Jack, frank sent me this article, and to take 1/2 off the table made sense to me....Note I still own 3000 AZTC...
Many traders quickly come to acknowledge that despite being familiar with winning strategies, systems, and money management techniques,trading success is dependent on your psychological state of mind. If you're a trader just starting out, where do you find the initial confidence to pull the trigger? How do you deal with the down times
without digging yourself deeper into the hole? If you are in a hole, how do you work your way back out? How do experienced traders push through the ceiling of profitability that caps their initial trading years and
make a truly fabulous living?
Trading is a performance-oriented discipline. Stress and mental pressures can affect your ability to function and impact your bottom line. Much of what has been learned about achieving peak performance in both business and sports can be applied to trading. But before looking at some of these factors, let's first examine the ways that
trading differs from other businesses.
1.Intellect has nothing to do with your ability as a trader. Success is not a function of how smart you are or how much you have applied yourself academically.
This is hard to accept in a society that puts a premium on intellect.
2.There is no customer or client good will built up each
day in your business. Customer relationships, traditionally important in American businesses, have little to do with a
trader's profitability. Each day is a clean slate.
3.The traditionally 8-5 work ethic doesn't apply in this
business! A trader could sit in front of a screen all day waiting for a recognizable pattern to occur and have nothing happen.There is a temptation to take marginal trades just so a trader can feel like he's doing
something. There's also the dilemma of putting in
constant hours of research, having nothing to show for it, and not getting paid for the work done. Yet if a trader works too hard, he risks burn- out. And what about those months where 19 out of 20 days are profitable, but the trader gives it all back in one or two bad days? How can a trader account for his productivity in these situations?
4.If you were to invest time, energy, and emotion into
developing a business venture and backed out at the last minute, it would be considered a failure. However, you should be able to invest time and energy into researching a
trading idea, and yet still be able to change your mind at the last minute. Market conditions change, and we cannot be
expected to predict all the variables with foresight.
Getting out of a bad trade with only a small loss should be considered a big success!
What IS the definition of a successful trader? He should
feel good about himself and enjoy playing the game. You can make a few small trades a year as a hobby, generate some very modest profits, and be quite successful because you had fun.
There are also aggressive traders who have had big years, but ultimately blow-out, ruin their health or lead miserable lives from all the stress they put themselves under.
Principles of Peak Performance
The first principle of peak performance is to put fun and
passion first. Get the performance pressures out of your head. Forget about statistics,percentage returns, win/loss ratios, etc. Floor-traders scratch dozens of trades during the course of a day, but all that matters is whether
they're up at the end of the month.
Don't think about TRYING to win the game - that goes for any
sport or performance-oriented discipline. Stay involved in the process, the technique, the moment, the proverbial here and now.! A trader must concentrate on the present price action of the market. A good analogy is a professional tennis player who focuses only on the point at hand. He'll probably lose half the points he plays, but he doesn't allow himself to worry about whether or not he's down a set. He must have confidence that by concentrating on the techniques he's worked on in practice, the strengths in his game will prevail and he will be able to outlast his opponent.
The second principle of peak performance is confidence. in
yourself, your methodology, and your ability to succeed. Some people are naturally born confident. Other people are able to translate success from another area in their life. Perhaps they were good in sports, music, or academics growing up. There's also the old-fashioned "hard work" way of getting confidence.
Begin by researching and developing different systems or
methodologies. Put in the hours of backtesting. Tweak and modify the systems so as to make them your own. Study the charts until you've memorized every significant swing high or low. Self-confidence comes from developing a methodology that YOU believe in.
Concentrate on the technical conditions. Have a clear gameplan. Don't listen to CNBC, your broker, or a friend. You must do your own analysis and have confidence in your game plan to be a successful trader.
Analyze the markets when they are closed. Your job during
the day is to monitor markets,execute trades and manage positions. Traders should be like fighter pilots - make quick decisions and have quick reflexes. Their plan of attack is already predetermined, yet they must be ready to abort their mission at any stage of the game.
Just as you should put winning out of your mind, so should you put losing out of your mind - quickly. A bad trade doesn't mean you've blown your day. Get
rid of the problem quickly and start making the money back. It's like cheating on a diet.You can't undo the damage that's been done. However, it doesn't mean you've blown your whole diet.Get back on track and you'll do fine.
For that matter, the better you are able to eliminate
emotions from your day, the better off you will be. A certain amount of detachment adds a healthy dose of objectivity.
Trading is a great business because the markets close at the end of the day (at least some ofthem). This gives you a zero point from which to begin the next day - a clean slate. Each day is a new day. Forget about how you did the week before. What counts is how you do today!
Sometimes what will happen during the day comes down to
knowing yourself. Are you relaxed or distracted? Are you prepared or not? If you can't trade that day, don't! - and don't overanalyze the reasons why or why not. Is psychoanalyzing your childhood going to help your trading? Nonsense!
The third important ingredient for achieving peak performance is attitude. Attitude is how you
deal with the inevitable adverse situations that occur in
the markets. Attitude is also how you handle the daily grind, the constant 2 steps forward and 2 steps back. Every professional has gone through long flat times. Slumps are inevitable for it's impossible to stay on top of your
game 100% of the time. Once you've dug yourself out of a
hole, no matter how long it takes,you know that you can do it again. If you've done something once, it is a repeatable act. That knowledge is a powerful weapon and can make you a much stronger trader.
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