what anyone else is doing.  The reason for that is simple, they already know that the nuts and bolts of trading are way down the list of what makes one a successful trader.

Of course, matching the market and method to your personality is important, absolutely, but it is not the determining factor.  The determining factor, the thing that will stop you from making the ‘turn’ is you.

There will always be tactical errors when trading – an errant keystroke, an accidental mouse click, being in sim when you thought you were live….  These are errors, for sure, but they’re not the errors that will keep you in sim, or on micros for the rest of your career.  The real errors are those errors we commit as the result of what I refer to as our ERS – our Emotional Response System.  We all have one.  We all react to circumstances uniquely.  Some of us are more aggressive, some more risk-averse.  Some of us want to scalp, some of us want one structured trade per day.  

Professional traders have learned who they are.  They encounter the same emotions as the rest of us.  The difference is they’ve learned to identify them and not react to them.

Professional traders bring developed psychology, mindset, and ERS to the table each day.  When they miss the move, they may feel that twinge of FOMO, but they simply do not react to it.  When they’re in a trade they may feel their mind pulling at them to take it off, but they see that for what it is and they do not react to it.  Their ERS is highly trained.

Do you know who you are?

Do you know who you are as a trader?  Do you know how you will react when you’re in a trade, the market moves in your favor then comes back against you, past your entry, and approaches your stop?  Do you have the ability to absorb everything that’s going on both on the screens and in your brain at that moment and hold firm?  Will you move your stop out the way so it doesn’t get hit and you don’t have to take the loss?  Will you take it off early so as to avoid the stop and the bigger loss?  I could present a thousand scenarios and ask how you might react to missing the move on a trend day, on a balanced day, in chop, during news……  

How you or your mind reacts to these situations, and almost every situation when we’re trading is part of who we are.  Who we are, began when we were very young, and has had a lifetime to develop – and if you don’t already know, is almost always completely contrary to everything we want to do as traders.

So how do we really make the turn?

We make the turn, or at the very least make a huge step forward, by figuring out who we are as traders.  We begin by identifying and mapping these errors as they occur so we can better identify who we are, how we tend to react, and ultimately where our real weaknesses are.  We begin to focus on these specific errors and we develop a plan to begin eliminating these specific behaviors.  We begin with one trade and say I will ONLY do this, or I will NOT do that.  It can start with one trade per day for a week and progress until we’ve become proficient at dealing with that one issue, then move on to the next.  As we gain better control of our emotional errors we develop a better, stronger mindset and we become better traders each step of the way.  There’s no set timeline or procedure on how we remake our own mindset.  The key is understanding the importance of our mindset and set out on a path of development that actually gets us to the turn.

This won’t happen by finding a better strategy, methodology, or indicator.  This can only happen by beginning to map out who you are as a trader, identifying where your errors are, and then addressing those errors.

You cannot worry about whether you make money during this part of your journey.  You have to be solely focused on improving your trading psychology and nothing else.  Remember this, your stats are useless until you can remove your own interference from the data.  Until you can trade your methodology without interfering with the natural outcome of your trades you will always be moving from one market to another, one strategy to the next, one indicator to ten, to twenty…  The reason is you’re not addressing the real issue.  The real issue and the one key to trading (if there were such a thing as ‘one’ key) is your mindset.  Your Mind is your Matrix.  Dive in and enjoy the ride.

– @BrianB (Long-time Member at Convergent Trading)

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