Hello everyone, I started out my last post with a title called, “Trade Commitment & Trade Selection”. This is the second part to that last post a few days back. Exercising good trade selection goes right with trade commitment, hand and hand they go together.
As I mentioned in my last post, you need a strong understanding of how to build, “Price Structure”. This is the building blocks that make up trends and even sideways choppy movement. With a strong understand of price structure, you can choose to be in select trades for the right reasons. You may say, I just want to make money and I can understand that, but a balanced well thought approach to get that, is to build the right foundation to support it.
You want to be in the right trades for the right reason. You don’t want to be in a trade because of “fear of missing the move”. That is a common mistake that hurts and has hit just about everyone. It takes work to not allow that to be your motivation. It takes self awareness of your thoughts and anchoring your actions to your well written trading plan.
Fear is a very powerful emotion which can be tied to ‘fear of loss’ and just as powerful, ‘fear of loss opportunity’. Both of those can cause you to take action for the wrong reasons. This goes back to the importance of “trade selection” and your understanding of what makes up good price structure, then you can know with a higher degree that you will get movement in your direction.
Don’t be bothered about missing out. Face that fear and deal with it now, ahead of time, because you know it will come up. You don’t want to deal with it on the field, so deal with it now. Imagine in your mind right now, that you fear missing a move, but you are not fully prepared or your understanding of the action is not clear. The thing to do, is wait and be OK with that. Be at peace and let it go if you hold no advantage. It is not on every trade you feel that way, so “let go” of your need to know every move.
You have to admit and I do too, that we won’t know where the market is going all the time and that is very much OK. You only have to know the times that you hold a real trading advantage and then you can put the trade on with greater confidence and not be faced with the fear of missing a trade. Question? Is there going to be another trade opportunity? Yes, so think on that next trade where it all comes together. That is where the you want to be.
Here is an exercise: See the trade that you know will work well for you in your mind. Imagine it all coming together, piece by piece. As time passes, it gets into a position that you are familiar with. Then see yourself not hesitating to pull the trigger, but entering the trade with confidence and a positive trade expectancy and imagine it moving right to your target area. If you put on a preset target it will be easier for those new to trading because it takes one less decision for you make while the trade is on, but see the price moving to your target and exiting. Call it “the perfect trade”. Some could call that mediating on the process and in a way it is. If you get your mind very familiar with what you want, it will be much easier for you to match up your live trading actions to your meditative thought.
If you look up the word “meditate”, you will see the definition just means, “To study, think, engage in thought, or contemplation, reflect”. There is nothing mystical about that, but many traders don’t do it. It can really help if you do. I would say, that you have to have that good solid foundations to base all of this on, which is essential and not optional. A weak foundation will still only produce weak results, so think ahead on what is best for you and your future.
So, to sum it up; 1) don’t force trades. 2) don’t chase trades you don’t understand. 3) wait for the easy & obvious trades that you do understand as all of these has its roots in good “trade selection”.
You can do this thing! What the mind can conceive, man (trader) can achieve. I wish you the best in your trading