Trading Mantras

Trading Mantras Taken from “Techniques of Tape Reading“

~Vadym Graifer, Christopher Schumacher

1. General State of Mind

* Responsibility for your Own Trading. No one has control over me. I am controlling myself. I cause any changes in my account. I am looking into my actions to find the reasons for any changes that occur. I have the power to make positive changes in my account. No one can hurt me, since I am protected by my rules and discipline. The market is not a hostile environment; it’s just a sea of opportunities. I am giving myself money or taking it from myself. I am not hiding in the comfort of blaming someone else. I want the result-profit or loss-to come from my choices.

* Opinion less State of Mind. The market has no firm link between reason and outcome. I don’t have to figure out the future. I don’t need the weight of opinion on my shoulders. I am free to react to what happens by relying on my reading of stock action. I keep a flexible state of mind. Nothing prevents me from changing my tactic if the market doesn’t act as I expect it to.

* Confidence. I don’t know what the market will do next. I don’t have to know how I will react to anything the market does. I am confident in my ability to react correctly. I have a strategy that works and the discipline to carry it out. I am independent-minded. I don’t trade to please others. I am self-reliant. I question any trade I take, but I don’t question my ability to make the right decisions. I trade effortlessly and automatically. I manage risk and assume losses. I trust myself.

* Living in Reality. I do not convince myself that I am right. I just watch stock movement and make my conclusions. When market behavior changes, so does my strategy. Market movement is the ultimate truth. I am not trying to outsmart or outguess it. I live in the here and now. My mind is open to possibilities.

* Motionlessness. I am objective and calm. I am a detached observer. I don’t get angry about stocks not doing what I expected. I know they do what they do and that the market is what it is. I don’t get frustrated with stop losses; they are part of the game. I don’t get overexcited with winning trades; they are just one more confirmation of my correct approach. I feel good about my trading and about myself. My performance as a trader doesn’t reflect on my self-worth.

2. Morning Tune-up after a Wining Day

* I am relaxed and confident. I have an optimistic, winning attitude from yesterday. I remember the feeling of doing the right things, and I am going to repeat those things today. I am focused. I can see everything that happens. I evaluate events quickly and precisely. I see myself in control.

3. Morning Tune-up after a Losing Day

* Today is a separate day, which has nothing in common with yesterday. Today’s performance is fresh. It is I who has the power to do the right things. The stock market has no power over me. It’s not after me. It has no memory of yesterday, and neither do I. I remember how I feel when I win. I am going to remember this feeling of victory. I can identify and execute winning trades.

4. Recovery after a Losing Streak or a Heavy Loss

* I am starting fresh. I know what to do to win. I am doing the right things right now, and not trying to get back my money. I am not taking revenge; there is no one to fight with. I am taking it slowly until I get a good feeling. I am not complaining about my loss. I paid money for the lesson. Now I am applying my new knowledge to my trading. I am taking only trades that match my set of rules. There is no memory of money lost; my trading account is not money. It’s a tool for making money. I am rebuilding my confidence with many small wins. They let me feel the taste of winning. I don’t let events control me. I am in control of myself. I am going to remember the feeling of every win.

5. Stop Loss

* Stopping out prevents losses. It’s not losing; it’s preventing a loss. Ia m not trying to control the market. I admit to its independence. I am willing to act in tune with it. If I find myself in the wrong place at the wrong time, it’s in m power to get out. I have the responsibility to keep my trading account in good shape, and stop loss is my way to achieve this. There is a nothing wrong in being stopped out. A stop does not make me a loser. It makes me a winner, serving as a line of defense for my account. This is my way to control events. This is my salvation. I want to be in control and be happy. A stop is not a loss. A stop prevents a loss from growing. The market is in endless motion. No trade is so significant that it’s worth holding onto if it doesn’t’ work. The next opportunity comes right away. I switch easily from the trade that doesn’t work to another that will. I enter any trade accepting in advance that it can stop me out. If the trade doesn’t work out, it won’t come as a surprise to me. My trading strategy has the inevitability of losses built into it. But no single loss can get out of my hand.

6. Fear of Trading, Hesitation to Pull the Trigger.


* Trading is a game of probabilities. I don’t have to be right every time. I just have to follow my rules. I know my system works. Every trade is either a profit or a stop. Any given trade is not of significance. The results over a certain time period are what matter. Trading within my proven system puts the odds on my side. I have to play to allow opportunities to materialize. I know I can trade by my rules. All I do is react to signals, a signal to enter and signal to exit, that are generated by my system. They take me in and out with no hesitation. I can observe the market and emotionally detach from it. Any stock movement is simply numbers that change following certain patterns. I know how to read those patters. I am totally focused on what the market is telling me. I can hear it and react to it.

7. Letting Winners Run.

* I don’t have to be right all the time. I don’t have to take a profit as soon as my position shows one. I have to sell when my system generates a sell signal, not when I have a profit. My goal is to play within a set of rules, not to make money. Things once set in motion tend to remain in motion. I want to ride them while they move. I just trail my stop until the stock proves that it has reversed or until a sell signal is generated. My system is profit-oriented. I am going to let it generate profits.

8. Overtrading

* I have only one reason to put on a trade. This reason is a valid setup in terms of my system. There are no external influences that can make me trade. Boredom is not a reason to trade. Being down for the day is not a reason to trade. The market doesn’t care about my being up or down. It generates profitable opportunities regardless of what I want. I wait for the market to create a situation I can recognize. I am not eager to find the trade. I will know when it comes along. I don’t have to be in the market all the time. I sit and wait for the right opportunity. My money works when it’s in a trade that exploits a profitable opportunity. My money works when it’s sitting on the sidelines being ready for the right moment.

There is a time and a place that every single one of these mantras are relevant in one’s trading. Whether you’ve had a rough day and you’re nervous about the upcoming trading session, or you’re on a roll and you feel like money is pouring into your account at light-speed, always be aware of how emotions can effect your trading. A great defense always trumps a great offense.

How I personally use these mantras is I take a few minutes before the market opens to read it to myself a few times. Allow the words to sink in, almost at a subconscious level, so when you’re presented with an opportunity, you’re able to take it without thinking. That’s where you’re best trading will be done.

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Article B:

You’ve Got a Great Trading System… So Why Are You Losing?
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You’ve done your homework.

Countless hours of seeking out the right guru (or piecing together your own system). Weeks of monitoring your guru’s daily trade picks (or paper-trading and back-testing your homemade system). You’ve done it by the book.

No seat of the pants trading for you!

OK, now you’re confident. It’s time to put your money where your homework is.

You’ve had your coffee and your first trade signal is before you.

Confidence high. Trade made. First loss. Not a problem.

You understood before you started that successful traders both win and lose and “losing is part of the overall winning”. You’ve also heard more then once that “successful traders don’t win on every trade.”

Moving on, still confident. Next trade made. Another loss, but…

This one hurt your pride a little because you got stopped out early in the trade, and then the market rebounded and would have hit your profit target if you weren’t stopped out.

You double check.

Yep, you placed the stop where your trading system told you to place it.

You kind of had a feeling that the early weakness in the market was just profit-taking from the previous day’s trading, but you’re trading a system and you must stick to it. Wounded, but resilient.

After a good night’s sleep and a few mouse clicks, your new daily trades are in front of you.

Hey, this one looks good! It’s a little bit more risk than yesterday’s trades had, but look at that profit potential!

With a smiling face, the trade is executed. With a nice start to the trade, you’re feeling good and you’ve moved your stop to breakeven, just like your system said.

Surprise piece of news! Market reverses – blows through your stop – an “unexpected” loss.

Is something wrong with the system?

Has the overall market “personality” changed, affecting your system to the core, rendering all your back-testing irrelevant?

Your confidence turns to doubt.

You decide to “watch” the next trade… I mean, isn’t it wise to make sure the system gets back on track before you “throw good money after bad?”

Isn’t that what a conservative trader does?

Trade watched. It wins!

In your head, you beat yourself up a little because you know that when you started your “live” trading, you made an agreement with yourself to take the first 10 trades “no matter what”… and here you wimped-out and missed a big winner that would have gotten you even.

What’s happening?!!

What’s happening is that you are out of control. Your emotions are ruling your trading.

The above scenario plays out in every trader from time to time... newbie and veteran alike.

The winning trader senses what is happening and nips it in the bud. The winning trader spend time EVERY DAY, working on “the discipline of trading”.

He/she reads a chapter in his/her favorite psychological trading book, scans the “ten commandments of trading” that hangs on the wall over his/her desk, listens to his/her mental training software for traders…

Something… Every Day… before trading begins.

There are many more losing traders than winning traders… and it’s seldom about the trading system.

In my career, I’ve come across at least 50 systems that I consider A+, yet I know for a fact that MOST traders that have traded these systems have lost. Why? They were not in control of their emotions. Are you?

Source: http://sefindotrader.blogspot.com/2008/09/youve-got-great-trading-system-so-why.html

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One of my favourite general affirmations is:

"Fear of pulling the trigger is warranted when you don't have an edge...fear of NOT pulling the trigger is necessary when you have one"

These are examples of the crazy things I've been telling myself any time I consider deviating from the plan. They are tailor-made for my particular difficulties.

It's had an enormous affect on my results

source: http://onlythemomo.blogspot.com/

A story to begin

http://www.startribune.com/business/35288814.html?page=5&c=y


When Wolke started trading, he had just $4,500, a sum that could be wiped out in a single morning. He had spent two years at the exchange as a floor clerk, making $48 a session marking down buy and sell orders. But he was good at games, particularly chess and poker, considered litmus tests at the hyper-competitive exchange.

His goals were modest: To make at least as much money as he did serving drinks, and to gradually earn enough to move into a nicer apartment. His Uptown rental had leaky pipes, mold growing in the kitchen, and a hole in the ceiling "as big as two watermelons," he said. "I remember thinking, if I lose $250, then get out, because that's what I'd make bartending a night or two."

His new career almost came to an abrupt halt about nine months after he started. One morning, convinced that the market would rally, Wolke bought 10 wheat contracts -- equivalent to 50,000 bushels. It was a huge position for a novice trader. As the market fell, he refused to accept that he made a bad trade, and then panicked and sold when it bottomed. He faced a $8,000 margin call.

Suddenly, trading no longer seemed like a game. If he didn't pay, a collections guy would be calling, and his new career over. For three hours, Wolke stared at his apartment wall, unable to move. "Trading was one of the few things I ever truly loved doing, and I felt like I had failed."

Wolke maxed out two credit cards and the next morning, he was back on the floor, in an octagon-shaped area known as "the pit," yelling buy and sell orders with the whole force of his lungs. If he missed again, he would probably have to file for bankruptcy.

He heeded the lesson of his loss, refusing to hold firm opinions about where the market was headed. Within three weeks, Wolke recovered the money. Two months after that, he was up $20,000. And within a year, he had pocketed $1 million, largely by riding the upswing in commodities prices. He made about one-third of that sum in February, when many commodities were setting record highs.

"Opinions are dangerous," he said, after a Monday session in which he lost more than $10,000. "A lot of people think they know what the wheat market looks like if they look at a crop report. But if some big hedge fund is coming in and buying a billion dollars worth of wheat, wheat is going to go up."

A pit bull

Wolke typically arrives at the pit at 9:15 a.m. He mills about, often ignoring the flurry of reports on weekly crop conditions that might give a window into harvest yields -- the reports that help define the moves of more veteran traders.

At the 9:30 opening bell, he charges to the center of the pit. A former hockey player at Ohio State, Wolke isn't afraid to get physical, sometimes tugging at shirts to make sure brokers hear his trades.

Within his first six months, he was hit with a $500 fine for elbowing a floor broker in the stomach. Wolke claims the broker refused to acknowledge his order. Soon after, Wolke was fined again for swearing at the same broker. (The exchange allows foul language, except when directed at someone.)

"My general attitude was, 'I don't have any idea what's going on and I shouldn't pretend that I do,'" he said. "That may have helped me see things more clearly."

Indeed, Wolke's lack of trading experience may have been an asset. It freed him from preconceived notions about how commodities markets should work -- at a time when they were being turned upside down by the flow of new money.

Instead, he followed the money. He watches electronic trading markets and news wires closely from a handheld computer that he wears around his neck -- the first trader to do so. When he sees a fund buying or selling a large block of futures, he often assumes others will follow. In the buying orgy of earlier this year, he was usually right.

On a day in late February, he made more than $100,000 in a single four-hour session. He spent $2,000 of it that night, buying food and drinks at downtown Minneapolis restaurants for fellow traders.

"When the market was first getting hot, there was a lot of celebrating," he said. "You'd double your net worth in a day and say, 'OK, let's go out and have a good tine.'"

But since the commodities bubble burst, there's little to celebrate. He recently lost money on four consecutive sessions, prompting him to take a day off to relax and think things over. "If you're in a hole, stop digging," he said. On the day of his $16,000, 20-minute loss, he pondered why he was so quick to sell.

"There are some days I'm just bulletproof, and I'll stand in there and take $30,000, $40,000 and $60,000 hits because I'm so convinced that I'm right," he said, scarfing down a plateful of spaghetti at a restaurant in the skyway. "But the confidence just wasn't there today. I sweat a lot when I've got a bad position on, and today I sweated like a pig."

Overall, Wolke, a native of St. Cloud, has survived the downturn better than he had expected. He finally moved out of his dingy apartment and bought a modern $350,000 condo in downtown Minneapolis with a balcony overlooking the Mississippi. Another splurge: new front teeth. (His old ones were chipped and had been knocked out six times in hockey games.)

Most of his trading profits he's socked away in municipal bonds, giving him a cushion as the Grain Exchange goes all electronic in a few weeks. While he plans to try electronic trading, there's always bartending, he said.

These days, he's an active short seller, betting that prices will fall. He's still up more than $1 million for the year, but his $100,000-plus days appear over.

"People think it's easy being a speculator," said Wolke. "But if it's easy, then by all means, come right on in. It's not easy. It just isn't."

Chris Serres • 612-673-4308