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Trading In Mind
10 Ways To Stay Focused

For Real-Time Traders

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Disclaimer " Risk #arning

%ll trading in&ol&es ris'. (ou should ne&er trade )ith money you cannot a**ord to lose. The contents o* this eboo' are *or general in*ormation !ur!oses only. %lthough e&ery e**ort has been made to assure accuracy+ the !ublishers can assume no res!onsibility *or errors or omissions. ,-am!les are !ro&ided *or illustrati&e !ur!oses only and should not be construed as in&estment ad&ice or strategy. Past !er*ormance is not indicati&e o* *uture results. .n no e&ent shall Day-Trading-Mind.com or its content !ro&iders be liable *or any damages o* any 'ind )hatsoe&er )ith res!ect to the ser&ice+ the material and the !roducts !ro&ided herein.

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Table of Contents
.ntroduction / !g 0 1. 1nderstand The Truth / !g 2 #. Plan (our Trades+ Then Trade (our Plan / !g 3 4. .* (ou Don5t S!end Much+ (ou an5t 6ose Much / !g 7 0. Don5t Thin' Money+ Thin' Points / !g 8 2. What The Mind an oncei&e... - !g10 9. :e (our ;)n :oss / !g 11 3. Mind (our 6anguage / !g 1# 7. 6ess .s De*initely More / !g 14 8. <et % 6i*e / !g 10 10. The ,ssential Real-Time Trading Tool / !g 12 What5s =e-t> / !g 13

Introduction
Ta'e t)o traders. <i&e them the same starting ca!ital+ the same trading !lat*orm+ the same mar'et+ and the same trading system )ith !recise rules *or entry and e-it. ome bac' a month later and )hat )ill you *ind> ;ne trader )ill be u! #0?. The other )ill be do)n 00?. .t5s *ascinating+ isn5t it+ ho) t)o !eo!le can ha&e the same o!!ortunities in li*e+ and yet get &ery di**erent results. We at Day-Trading-Mind.com *irmly belie&e that the ans)er to success lies )ithin each o* us@ and that )e are each com!letely res!onsible *or our o)n results in the mar'et. The *ollo)ing to! 10 list )as com!iled *rom the many discussions that ta'e !lace at our regular monthly Atrader5s con*erencesB Ci.e. a local barD. @-DD Some o* it you5ll already 'no)... some o* it )ill be ne). Eo!e*ully you5ll *ind it use*ul.

$. %nderstand The Truth

Trading is a game o* !robabilities. .magine )e5re *li!!ing a coin. Eeads . )in one dollar - tails you )in one dollar. Sim!le. Eeads and tails )ill each come u! hal* the time+ and )e5ll both neither )in nor lose. Eo)e&er+ un'no)n to me+ you ha&e a loaded coin. For e&ery 100 thro)s+ heads comes u! 08 times+ and tails comes u! 21 times. (ou no) ha&e a license to !rint money. 6et5s call it the FTails Trading SystemF. %ll you ha&e to do is sit bac' and bet on tails *ore&er. ,&entually+ you5d )in all my money Cand anyone else5s )ho too' you onD. %ll any trading system gi&es you is an FedgeF. % *a&orable bias. Something that is more li'ely to ha!!en than not. Whate&er trading system you use... e.g.
... !attern brea'outs+ trend-*ollo)ing+ *ibonacci+ mo&ing a&erages+ channel *ollo)ing+ oscillator signals+

bollinger bands+ s)ing trading+ o!ening ga!s... ... you are relying on a !ositi&e bias. ,ssentially+ the trading system is saying F)hen 5-5 ha!!ens... 5y5 usually *ollo)sF. Sometimes it doesn5t. Most o* the time it does. %nd all your trading system does is hel! you identi*y high !robability trades+ enter then correctly+ and !rotect yoursel* )hile allo)ing your !ro*its to gro). =o) some trading systems are better than others. :ut don5t get caught u! on the search *or the perfect system... (ou 'no)+ the trader5s =ir&ana... the elusi&e FEoly <railF... the system that deli&ers !ro*its on demand and ne&er+ e&er gets it )rong. Find a trading system that you li'e. ;ne you *eel com*ortable )ith. ;ne you understand. Then stic' )ith it. :e consistent. % cool+ disci!lined+ trader )ill ta'e an a&erage system and ma'e money )ith it. % ner&ous+ arbitrary 2

trader )ill ta'e a brilliant system and )rec' it. %ll traders ha&e FgoodF days and FbadF days. Some days you5ll ma'e small !ro*its. ;ther days you5ll ma'e small losses. %nd once or t)ice a month+ on a&erage+ you5ll ma'e big !ro*its. That5s ho) you ma'e money as a traders. .t5s not 8 till 2. Problem is+ you ne&er 'no) )hen the big trades are due to arri&e. 6i'e our FTails Trading SystemF abo&e+ the one time you don5t ta'e the trade is e-actly the time the mar'et ta'es o** and ne&er loo's bac'. (ou M1ST see the big !icture. RealiGe that the current trade is only one o* many. ;n that basis+ the current trade hardly matters. .t5s li'e a !iece o* !lan'ton in a &ery large ocean. Trading is all about managing ris' and then surrendering yoursel* to the oldest la) in the 1ni&erse: The ancient la) o* !robability.

&. 'lan Your Trades, Then Trade Your 'lan

(our Hob as a trader is to *ollo) a trading !lan. %nd )ho5s going to )rite this trading !lan> (ou are. =otice the )ord F)riteF. .t needs to be )ritten do)n+ on your trading des'+ in *ront o* you. (our trading system )ill gi&e you the rules to *ollo). %ll you do is translate these into your !lan. % trading !lan must ha&e three !arts: Setu!+ ,ntry and ,-it. C;b&iously it5s beyond the sco!e o* this document to !ro&ide details on s!eci*ic trading systems as there are literally hundreds o* themI Eo)e&er )e do *eature some occasionally in our ne)sletter.D The !oint is that a trading !lan co&ers e&ery e&entuality. (ou 'no) )hat to loo' *or in the mar'et+ )hen to get into a trade+ and )hen to get out. Jee! it sim!le. Then *ollo) it. Religiously.

(. If You Don)t *pend +uch, You Can)t ,ose +uch

;ne o* the biggest mista'es you can ma'e as a trader is ha&e too much money riding on a trade. The more money you use+ the more emotional *uel you are !ouring onto the *ire. ,&entually+ you are li'ely to be burned... badly. %nd the !ost-traumatic stress may be irre!arable. Most beginning traders sta'e too much in the ho!e o* a Kuic' )in. ,-!erienced traders 'no) better. .n day trading+ )here the trades can come thic' and *ast+ a *e) big losers can eat you ali&e &ery Kuic'ly. <ood day traders )ho sur&i&e )ill ris' only a tiny amount o* their trading ca!ital on any one trade. .* you5re Funder ca!italiGedF then consider using a trading system )hich o**ers a tight sto! loss. %lternati&ely+ trade a shorter time-*rame+ li'e the 1-minute chart+ )here losses can be minimiGed. ;&ercon*idence is the other cause o* e-cessi&e ris'. FEey... heads has come u! 10 times in a ro)... let5s !ut hal* the trading ca!ital on tails C)hich is sure to come u! ne-tD and clean u!.F The !roblem )ith sure-thing trades is that: aD The mar'et hardly e&er obliges@ bD ,&eryone else sees them as sure-things as )ell and Hum!s aboard. So )hen they go )rong+ they go )rong big-time. Ris' a tiny amount on each trade. (ou5ll be more rela-ed+ and more able to e-ecute the trade !ro!erly.

-. Don)t Think +oney . Think 'oints

Follo)ing on *rom minimiGing your e-!osure+ )e come to your relationshi! )ith money. Whether )e li'e it or not+ money is highly !riGed in our society. .t5s im!ortant. %nd )e attach a lot o* *eeling to it. Eo) then )ill you *eel )hen you see hundreds o* dollars C!erha!s thousands+ de!ending on your account siGeD go u! in smo'e in *ront o* you> The !roblem is+ Fe-!ensesF are !art o* the game. (ou ha&e to lose some to )in some more. There is no holy grail+ li'e )e said be*ore. .* you can5t change your relationshi! )ith money+ then Hust don5t thin' about it. Focus instead on numbers. Thin' F!ercentage o* trading accountF. Thin' Fa&erage ris'-to-re)ard ratioF. Thin' F!otential !ro*it !oints &ersus ma-imum !oints ris'edF. oncentrate on getting the numbers right and the money )ill ta'e care o* itsel*.

/. #hat The +ind Can Concei e...

.s it !ossible you secretly )ant to lose> Sel*-destructi&e beha&ior can easily mani*est itsel* in the mar'ets+ !articularly among day traders. When the !rice is dancing around in *ront o* your eyes+ it can ta'e a gri! o* you. (ou can start to *eel li'e it5s !laying )ith you. This is )hy you ha&e to be &ery+ &ery care*ul to a&oid emotional trading. .* you5re a boiling cauldron )aiting to e-!lode+ then you5re heading *or a seriously bad e-!erience in the mar'et. Don5t get emotional about trading. Remember the current trade is only one o* a long series. (ou5re in this *or the long term. Remember that and don5t+ e&er+ get too attached to any one trade. (ou must see yoursel* as a !ro*essional trader. %t the start o* each trading day+ be*ore the mar'et o!ens+ ta'e a *e) minutes *or yoursel*. lose your eyes. Start &isualiGing the mar'et. See the real-time chart on your com!uter screen. Watch as the !rice gyrates u! and do)n. See yoursel* entering a trade. =otice you *eel rela-ed. (ou5re alert but calm. om!letely nonemotional. ;bser&e ho) the !rice mo&es a*ter you enter. Eo) it comes close to your sto! loss. Mentally !lace a number o* trades. Follo) them through. (ou get a losing trade. =otice you see the big !icture. (ou are unemotional. om!letely calm. (ou !ut on another trade. %gain+ another small loss. (ou are un!erturbed. =e-t a )inning trade. %gain+ you are rela-ed. .t5s all !art o* the Hob. This ta'es !ractice. %nd you must do it regularly to get the ma-imum bene*it. Try it e&ery morning+ and any time you e&en begin *eel stressed or you lose your *ocus. The ad&antage o* this techniKue is it5s *ree. %nd the !ayo** is e-cellent.

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0. 1e Your 2wn 1oss

(ou5re the one in charge o* your trading. (ou alone are res!onsible *or your success or *ailure as a trader. =ot the mar'et... not the trading system... not the go&ernment or the Federal Reser&e. (ou. That5s Kuite a res!onsibility. (ou handle it by being 'ind to yoursel*. :ecome your o)n mentor. Watch ho) you5re beha&ing during the trading session. :e es!ecially care*ul to notice your *eelings. Focusing on your *eelings gi&es you use*ul *eedbac' about your !er*ormance. Remember that ha&ing a F)inning dayF or a Flosing dayF is not the issue here. %ll that5s im!ortant is ho) you5re !er*orming in the Hob. %re you being !ro*essional+ remaining emotionally detached> ;r are you starting to get irritable at the mar'et... the mar'et ma'ers... the un*airness o* li*e...> =egati&e emotions are early-)arning signals that you need to cool do)n and rela-. <et bac' into your state. ;bser&e the tension in your body and release it. Lust let it go. Per*orm the &isualiGation e-ercise again. Remind yoursel* that it5s all !ercentages. This is Hust another trade+ Hust another day. .* you ma'e a mista'e during your trading - and )ho doesn5t - don5t beat yoursel* o&er the head )ith it. 6earn *rom it. Ma'e a mental note to build on it. Than' the mar'et *or the training lesson @-D and mo&e on. :e nice to yoursel*I .t5s &ery im!ortant that you a&oid s!iraling do)n into an emotional cycle )here you end u! doing some serious damage to your account and to your o)n ego.

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3. +ind Your ,anguage

Try this e-!eriment sometime: Tell a *riend to close her eyes and stretch her arm out )ide. =o) get her to thin' o* the )ord F)ea'F+ then !ress do)n on her hand. (ou5ll notice her )hole arm mo&es do)n easily. Re!eat the e-!eriment as be*ore+ only this time+ tell her to *ocus on the )ord FstrongF. This time you5ll notice enormous resistance in her arm+ and you might struggle to mo&e it at all. T)o sim!le )ords - t)o &ery di**erent results. .* )ords are so incredibly !o)er*ul+ Hust thin' )hat you do to yoursel* )hen you call yoursel* an FidiotF or )orseI :ut )ords are more subtle than Hust name-calling. Eo) about this one... 56oss5. :oy+ thin' )hat that one conHures u!. Missed o!!ortunity> % ga!ing hole in your li*e> % the*t> % berea&ement+ e&en> =o )onder traders *ind it hard to ta'e losses. 6et5s call it something else: 5%n e-!ense5. %h+ no) it5s sounding better. Much more business li'e. Eel!s to !ut it into its true !ers!ecti&e. Similarly+ on the other side o* the balance sheet+ let5s sto! tal'ing about: 5Win5 ... )hich again is stee!ed in emotion... and change it to: 5.ncome5. .ncome &ersus e-!enses. .sn5t that )hat trading really is> % business. (ou5re much more li'ely to become !ro*itable )hen you realiGe this. %nd *orget about !itching your ego into imaginary battles that ensnare your sense o* reason along the )ay. Mind your language )hen trading. 1se neutral )ords at all times+ both about yoursel* and the mar'et.

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4. ,ess Is Definitely +ore

The best times to day trade are usually the *irst t)o hours a*ter the o!en. Some traders also li'e to trade the last hal*-hour be*ore the close. Momentum is greatest at these times+ )ith real buying and selling !ressure creating the best trends. Many real-time traders also *ollo) the F4 stri'es and you5re outF rule. :y limiting your trading to only three trades a day - M%M - you reduce your stress le&el enormously. (ou5ll be shar!er and less li'ely to ma'e mista'es. (ou also insure yoursel* against a Fsuicide dayF+ )hen you ta'e serial losses+ each time trying to reco&er *rom the !re&ious loss... Reading this a)ay *rom the mar'et+ you might *eel you )ould ne&er *all into that tra!. Eo)e&er+ it5s sur!rising ho) many traders ha&e come unstuc' in a real-time a&alanche as the losses begin to sno)ball. The motto> Tomorro)5s another day. Ta'e it easy. Don5t trade a 00-hour )ee'. %ccumulate your !ro*its o&er time. %nd you5ll ma'e more by doing less.

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5. 6et 7 ,ife
Do you 'no) )hy you trade> .s it the *un and e-citement+ the sheer ner&e-Hangling+ adrenaline rush that comes *rom trading the )ord5s *inancial mar'ets> Perha!s you enHoy status o* being a trader> FEi - Lohn Doe - Futures Trader - nice to meet you...F For some traders+ it5s an esca!e. They hate the )orld around them - their Hob+ their boss+ their s!ouse+ their )hole li*e in *act. Trading then becomes a *antasy to sli! into at )ill. The *act is+ trading has to be about one thing. Ma'ing a !ro*it. .* you do it *or any other reason+ you are !robably doomed to *ailure+ because you5ll o!erate *rom emotion instead o* the cold+ mechanical thin'ing that5s the hallmar' o* a good trader. 6oo' at your o)n moti&ations *or trading. See i* you can disco&er a hidden agenda. .* there5s something missing in your li*e that trading is currently *illing+ then you need to address that. 6i&e a balanced li*e. Don5t s!end the )hole day trading. Meet !eo!le. <et outI Start a ne) business. Find ne) interests. Jee! your trading des' *ree *rom emotional clutter.

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$8. The 9ssential Real.Time Trading Tool

Real-time traders li&e *rom moment to moment. Such is the !ull o* a li&e data *eed+ it5s o*ten a challenge to see the big !icture. :ut this you must do i* you )ant to sur&i&e and !ros!er. . NisualiGing the current trade as one o* a series hel!s to maintain your disci!line and lo)er your emotional cholesterol. :ut there5s one trading tool that )ill really im!ro&e your !er*ormance more than anything else. % trader5s diary. Don5t be scared o** by the sentimental connotations o* 'ee!ing a diary. FDear Diary... today .... F this is not. (our o)n trading diary can be com!uter-based - &ia a )ord-!rocessing document or a sim!le te-t *ile sa&ed to your des'to!. ;r you may *ind a traditional !en and !a!er &ersion more e**ecti&e. CThere is something about )riting on !a!er that ma'es it more !ersonal. Probably the )ay the hand and eye coordinate )ith the brain. Plus you5&e !robably got enough a!!lications running )hen you5re trading in real-timeID %nother o!tion is to a !ersonal ta!e recorder. <ood i* you !re*er s!ea'ing to )riting. Whate&er *ormat you use... )hat )ill you actually )rite Cor sayD> %nything. Don5t )orry about grammar. Ma'e one-)ord notes o* )hat5s ha!!ening. Sure+ you can note do)n the *acts and *igures - stoc' code+ time and date+ !osition siGe+ entry !rice+ sto! loss+ e-it !rice. :ut also - and more im!ortantly - record your thoughts. .* you )ere hesitant about getting in the trade+ say so. .* you5re terri*ied no) you5re in Cthe dreaded FTrader5s RemorseFD then ma'e a note o* it. When you e-it+ say )hy. Sto!!ed out> Too' !ro*its> Why> Eo) did you *eel be*ore the e-it> Eo) do you *eel no)+ a*ter)ards> This only ta'es a *e) seconds to record this ongoing commentary o* your o)n trading. :ut the in*ormation you get can be !riceless. Eere5s )hy:

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%t the end o* each )ee'+ !re*erably at the )ee'end )hen the mar'ets are closed+ re&ie) the )ee'5s entries. (ou can guarantee that you5ll see a !attern in your beha&ior. There is !robably something you are doing consistently that5s causing negati&e results. %nd once you5&e identi*ied the !roblem+ the solution usually becomes ob&ious. Do this e-ercise e&ery )ee'+ and also e&ery month to get a longer term !ers!ecti&e. ;nly you can do this *or yoursel*. =obody loo's a*ter your o)n a**airs better than you do. (ou don5t need the latest million dollar trading system to be success*ul in this business. 6oo' )ithin. (ou may be amaGed )ith the results.

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#hat)s :e;t<
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