Image (1)

The simplest way to define trading is to say that it is a game of pattern recognition.

What kind of pattern recognition? And where do these patterns occur?

The answer to this is – the stock market.

This two part article can help you identify traits that can help you grow as a successful trader.

As a trader, you need to analyse the trends, define how much is at risk for you and then make a decision on whether you must go ahead with the trade or not.

However, as is with any other business of the game that requires you to make choices and take decisions, the more you dwell into thinking about it, the higher are the chances of your failure.

It is this fact that makes trading one of the toughest businesses to find success at.

Your market analysis may give you trends and patterns, but no matter how sure a market analysis has been in the past, you will need to live in the ‘now moment’.

For this, you need to be in control of your expectations, which in turn require a good conditioning of the mental environment to help you align your thinking processes.

Image (2)

A clear understanding and implementation of these four points shall take you to the second stage.

This stage is called the subjective stage.

During this stage, you will need to apply the knowledge that you have learnt about the market and your own self to achieve your goals.

This stage allows you immense freedom and flexibility to chalk out why you have been making the trading errors that you make.

Next is the intuitive stage.

This is the highest level of development as far as a trader is concerned.

This stage cannot be mastered or learnt your way through.

It is not possible to teach someone to be intuitive.

Intuition is a spontaneous reaction to a situation.

Anything that you plan and think about is a result of your knowledge and analysis.

So, anything that you spend time thinking about cannot be intuition.

Moreover, intuition doesn’t bring into the picture the rational part of your brain.

As a result, the rational part of your brain may contradict the intuitive thoughts and decisions.

With this said, if you ask any trader in the market, you will receive the well-accepted answer, ‘had I listened to my intuition’s call, life would have been much simpler’.

To listen and act on your intuition, you will need to prepare your mental state to accept and work as per your intuitive callings.

Image (3)

Observe!

The thumb rule of trading is that you must focus on yourself.

So, for starters, you will need to observe yourself.

You need to note down everything that your mind thinks feels and acts upon.

You must be wondering as to how this observance and understanding are important.

Whatever you think, feel or do is a result of a belief. So, in a way all of these facets of your mental state reinforce your mental state.

As you practice, you will realize that this will become part of your psychological processing.

Your goal here is to objectively observe your own thoughts and deeds.

You don’t really know it, but this will be your first line of defines.

Before you make a mistake, you will think about it and this is where you will catch the trading error even before it has happened in reality.

Obviously, if you don’t catch your trading errors here, you will catch them while you are acting upon them.

If none of your lines of defines work, you will end up realizing that you have committed a mistake after all the damage has been done.

When we say that you will need to observe yourself in an objective manner, we mean to say that in the process of observance, you must not judge yourself on the basis of what people say or think about you.

No matter how carefree you are, what you hear about yourself from people has a direct impact on you and this impact the way in which you observe yourself.

All in all, this will not be an easy task and more often than not, people fail at it badly and end up in a lot of emotional pain and frustration.

It is because of this perception of the human mind and in an attempt to prevent any emotional pain from occurring to you; your mind does not accept a mistake for as long a time as it possibly can.

Although, this lack of acceptance may not affect you much in your everyday life decisions, such behaviour can be disastrous for you in the trading scenario.

Committing mistake is an inevitable part of human existence and you will be in the best state to accept this fact if your beliefs and desires are perfectly aligned.

Moreover, your beliefs are structured in such a manner that they work perfectly fine from the perspective of the environment.

The alignment between your beliefs and environment’s perspective is absolutely essential.

An absence of this alignment can lead to mistakes from your side.

For instance, it may not be possible for you to see if your objectives are achievable and the steps that you are required to take to reach there may also not be clear.

Apart from this, an alignment between objectives and beliefs is also equally crucial.

This can be an uphill task in view of the fact that mistakes that are made as a result of this misalignment do not come with an apparent cause or reason of occurrence.

For instance, an instant without focus may just be the distracting moment that made all the difference.

Although, this example may not seem grave to you at first, but it can have devastating implications on your results.

Image (4)

May be, they were just brought up to believe that mistakes don’t define you.

They just tell you all the areas of your life and existence that require your focus and improvement.

In other words, for them, mistakes are not a source of negativity for them and even if you make one, it is possible to recover from it and gain success in whatever follows.

This brings us to an important question – what do I do if I find myself in a state where I am in the process of making a mistake?

If such a scenario is presented to you, you can choose between one of these options.

The first option is to activate positively charged beliefs by understanding what a mistake is and removing all the negativity that is usually associated with it.

However, if doesn’t seem like an option for you, you may alter your trading regime in such a manner that your error making potential can be sufficiently compensated for.

Next week, we will be looking into the role of consistency in trading.

So, stay tuned and keep reading more on www.stockmarketsignals.com/blog