ForexSpirit

I took a step back this week to try and review where I stand with my trading.

I have been trading a pretty simple scalping approach since early October. About two weeks ago I started getting sidetracked by another trading method which had a lot of the same foundational work that I seem suited too but at the same time put forward a different way of entering and managing trades.

I found myself questioning the validity of even considering a different trading method when I was still trying to solidify my approach to the one being currently used. Was I getting cold feet? What was it about the scalping method that I was looking to run away from?

Jumping from one trading method to another every few weeks or months is never going to lead to long term success. I know this. So I began to ask myself why I was doing what I was doing.

No answer was readily forthcoming.

I began listening to some audio books on my daily commute this week for the first time in quite a while, probably over a year. I started with Sun Tzu’s Art of War and I’m now on Napoleon Hill’s Think and Grow Rich.

While taking in the chapter that talks about faith for the first time I realised that this is exactly where I have a problem.

Napoleon Hill talks about desire and a definiteness of purpose as being the first step in achieving your dreams. I think I have pretty good handle on my trading objective: to be a consistent, profitable and patient trader.

To have any chance of turning this desire from a figment of my imagination into reality I need to have unwavering faith in my own abilities. This comes down to bombarding my subconscious with thoughts and verbal affirmations that I am already what I desire to be. My subconscious is unable to tell the truth of what it is told. It just takes everything at face value and shapes itself to act on what it is told. This is the basis for the power of positive thinking.

It seems as if there are still ramifications of blowing up my account last year that I need to work on.

If I’m totally honest and look deep within myself I don’t think I can say that I have 100% faith in my trading abilities. The problem area is definitely related to handling large losses and the potential for things to snowball out of control.

In pretty much any other area of trading I have a deep conviction in my ability to perform well. Whether it’s the ability to pull the trigger on a trade, analysing the market and picking a direction to trade in, knowing that there is no holy grail method out there and that I’m the master of my own trading destiny.

There remains that one nagging doubt as to my ability to correctly recognise and handle losing trades. It’s as if I fear that I’ll get sucked into a myopic view of the market and won’t be able to accept that I’m wrong and do what is necessary to preserve my remaining capital. This blind spot in my trading outlook is severely diminishing the faith that I have in achieving my trading objectives. Without unquestioning faith there can be no chance of fulfilling the dreamed for desire.

It seems such a small issue when I put it into words but under the microscope in my mind’s eye it is a huge black hole sucking everything in the vicinity into it.

It’s one thing to identify a weakness that is hampering me. It’s quite another to do something about it.

The best way I can see to tackle the situation is to turn this weakness into a strength. Instead of being fearful of my ability to manage losses, no matter what form they come in, I need to see myself as being able to handle losses in a calm and collected manner, unencumbered by the surrounding circumstances.

I need to fiercely believe that I will always be able to correctly identify when I’m trading against the trend. I must also reinforce that I can manage such situations in the best possible way. This could be as simple as just bailing immediately from losing positions through looking to manage those losses and either exiting at a better price or implementing clearly defined rescue attempts.

I have to know that while there will always be the occasional losing trade, my more numerous profitable trades will mean that I will always be in the black overall. It is inevitable that my equity curve will experience dips and drawdowns but the inexorable rise over time is unstoppable.

While these beliefs are not currently part of my mental makeup it is clear that they need to be to restore and build the unassailable faith that I need to make progress on my desire.

I must press them upon my subconscious mind so that they permeate my being and thus become truth.

I’m going to work on this part of my trading psychology over the holiday period, especially during my meditation sessions. I also hope to find the time to clearly document all my trading beliefs to see if there are any other ones that I need to focus on and correct.