Trading
We can have a really good plan, but when we do it under big stress, everything starts to fall apart. Mike Tyson summarizes it briefly in today’s quote of the week:
“Everyone has a plan until they get hit hard in the face”
– Mike Tyson
We are not able to stick to the plan, because under stress, our brain starts to work differently. We inherited stress from our ancestors – in an emergency situation they had few choices, very simple choices and none of them included complex intellectual processes. They were the fight, flight or freeze and pretending that they are not there.
We have no choice in trading – we have to learn how to act under stress, especially during the first months of the game. Therefore , let`s reach out for such solutions, which work just with the necessity to act in a very big stress.
As you probably already know under stress and especially under high stress (and I am preparing you for that) the mind works differently, it associates slower because intellectual capabilities are decreasing.
Under strong stress the mind works the best when it has clear instruction “step by step”. Under strong stress, under the pressure, don`t imagine that you will think clearly. Then, the best solution for reasonable action is “cheat sheet”.
Cheat sheet is a manual what to do step by step
Cheat sheet allows you to keep the right path and avoid mistakes.
- You will remember much easier what you should do if the information is given in the form of simple commands and each of them is placed one under the other.
- You should use cheat sheet at least for one year. It does not matter that you already “know it all”. The idea is to look at any time into the notes, if any doubt arises.
Work according to the rules calms, and decision-making process is better.
For this reason, during the famous emergency landing in Warsaw, where the giant Boeing “were sitting” without chassis one of the crew members read the relevant procedure and others performed it point by point.
The lives of all the passengers and crew members depended on the proper performance of the landing procedure – therefore they do not relied on the memory that in a stress situation is sometimes unreliable. The entire crew focused on the correct execution of the instructions to landing without chassis provided for this plane model.
In each plane there is a set of instructions proceedings in every possible situation. When something unusual happens – the crew look into the manual and begin to implement the appropriate step by step instructions.
This knowledge will bring you closer to the market success.
Prepare a complete cheat sheet for each type of setup, if you still do not have it. If you have several types of setups – for each type of it there should be an instruction on a separate sheet. It is the basic document to use when you are on the market.
If your system provides two parts: a preliminary analysis and order execution, on one side write down analysis before putting order and on the other – a trade execution instruction.
Where is the entry?
Which conditions must occur in the market to enter perfectly? Note them.
- How do you manage the order?
- If the market will do it – I do it.
- If the market will do x – I do it.
- If the market will do y – I close the order from hand.
- What kind of scenarios can happen? Be prepared for anything.
- Where is the exit?
- …
What kind of scenarios can happen? Be prepared for anything. It is very important to prepare and later polish the cheat sheet. During its development and later improvement there will be a lot of questions. Then, you will have time to find the answers.
“But I do not know what to do when something like this happens in the market …”
Do you think that you will find out, when you will be on the market?
- You will make worse decisions under pressure and the only thing left for you will be either to “hope” or “pray” – and these two toxic states lead to losses.
- You will make worse decisions under pressure and the only thing left for you will be either to “hope” or “pray” – and these two toxic states lead to losses.
A place for a prayer is in the church, on live market it’s too late 😉 If during the trade occurs one of them – consider getting out off the market, you are not yet well prepared.
Get even more from this!
This is a small excerpt taken from one of the lessons of the comprehensive trader training course "Lessons from Forex Market Masters".
- You will learn what makes up a successful trading in the context of key factors: system, discipline, decision-making.
- You will find out how Best Traders, Market Master, International Champion, World Trade Masters think and make their trading decisions.
- You can learn techniques and methods of working with your psyche, building self-confidence and professionalism as a trader.
- The course will help you focus on the best paying setups.
- During the course you can develop self-discipline and self-insight that are essential to long-term profitability.
- You will learn some tested exercises to control your emotions and stress levels. If you have ever made an ill-informed decision under the influence of emotion or stress, then imagine that after this course you will achieve unparalleled levels of self-control in the most difficult trading and life situations.
