Have you ever wondered what sets successful traders apart from ordinary market participants? It comes down to self belief and the ability to execute ones edge according to a trading plan.
Once you have a strategy or system that has a demonstrated edge, the next step is to cultivate your beliefs so that you can execute your edge flawlessly. Flawless execution can be achieved when the mind’s eye shifts from an outcome bias that is affected by ‘noise’ and fear, to purely focusing on processes to execute the edge.
None of this happens naturally. Even if you have an edge, you will understand how simple it is to be distracted, lose faith and find yourself off-course. So imagine how difficult it is if you don’t know whether you have an edge or not. So a core skills objective of trading an edge is to align your thoughts with your actions such that you can give yourself the best chance of flawless execution of your plan and hence your edge.
Developing the right kind of mindset is one of the most important requirements to successfully trading the markets. Amongst others, using powerful techniques such as affirmations and anchoring, it becomes possible to transform your thoughts so that they align with your execution processes.
Many actions are guided by our thoughts and subconscious. The self-talk conversations that pop into our minds can either encourage or discourage successful behaviour. Affirmations that are aligned with our objectives can block out the nonsense and static noise that creates the distraction and substitute the correct thoughts in their place.
Step by step guide to establishing your own affirmations
- Develop the affirmation yourself – Your affirmations need to directly benefit you. Invest the necessary effort into devising your own customised affirmations by putting careful thought into the words that you choose
- They have to be positive – Focus on the positive action. What you really want to achieve, not what you don’t want to achieve.
- Make your affirmations short and clear – It’s not a paragraph, it’s a change statement
- Use a format that personalises the affirmation – Like, “I am consistently following my trading plan” or “I implement the risk management techniques of my edge” or “I am at peace with all trade outcomes whether they be individual profit or loss trades as both are built into my edge”.
- Your affirmations can be in writing or recorded – If recorded, research using binaural beats sounds as background to your affirmations. Learn about the different frequencies at which brain waves operate. Recorded affirmations have distinct advantages over just written affirmations. You can record a ‘loud’ copy and a subliminal copy with binaural beats where the words are indistinguishable to your conscious mind. Not to worry your subconscious mind will hear them. You can also have multiple affirmations that are used in different circumstances. (There is plenty of free and inexpensive recording software around for mixing sound.)
- Place your written affirmations in a place where you can see them when executing trades – If you have a common area where you conduct analysis and trading execution such as an office or workstation, place your written affirmations at your fingertips.
- Read or listen to your affirmations before the action and repeat them out loud – The objective is to reprogram your subconscious mind with re-energised beliefs about yourself wrt to trading. Your affirmations must be said out loud, with conviction and emotion and before the actual event. The more energy we put into the statements the more they get entrenched into our subconscious. You can listen to recorded affirmations whenever you want, whilst driving or sitting on public transport but the most effective time is when you fall asleep which you should spend some time researching.
- Affirmations work best with frequency- Transitioning one’s mind to achieve change takes time and effort. The more frequently you can repeat your affirmations, the higher the probability that you will reach your desired goals.
Anchoring is an NLP technique that is used extensively by professional sports athletes and over achievers. Tiger Woods, for example, has been known to store the positive golf shots by ‘stacking’ his great shots and totally discarding his failures. Before taking the next shot he is known to fire his anchor and recall his great performances.
Anchoring positive affirmations before trade execution heightens the senses and focuses the mind on what really needs to be done in that very moment by automatically and instantly recalling pre-programmed thoughts.
There are two parts to anchoring:
- The trigger or stimulus – that activates the engagement.
- The response – the automatic and unconscious mood change that occurs as a result of the trigger.
For years I read and reread Mark Douglas book “Trading in the Zone”, created my very own affirmations and my trigger became reading them before each and every trading event. The action, heightened my senses, made me ‘switch on’ and drove me to focus on achieving flawless trade execution. Still today I regularly listen to affirmations when I drive the car. The advent of iPods and subsequent technologies have made this quite simple for anybody to do.
I hear you say that none of this psychological stuff really matters; all you have to do is pick the winners. Rubbish. If you want to be a successful trader you first need a positive statistical edge. If you don’t have one, either build one or buy one. Once you have an edge, it comes down to getting your trust in the edge and yourself to a level that breeds confidence to flawlessly execute the edge according to your trading plan. In reality, flawless execution of the edge over a large sample is all that matters.