Trading Psychology (lesson26)

After reading all trading psychology from this course, read Trading in the Zone by Mark Douglas.
Don't place one trade in the market if you didn't read this course psychology and the book Trading in the Zone.

Welcome to session 2 of the Trading Psychology.

We will look at high-performance trading.
Remember in trading psychology is the most important part!!
Developing a high-performance approach, the performance funnel and trading success factors, and the performance cycle.
We will start by looking at trading as the high performance activity, high-performance mindset and building patterns of effective (high performance) behaviour.
You need to start thinking that trading is high-performance activity similar to a sport like chess, military ,art, high-performance activity with results-driven environment where there is pressure, skills, knowledge based.
Many people don't see trading in that same way.
When you are best trading self you are high-performance trader.

So if trading is high-performance activity we need to approach with high-performance approach.
The bias in trading is towards results, however if we look at trading in performance terms then yes we want to get good results and outcome to maximize our market returns but we need to really get into and get interested, fascinated with what are the factors of high performance that generate those results.
When we look at high-performance factors we get back into trading process.
The performance funnel.
On the left we have high-performance factors like planning, preparation, mindset, sleep, trading strategy, exercise, a number of factors wich when put in place increases your chances of success and the more we put this high-performance factors in place we get the smaller amount of interference from thought, emotions, feelings, and behaviour.
If a trader turns to market with no strategy with poor risk management, they are not well prepared, they don't have a trading plan, they didn't sleep well, their knowledge level is low, skill level is low then we can say trader has high amount of interference and thoughts, emotions, feelings and behaviour would affect their trading significantly.

If we have another trader - good skills, good knowledge, proven strategy, good risk management, good sleep,  even if they are trading the same markets they get different experiences, so what we will do in the program is build the bigest funnel we can in a positive way.
A lot of traders don't put enough factors in place to increase their chances of success.
Just take a moment and think about your performance funnel, is it a positive funnel?
Do you have a lot of things in place?
Or you have the negative funnel?
When it comes to building a funnel and looking what can be done we can use high-performance cycle.
The are 3 key phases - Plan, Execution, Evaluation.
Plan- create conditions and opportunity for success then you implement your plan then execute your trading strategy, you get a feedback then there is the phase of evaluation- we look what happened, we learn from that and leverage that feedback gets into the momentum, and then we get back to plan and preparation.
Now if you give yourself number from 1 to 10 on each phase.
The phase that has a low number, work on it!
There is definitely room for improvement.

Let's start with mindset.
What is high-performance mindset?
Most important factor is Focus on becoming your best trading self.
And that is growth mindset, the growth mindset is getting better at developing.
Best traders in the world are also having coaches because they want to get better, they have the growth mindset, they always try to get better and you should do the same.
Mastery approach is trying to get better rather than good, being good is an enemy of being better so it's important to focus on growing.

Now we will look at preparation.
Why is preparation important?
Benefits                     Biases
confidence                 uncertainty
concentration             anxiety aversion
consistency
Only small amount of traders are well prepared and have a plan.
Being prepared is an edge.
There are 2 key elements of preparation
Technical/Tactical

• research
• analysis
• market news
• data
• technical levels

from that, you are following your trading strategy for the trading session but there is also

Mental/Emotional/Physical

• sleep
• breakfast
• exercise
• meditation/mindfulness
• Mental rehearsal

- if-then scenarios
- visualise "best trading self"
- premortem

• music
• write down thoughts, feelings

Stages of trade execution

observe->identify->enter->manage->exit
Thought and feelings are important in these stages, so closely monitor them.You need to identify your weakness, for example, my weakness was enter-execution, i had very good strategy and a plan but when i neded to enter the market execute my fear interfered and I didn't enter the markets and lose money overall, but when I accepted my risk and clear my mind I start to execute trades and become profitable trader.

Execution ChallengesObserve->execution->results
It's not your strategy that gets results, it's your execution.
Dangers are - outcome focus, short term focus, rigidity
The mirror in trading is data that comes from trading.

What to evaluate?
Trade data                                                     Self data
market                                                           thoughts
long/short                                                      feelings-emotion-energy
position size
entry price
time in/out
management
exit/price
reasons for entry/exit

It is very important to have a journal so you can self-correct.
Its very important to focus on process not outcome.
Building habits of excellence
Excellence is an art won by training and habituation.
We do not act rightly because we have a virtue or excellence, but we rather have those because we acted rightly.
We are what we repeatedly do.
Excellence,then, is not an act but a habit.
Habits take to form around 65 days.
Performance lifestyle habits
Sleep, exercise, nutrition, family, travel, creative time, home