There are 2 types of edges in trading, a trading strategy edge and a trading psychology edge.

You need to have both to succeed.

This post will focus on how to develop your mental edge, which is the more important of the 2 types.

The process of developing a trading psychology edge is simple, but usually not easy.

1. Start trading
2. Identify your advantages and weaknesses
3. Find solutions to your weaknesses
4. Review your results
5. Repeat steps 3 and 4 until you reach your goals

In this post, I'll give you strategies to uncover your trading genius and overcome your biggest roadblocks.

Keep reading to learn the details of each step.

1. Start Trading

This step might seem obvious to some people, but it won't be to others, so I'm going to talk about it.

In order to develop a mental edge in trading, you have to engage the markets on a regular basis.

Even if you only demo trade, taking trades will start to expose your psychological strengths and weaknesses, within the context of trading.

Here are some things that you might discover after you begin trading.

• You're afraid to take trades
• It's easier for you to follow a rules based trading strategy
• You have a tendency to revenge trade
• You're good at riding trends
• You take good notes
• You don't like backtesting
• You get easily discouraged after a series of losses

That's just a short list of what could come up for you.

But you'll only discover these things when you go through the process of taking trades and experiencing the emotional ups and downs that come with wins and losses.

Once you've taken some trades, now it's time to take an inventory of your strengths and weaknesses.

2. Identify Your Advantages and Weaknesses

Awareness is the first step to improving your performance in any area.

How many times have you experienced an event with a group of people and they noticed things about the event that you missed?

This is because they were aware of those things and you weren't.

You also probably noticed things that they didn't.

That shows that we will only notice things that we place our awareness on.

So start a trading journal and write down what you're good at and what you aren't so great at, while you're trading.

This is the first step to full awareness.

The things you do well will give you clues as to what you should probably focus on in trading.

For example, if you find it easy to follow a trend on the daily chart, then you should probably work on trading some sort of trend following, swing trading strategy.

If you lose a lot of money when you day trade, then that's probably something you should avoid.

Maybe you live in a timezone that makes it difficult to trade the New York Forex session. Then you could work on a strategy that trades the Asian session or the London open instead.

Like with any other skill, there will be things that are optional, and there will be things that you have to change.

In the case of day trading versus swing trading, you don't have to day trade. You can trade on other timeframes, so being bad at day trading is not a problem.

But let's say that you have a tendency to over trade and revenge trade.

That's a problem that has to be fixed if you want to become a successful trader.

So find ways to amplify your strengths.

That's pretty easy.

What about your weaknesses?

That will probably take a little more effort.

Here's how to get started with overcoming them.

3. Find Solutions to Your Weaknesses

The great news is that there are a ton of solutions out there to help you overcome anything you're working on.

You simply have to do the work to seek out these solutions and implement them.

I cannot list all of the strategies available because there are so many of them.

But I'll get you started with the 2 general categories.

I believe that there are only 2 parts to the human mind, the conscious and subconscious.

Yeah, you probably knew that already.

However, I feel that many therapists and coaches don't understand how to apply this concept effectively. Many are trained in a particular type of treatment. Most only follow the doctrine of that modality and think that everything can be solved through that lens.

Obviously, the more aware ones understand the limitations of their craft. But there are many who do not.

Not entirely their fault. They don't know what they don't know.

There are a lot of things that I don't know either.

But I do know that it's up you to you to use your intellect to figure out what will work best for you.

That said, let's take a look at a real example of why the conscious/subconscious theory is so important.

I have a friend who used to smoke. If you know a smoker, or you were a smoker, you know that it can be one of the toughest habits to break.

But guess how he quit?

He was on a smoke break at work one day…

He looked the the cigarette, and thought “This is dumb.”

So he quit cold turkey, on the spot.

That's it.

How was that possible?

I don't think that anyone knows for sure, probably not even him. But here's my theory…

There's always a reason why we do things. Our actions fulfill a need or desire in our mind.

Sometimes the cause of a desire sits in our conscious mind. But many times it sits in the subconscious mind.

I believe that the cause of his smoking habit was in his conscious mind. So he could use a conscious thought to change the behavior.

That's why it was so easy.

Now if the source was in his subconscious, even though he knew that smoking was a waste of time and money, it would have been much harder to quit.

So when you look for methods to help you change your behaviors, start with the conscious methods first because those will give you the easiest wins.

But if you cannot change with those methods, then it's time to go deeper and dive into your subconscious. 

It's not always possible to figure out if a behavior is caused by a subconscious or conscious source. It can also be difficult to figure out which part of your mind a treatment will work on.

That's OK.

Do your best and you'll get a good feel for it after trying a few different things.

Conscious Mind Methods

Methods for changing thoughts in your conscious mind usually involve mental visualization exercises, repeating affirmations or visual cues.

• Neuro linguistic programming (NLP)
• Mind Movies
• Visualization
• Vision boards
• Mantras
• Talk therapy

Subconscious Mind Methods

Changing your subconscious mind is a new concept to many people and it's probably new to you too. The reason why this works may not be obvious at first.

You're basically digging down into your subconscious and bringing the causes of your negative behavior to the surface. When you do this, it's much easier to resolve the issue so the symptoms never come up again.

This can be very powerful stuff and you really have to experience it believe it.

• Subliminal recordings
• Hypnosis with a therapist
• Cloud Sound Therapy
• The Emotion Code
• Clairvision

Again, this is just a short list of what's out there. But it will give you a great starting point.

4. Review Your Results

Now it's time to see how you've done.

Sit down on a Sunday morning with a coffee (or your favorite drink) and review your trading journal again.

Did the methods you used work?

If yes, then great, you're done! You can stop reading right now.

However, it's more likely that you still have things that aren't completely resolved.

That's just how it works. 

Unfortunately, modern mass marketing has given us the impression that there's always a pill or hack that we can use to instantly achieve any outcome that we want. 

In reality, that's rarely the case.

It's like mining. Miners almost never hit gold on the first try.

They usually have to do a lot of homework and drill several holes before they find a workable mine.

So put down your discouragement and dig your heels in for the long haul. Your transformation could be fast, but it's more likely that it will be a process.

That's how your great grandparents did it, along with every generation before them.

The idea of instant results is a new and often unrealistic ideal.

5. Repeat Steps 3 and 4 Until You Reach Your Goals

Instead of getting discouraged, do this:

1. Congratulate yourself for taking action.
2. Celebrate what did work. It's very likely that you made some progress, no matter how small.
3. Look for the next thing to try. Assuming you gave the first thing an honest try, it just might not have been a good fit for you.

I've had many cases where this has happened in my life.

For example, back in the day, I used to listen to a lot of Tony Robbins recordings. He's great, I have nothing against Tony.

However, I put too much faith in the idea that he had all the answers. I figured that since he had so many high-profile clients, he must have a solution that could help me.

So I would listen to his tracks over and over, and implement the strategies…over and over.

…and they did help a little.

But they didn't create the big shifts that I was looking for.

Instead of continuing to do something that didn't work, I should have reassessed my results after a few weeks, then tried something else. I just didn't know any better back then, and I'm OK with that.

It literally took me years to figure out that I needed to branch out and try other things.

I want you to learn from my experience.

If you didn't get the results that you expected, then don't get down on yourself.

Remember that one of the the most powerful tools that you can have in your trading toolbox is self-forgiveness.

It will take as long as it takes for you to become successful at trading. So get back up on your horse and keep going.

Of course, there can be the tendency to have “shiny object syndrome,” where you keep hopping to the next new thing. So you have to be honest and ask yourself if you've given the method an honest try, before moving on.

Only you can answer that question. 

Final Thoughts on Developing a Trading Psychology Edge

Most new traders think that the right trading strategy will make them rich.

Experienced traders know that having the right mindset is the real key to success.

A solid trading psychology will allow you to overcome losing streaks, keep expanding your knowledge, and persevere when most people would give up.

Implement the tips in this post and you'll start to see positive results.

Amplify your strengths, heal your weaknesses.

You can do it.

The post Develop Your Trading Psychology Edge in 5 Steps appeared first on Trading Heroes.

Most traders don't understand the importance of trading psychology until they get so frustrated with system jumping, that they're forced to review other options. That's when they usually realize that trading psychology is the the real key to success in trading…or they quit altogether.

So if you want to save yourself some time (and headache), implement these 9 trading psychology tips.

I wish that I knew these secrets when I started.

1. Focus on How You Handle Losing Trades

Many traders don't want to even look at their losing trades.

But your losing trades are the key to your success in trading.

First, ask yourself how you feel about your losing trades. Do you avoid them like the plague? Do you get mad?

…or do you dig into them every week so you can learn something from them?

If you dig a little deeper into your psychology, do you take losing trades personally?

Is that because you're risking too much money? Or because you feel that it's an insult to your intelligence?

…or something else?

You will only start to improve when you can face your losing trades and learn from them.

Who knows, maybe you are being hard on yourself for no reason. Those losing trades might actually be high-quality trades, that just happened to lose. 

2. Ask Yourself Why You Are Trading

A lot of people get into trading to make a quick buck.

But as you probably know by now, trading is anything but that.

So ask yourself why you are really attracted to trading. 

I'm attracted to trading because I'm fascinated by the psychology it takes to succeed, and the creativity that it takes to develop new trading strategies.

If you think that you will make a fortune in trading overnight, you're in for a big surprise. There could be a fairly long road ahead.

You will only be able to stick with it, if you have a reason to keep going. 

So be honest with yourself.

Why are you really into trading.

Ask yourself why 6 times…

• Why do I want to become a successful trader? To be able to travel.
• Why do I want to travel? To create memories.
• Why do I want to create memories?
• Etc…

You might be surprised at the final answer. 

3. Evaluate How People Around You Influence Your Trading

As the saying goes…

“You are the average of the 5 people you spend the most time with.”

— Jim Rohn

So take a minute to consider the people you hang out with on a regular basis. They don't have to be traders, but it's probably a good idea to hang out with happy people, who are successful at what they do, and encourage others to be the best they can be.

When you hang out with fun, successful people, then it's very likely that you'll become one too. 

I'm not judging. Some people choose to complain and play the role of the victim and they have every right to feel that way. It might sound weird, but they do get something out of that state of being.

But since you found this website, you probably want to take control of your life and not just complain about it.

Therefore, take a good hard look at the people you spend the most time with.

If they aren't the type of person that you admire, then consider making some new friends.

You don't have to stop seeing these people. However, you may want to cut back on your time with them.

It may sound harsh, but it's how things work. If you aren't happy with your life now, then you need to make some changes. 

4. Can You Visualize Yourself as Successful?

You might think that all people can visualize success themselves as successful.

Not true.

If you can see yourself as successful, then consider yourself lucky.

Others have trouble visualizing success.

I was one of them. 

When you cannot visualize yourself as a successful person, then there's a deeply rooted belief that's blocking this ability to visualize. 

As I wrote about in this blog post, the source of this blockage is always trauma.

There's something that happened to you that is creating the limiting belief that you cannot succeed. Read that blog post if you want to learn more.

The list of possible things is too long to cover here, but that post does a good job of going through what I discovered about myself.

You can also consider using a Mind Movie to help you visualize your success.

5. Celebrate Your Wins

Occasionally, a trader will tell me: “I only made 3% last year.”

I usually do a double-take and think…”wait…what?!”

There are fund managers out there who make millions of dollars a year, but don't return that much for their fund.

So stop downplaying your results. 

Yes, if you are trading a $5,000 account and you make 3%, then that won't be enough to make a living.

But it's a great start. 

Over 90% of traders lose money and most blow out their accounts. So if you're profitable, it's just a matter of improving your skills. 

In most cultures in the world, we are taught to give away our power and sovereignty.

We are taught not to question doctors, professors, religious leaders and anyone with letters after their name. But more and more people are discovering that these professionals only know part of the picture.

People like you and me can have the power to figure things out on our own. We should certainly consult these professionals because they have a lot of knowledge, especially in certain specialized areas.

But we should think independently and have the final say in how we live our lives. 

The same thing goes for trading. Stop giving away your power by downplaying your results.

If you were profitable last year, isn't it possible that you can be more profitable this year?

Of course it is. 

6. Understand Your Negativity Bias

Most people in the world have a negativity bias.

They look for what could go wrong, before anything else.

…and this behavior is perfectly natural.

In previous times, we frequently had to defend ourselves against natural disasters, wild animal attacks and invaders from other tribes. There was a lot to be worried about.

Modern societies have shielded most of us from these threats nowadays. But the tendency to look for danger first, still exists in our collective subconscious.

So when we get into trading, we start telling ourselves things like:

• This trade probably won't work out
• I'll take my profit right now because the trade will probably go against me
• I think my broker is running my stops
• That trading system is a scam
• I need to get more education before I start trading
• …and on, and on…

Again, this is natural…and is also why so many traders fail. But now that you're aware of this, it's up to you to fix it.

The first step is awareness. Become aware if you naturally gravitate to a negative outcome or a positive one.

If you are naturally negative, start asking why. Is there a reason that you can pinpoint? Can you work on resolving that issue?

Of course, being too positive can be a downside too. It's overall better than being negative. But ask yourself if you're being overly optimistic, which can also cloud your judgement.

You probably won't be able to solve these issues right away. But stay aware and the answers will come.  

7. Habit and Process are More Important Than Trading Systems

New traders think that a trading strategy alone will make them rich.

This is a perfectly natural assumption.

Trading strategies are deceptively simple. Just follow a few rules and you're a billionaire.

…or so the theory goes. 

But there's so much more to it than that.

What's actually more important are your trading habits and processes.

When you develop a habit, you'll put in the consistent work that's required to:

• Test trading strategies
• Review trades in your trading journal
• Get more education

Building a habit isn't easy, but it's a requirement for success. I would recommend reading The Power of Habit to get started with building your positive habits. It gives you a step-by-step process to build a positive habit, or get rid of a negative one.

Speaking of process…

Having a process for improving your trading will help you:

• Figure out exactly where your trading is going wrong
• Test a strategy thoroughly before risking real money
• Understand if your psychology or strategy isn't working

When building processes, it's helps to map out your workflow on a sheet of paper. Create a flowchart that will help you understand how you'll manage each step in your trading.

Consider having a roadmap for your testing, live trading and journaling.

…or put them all together in the same flowchart. You can include things like:

• When you'll journal your trades
• A reminder to check your trading rules before entering a trade
• Your definition of a successful backtest
• How long you'll demo trade a strategy before you trade it live

8. What's Your Real Passion?

Do you have to be passionate about trading to succeed?

I believe that you do.

But if you aren't passionate about trading I also believe that you can use another passion to drive your desire to succeed in trading.

For example, let's say that you are passionate about cleaning up all of the plastic in the environment. Not a whole lot of money to be made in cleaning up plastic.

…as far as I know.

However, if you can learn trading and have that as your primary income, you can use that money to start doing something about all of the plastic in the environment. At the very least, you can start contributing more to organizations that work on the problem.

Either way, put some real passion behind your trading. Learning to trade is not easy and you'll need all the reasons you can get to keep going. 

9. Remove Unnecessary Stresses on Your Trading

Many people come to trading because they hate their job, or they want to make money quickly. So they put undue pressure on themselves by quitting their job, or trying to turn $100 into $500,000 in 6 months.

There are some endeavors where you can follow a certain plan and make money in a reasonably predictable amount of time.

Trading is not one of those businesses. 

Success in trading relies heavily on having the right mindset, a mindset that most of us aren't born with. 

So when you quit your job or try to make a crazy return on a small amount of money, you put unnecessary pressure on yourself and amplify the negative aspects of your innate psychology.

If you hate your job, consider changing jobs. Consider working odd jobs that don't require a lot of time or mental investment. 

This will take the pressure off your trading and allow you to progress faster. 

Conclusion

So those are 9 trading psychology secrets that I wish I knew when I first started trading. In the beginning, it was all about trading systems and making the most money possible.

Part of that is what I was taught and part of that was because I had blinders on.

If you want to speed up your development as a trader, learn from my mistakes. Prioritize trading psychology.

Trading systems are secondary.

Very secondary. 

The post 9 Trading Psychology Secrets I Wish I Knew Earlier appeared first on Trading Heroes.

So many charts…so little time. Trading can get hectic, learning to trade mindfully can help.

If you want to improve your trading performance, it's essential to examine all elements of your game.

Here are 5 commonly overlooked areas where you can increase your awareness and profits.

1. Double-Check Your Mental State Before Opening Your Charts

It can be easy to jump into the charts without considering your mindset.

After all, you've tested your strategies and executed thousands of trades before.

Why should this time be any different? 

The reality is that your mindset can vary dramatically from session to session. 

So before you even open your charting platform, take a minute to check in with how you're feeling…

• Did you just have an argument with someone?
• Or did you spend the day relaxing on the beach and you're ready to rock!

Just the awareness of your mental state can be enough to help you calm down and get into the right mindset for trading.

If you're the type of person who would like a quantitative measurement, I've found that the Inner Balance app/device from HeartMath is the easiest ways to measure if you're in the zone or not.

This device and mobile app measures your level of coherence. The higher your coherence, the more focused you are. 

Of course, you can move in and out of coherence at any time. But the more you practice, the better you will get at it.

The goal is to stay in a coherent state throughout the entire time you're trading.

Here's an example of an excellent coherence session that I had before opening my charts…

This is a great tool to help you trade mindfully. I highly recommend it.

2. Review Your Feelings Shortly After Entering a Trade

If you open a trade and don't look at it until it hits the profit target or stop loss, then you could be missing out on a valuable piece of information.

That piece of information is your intuition. 

Some traders have good intuition, others not so good. So figure out what works best for you.

Record your thoughts in your trading journal a few minutes after entering it. Do you feel as confident about it as when you took the trade?

Don't act on this information in the beginning. 

But over time, you might start to see some patterns emerging. 

Maybe your intuition about a trade turns out to be pretty good. If so, then you know that you should usually trust your intuition.

If your intuition tends to be wrong most of the time, then you should probably follow your trading plan exactly.

This is a subtle element of trading mindfully, but it can help a lot.

3. Be Aware of Your Attitude Towards Money

A sneaky roadblock that a lot of people run into is their subconscious aversion to money.

On the outside, they say that they want to fly first class and own an expensive luxury car.

But deep down…society, their parents and their peers have drilled into them that money is bad. 

• Movies usually portray rich people as greedy.
• Some spiritual leaders tell their followers that money is: “the root of all evil.”
• Parents tell their kids: “money doesn't grow on trees.”
• Co-workers hate the boss who tells them what to do and lives in a beautiful house

…and so on.

Of course, this is nonsense.

Money is neither good or bad.

It only magnifies who you really are.

You can use your money to build schools in developing countries. You can use your money to fund inventions that will change the world.

So be more mindful of your attitudes towards money. Keep a journal with you and write down your thoughts about money throughout the day. 

You might be surprised at what you discover. 

4. Be Mindful of Reoccurring Themes

Life Events

Are there certain themes that keep popping up in your life?

For example, do you tend to get into a lot of arguments?

Well, that could explain why you have so many losing trades. You may be placing more importance on being right, then being profitable.

In effect, you're arguing with the markets.

This is a sign that you should probably listen more in life…and in trading.

Your Dreams

Another area that you can find common theme is in your dreams.

Everyone dreams.

Not everyone remembers their dreams. 

If you think that you don't dream, you simply aren't making a conscious effort to remember your dreams. Give it an honest try for a couple of weeks and you'll get the hang of it.

You probably won't remember your dreams every night.

But you will remember them a lot more often.

Keep a journal by your bed and be ready to record your dreams as soon as you awake. 

When I made a serious effort to remember my dreams, I discovered my primary mental roadblock was I believed that most things in my life would not work out.

Wow, imagine how limiting that belief can be!

It was amazing how often that theme came up.

Once I knew that, I was able to explore ways to fix it. But if I never had that realization, I might still be stuck in a cycle of self sabotage.

After you master dream recall, you can start to dive into lucid dreaming.

That's when the fun really starts

5. Maintain an Objective Mindset While Reviewing Trades

It can be easy to get down on yourself when you're on a losing streak. That's especially true when it comes time to review your trading journal.

Now I'm not saying that it's easy to keep an objective mindset when you are losing.

It can be very challenging.

But like with anything else, practice builds the skill.

Start from where you are, do your best…and go from there. 

When you're on a losing streak, just opening your trading journal can be painful. The first step to facing your trading losses is to consider the following…

1. Even if it was a poor trade, you can learn something from it. What's done is done. Find a way to prevent it next time and move on.
2. Upon closer review, you may find that you're actually trading quite well, but you simply hit a normal drawdown.

Also ask yourself if you're doing these two things…

1. Are you attaching too much of your personal identity to your trading results? If so, you're trading from an ego-centered mindset. Your ego wants to be right. Your ego wants to be the big-swinging-dick trader. This never ends well. Quiet your mind and learn to detach yourself from your trading results.
2. Are you trading with too much risk? If you're losing an uncomfortable amount of money, it's time to scale back or even downshift to a demo account until you can get your performance figured out.

Reviewing your trades is a perfect time to reflect on how you can take your performance to the next level.

Set a time in your calendar to do it regularly.  

Final Thoughts on Ways to Trade Mindfully

So those are 5 ways to upgrade your psychology and trade mindfully.

Learning trading strategies is easy. 

Mastering them is the hard part. 

But if you're conscious of every element of your trading process and work to make small improvements every day, those improvements can compound.

…and you know what they say about compounding.

What are some ways that you've upgraded your trading mindset. Share your experience in the comments below…

The post Trade Mindfully: 5 Commonly Overlooked Ways to be More Mindful appeared first on Trading Heroes.