Trading is a cerebral profession, it’s neither a team, or an individual player sport. However, analysts, traders and market commentators often use sporting analogies to make our points. We’ll talk about having “the guts to get up off the floor”, as if losing a series of trades is similar to a concussed boxer trying to win a fight on points. We’ll talk about “never giving up until the race is run”. How winning the bronze can be considered as good as “winning the gold” and it is if you’ve finished third in a world class field of competitors after four years of dedication. As with many aspects of ‘life advice’, some of the sporting references we’ll read are relevant to the skills and human qualities we need to trade successfully.
Undoubtedly, the psychology involved for the training of elite athletes does have absolute relevance and context for retail trading, particularly as the psychology can be (and often is) self taught. Getting your mindset right, getting your “head in the right place” in order to trade effectively, cannot be underestimated, in terms of the impact it can have on your bottom line. Let’s not forget that the “M of mindset” is one of the three critical success factors in our 3Ms trading plan; mindset, method and money management.
There are other sporting references and examples that are relevant to trading and one of them is visualisation. There are some excellent high profile examples of this. In team sports, were an individual action is required.
This visualisation is an integral part of our mindset approach, if we’re manual traders it’s essential that when our trading alerts chime; perhaps our two moving averages cross, or price reaches a level of support or resistance, validating our strategy, that we don’t hesitate and we take our trades without fear or doubt. Not every trade we take will be successful as manual traders, but we have to take the trade, it forms part of our trading strategy and overall methodology. If we don’t then our distribution of winners versus losers might be skewed.
Setting your trading plan goals
There’s also an extension to the visualisation concept and it involves where you envisage yourself in terms of trading. Where do you imagine you’ll be with perhaps two years of continual forex trading completed? Can we set ourselves goals, promise ourselves rewards, how will we have developed as human beings during the (sometimes daunting) self education process we’ll have embarked on?
We don’t work in academia, no one will be paying us a monthly salary for our deep thoughts and theories, we’re paid by the market for positive results. We have to take money out of the FX markets in order to survive and potentially thrive. We operate in a brutal commercial world, in which only the fittest survive and by “fittest” we mean those who’ve highly tuned themselves mentally to operate in our industry. Visualising your eventual success, setting goals, ensuring your trading actions are as robotic and automatic, having a winner’s mentality and mindset is crucial to your performance as a trader.
