day trading in mind

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Trading In Mind10 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

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Table of Contents

ntroduction / !g

1. nderstand 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

. 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 1

10. The ,ssential Real-Time Trading Tool / !g 12

What5s =et> / !g 13

4



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 tradingsystem )ith !recise rules *or entry and eit.

ome bac' a month later and )hat )ill you *ind>

;ne trader )ill be u! #0?. The other )ill be do)n 0?.

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 bar. @-

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 andtails )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! 8 times+

and tails comes u! 21 times.

(ou no) ha&e a license to !rint money. 6et5s call it the Tails Trading System.

%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 on.

%ll any trading system gi&es you is an edge. % *a&orable bias. Something that is more li'ely toha!!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 )hen 55 ha!!ens... 5y5

usually *ollo)s.

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 Eoly <rail... 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 good days and bad 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) youma'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 Tails Trading System

abo&e+ the one time you don5t ta'e the trade is eactly the time the mar'et ta'es o** and ne&er loo's

bac'.

(ou MST 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 ni&erse:

The ancient la) o* !robability.

9



&. '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 )rite. 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.

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.

3



(. 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 areli'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 under ca!italiGed 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* ecessi&e ris'.

Eey... 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! net and clean u!.

The !roblem )ith sure-thing trades is that:

a The mar'et hardly e&er obliges@

b ,&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 relaed+ and more able to eecute the trade !ro!erly.

7



-. 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 siGe go u! in smo'e in *ront o* you>

The !roblem is+ e!enses 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' !ercentage o* trading account. Thin' a&erage ris'-to-re)ard ratio. Thin' !otential !ro*it

!oints &ersus maimum !oints ris'ed.

oncentrate on getting the numbers right and the money )ill ta'e care o* itsel*.

8



/. #hat The +ind Can Conceie...

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 *eelli'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 relaed. (ou5re alert but calm. om!letely non-

emotional. ;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. =et a )inning trade. %gain+ you are relaed. t5s all !art o* the Hob.

This ta'es !ractice. %nd you must do it regularly to get the maimum 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 ecellent.

10



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

)inning day or a losing day is not the issue here. %ll that5s im!ortant is ho) you5re !er*orming inthe 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 eercise 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 @- and mo&eon.

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.

11



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 )ea'+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 strong. 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 idiot

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:

5ncome5.

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. se neutral )ords at all times+ both about yoursel* and the mar'et.

1#



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 4 stri'es and you5re out rule.

y limiting your trading to only three trades a day - 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 suicide day+ )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 0-hour )ee'. %ccumulate your !ro*its o&er time.

%nd you5ll ma'e more by doing less.

14



$8. The 9ssential RealTime 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. Dear Diary... today ... this is

not.

(our o)n trading diary can be com!uter-based - &ia a )ord-!rocessing document or a sim!le tet *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-timeI

%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 say>

%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+ eit !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

Trader5s Remorse then ma'e a note o* it.

When you eit+ say )hy. Sto!!ed out> Too' !ro*its> Why> Eo) did you *eel be*ore the eit> 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:

12



%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 eercise 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.

19



#hat)s :e;t<

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