How to develop a trading mindset with maximum efficiency


“I left too much money on the table on that last trade and I am definitely not going to do that on this trade,” Ben said to himself, “I turned down too much profit and this time I am really going to get every pip.” what I can from this deal.” Ben felt anticipation engulfing his body; the excitement was palpable.

As the deal unfolded, Ben allowed the deal to go beyond what he normally expects to come out, “knowing” this deal would go on “for a while”. As the exchange continued in his favor, Ben felt a rush of adrenaline coursing through his veins. As the deal went in his favor, he began to feel dizzy. Now Ben was hooked, he thought, “I caught a big winner, now I’ll show them!”

It was then that the trade began to move rapidly against him, faster than he could have expected. Ben didn’t panic at first, he reminded himself that the markets were changing and that “this market will be back soon.” But it is not. This went on and on against him until he finally admitted that he had let another big winning trade turn into a losing one. Once again, he shot himself in the notorious leg. Now Ben felt ashamed and embarrassed, he thought to himself: “How could I let this happen again!???”

Emotions can easily take over the mind

Why did Ben do it again? How did he come to a state of mind that causes him to make the same mistakes over and over again in the market? It would be easy for an objective observer to simply say that he deviated from his trading plan and was undisciplined. However, this assumption ignores the more important and deeper fact that people (especially in trading) are controlled by their emotions.

Our emotions determine how and what we can think. In Ben’s case, the emotional state he had to be in to make the obvious open profit when it was available was swept away by the stronger emotions of fear and greed he experienced. That is, the fear of missing out and being so greedy that you just want more and more. As this fear and greed began to grow within him, his thought processes and ultimately his actions became so affected that his ability to trade rationally was essentially eliminated at that point.

Like many other traders, Ben did not yet have the mental capacity to control his emotions when he entered into a trade and watched it unfold. As a result, a person who thought that all his i’s were dotted and crossed out became “obsessed” with more primitive processes of the human mind. Needless to say, there was no emotional control plan in Ben’s trading plan, which is a very common mistake among traders. Until Ben (and you and many other traders) learn to control the emotions that prevent you from trading rationally and logically, you will continue to repeat the same mistakes and lose money as a result.

Be aware of how your mind works when you trade

The first step to developing a trading mindset with maximum efficiency, is to maintain awareness of your emotional nature as a trader. To better understand this, let’s discuss in more detail what happened to Ben.

What Ben experienced was the result of trading with an out of control and overly emotional mind. He didn’t know that his primitive brain regions that make him overly emotional were about to kick in when the deal came. The shift from rational and logical thinking to more primitive fight-or-flight thinking is often very subtle and difficult to detect, especially during trading.. It happens without you noticing, unless you are ready for it, have planned it, and know how to “fight” it. As a result, once the deal began, Ben’s mind had already gone into a primitive “hunting for prey” mode and moved away from the rationality and planning that had brought him to this point.

As the deal progressed, Ben became engrossed in “big booty this time” and he wouldn’t settle for anything less. As we know, in his emotional stupor, Ben lost money again. The most difficult aspect of it all was that the same tendencies to “be the best” and “chase the big winner” served Ben well in many other areas of his life, especially in his non-trading career. But what he began to realize was that these traits and tendencies were actually working against him as a trader. But why? This is mainly because the qualities that lead to lasting success in the marketplace are things like patience, calmness, rationality, and not giving in to emotions, all with constant temptation. A difficult order to say the least.

To an objective outsider, Ben was clearly greedy and afraid to take profits because he thought he would get more. But for Ben, and most likely for you, once you’re in a “hot” deal state and have already allowed your mind to slip off that threshold from rational to primitive/emotional mode, it’s almost impossible to turn back. So the key is not to allow yourself to move beyond that mental threshold in the first place…

How to calm the mind through the body

A big mistake that traders often make when trying to solve their “mental” trading problems is that they only focus on the mind. For centuries people have tried to isolate the problems of the mind from the body. However, this is a mistake. Modern Western science has come to the conclusion that it is almost impossible to separate the mind from the body. Our minds (and therefore our emotions) are essentially fused together; they are inseparable.

What Ben didn’t know, and you probably don’t know either, is that simply changing the way you breathe can make a big difference and help you regulate your thinking while trading. Practicing diaphragmatic breathingyou can control stress much better and even prevent your brain from going into fight-or-flight mode when you cross the threshold from rationality to overly emotional trading.

Wikipedia states: “According to the University of Texas Counseling and Mental Health Center, “Diaphragmatic breathing allows a person to breathe normally by maximizing the amount of oxygen entering the bloodstream. It’s a way to interrupt the fight-or-flight response and kick-start the body’s normal relaxation response.”

Diaphragmatic breathing is when you take deep breaths and contract your diaphragm. It is characterized by the expansion of the abdomen during breathing, and not the chest. Many people find this to be a healthier way of breathing, and apparently it also has clear benefits in controlling one’s thinking.

To be clear, I am not saying that diaphragmatic breathing will solve all your trading problems or even give you the perfect trading mindset of all time. I’m just saying that this is a very valuable tool that you should learn to help you manage your trading mindset while trading. This can help you stay rational and calm, rather than emotional and overly attached to your trades. This breathing technique will be a good addition to an overall competent trading plan and mastering an effective trading strategy. Therefore, I recommend that you learn more about it and start practicing while trading and even when you are not trading.

If you want to develop your own trading mindset to the max, check out my Trading Education Course for comprehensive training and support.

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