UNIT D| Sum Up and Go

5. Beyond Trading Hours

Besides trading routines, there are some tasks which can and should be done while away from the market. Novice traders spend usually too much time in front of the charts while experienced traders take that time to enhance their skills. Here are some tips on the activities you can undertake.

Do Exercise

Are you willing to do 30 minutes of exercise before the trading session begins to relax and clear your mind? It is known that physical exercise interrupts negative and/or recurrent patterns of thought. Because so many negative behavior patterns are triggered by states of frustration, heading off these states by proactively engaging in this exercise is especially effective. Here are some suggestions from Don Dawson:

Meditation

How will you overcome the emotional swings between fear and excitement and their influences on your performance? This element may be more important than it seems at first glance. Positive thoughts and envisioning yourself as a great trader will not do it alone- you need additional resources to gain awareness of your emotional states and to train yourself in interrupting certain emotional states before they damage your trading account. Meditation practices acquired through Tai Chi Chuan or Yoga are already benefiting a lot of traders.

Backtesting

It is critical to backtest your ideas when you are not wrapped up in the fear of losing money or in the greed of making money. These emotional spirals are what keeps you from making money in the first place.

Many people who dislike backtesting have never done it. Why don't you just try and do it for 30 minute a week and keep gradually increasing the amount of time until you adopt it as a daily task? There are things a trader can only learn and discover when testing historical data. The acceleration of data processing in backtesting is critical to detect certain things that your mind will not detect when trading in real time.

Develop Powerful Habits

Creating powerful habits is one of the keystones to the making of a successful trading plan. One powerful habit is to record all the questions and their answers that come to you and incorporate them into a written trading plan the way we have been suggesting. When you do not have a written plan, even though you have developed a plan, it is too easy to drift away and go back to old habits. Writing your trading Plan down provides you with something tangible. Most novice traders know what has to be done in order to achieve consistency in trading, but only a few are aware of what they want to do.

A written plan also helps in recognizing your bad habits and sustaining the awareness to change them. The structure of change seems to be remarkably consistent. First the bad habits have to be recognized:; it is not possible to change a bad habit unless you can recognize its appearance in real time. This is the reason traders keep journals in which they observe situations that trigger problematic patterns and the consequences of those patterns. For example, if your equity grows to a certain amount, it triggers in you a feeling of overconfidence and the consequence is usually an increasing of the position size.

Once the bad habit is recognized, it has to be interrupted. Have a plan in place  is better than not knowing what to do when a certain bad habit is detected. For example, if your pattern is one of fear of loss after experimenting a new drawdown, you can chose to demo trade for the next session in order to regain confidence.

After interrupting a bad habit, it is necessary to substitute it with an effective one. The goal is to couple the triggers of the old bad habits with new, more constructive responses. Use your imagination and visualization to develop new powerful habits. The first attempts may require a lot of motivation and strength, but the most important aspect to make it work is the repetition of the whole process.

Many novice traders think it is their job to wake up each day and trade. The astute trader knows that every trading day offers them an opportunity to repeat old mistakes or to make changes upon them. Wayne McDonnel explains how he dealt with this reality:

Personal Development

Make this area a priority and it will put you ahead of others in the long run. Van Tharp suggests to transform at least five aspects of our personality:

Invest In Other Areas Of Your Life

Be sure to keep your life in balance while trying to accomplish your goals in the trading world. Your family, your friends, your job or anything you like to do, make sure you do not abandon them while you try to put the trading puzzle together. You will soon start to learn big trading lessons in areas where you never thought you would learn something related to trading, but it will happen. You mind is now prepared to reach a goal, and it will find clues everywhere, up to a point that you might learn more outside of your charts than looking at them.

You may have to remove certain things from your life to gain focus in your trading endeavors, but make sure these are not vital parts of your person- this would deplete you emotionally and create an unbalanced situation.

Are you giving yourself what you really need? Most of the time we hear from traders they wanted to become traders to have more time for their family, more time for themselves, maybe to learn something new, or to have that extra time they needed. But in most cases becoming a trader does not change too much one's circumstances in terms of free time. Do not keep yourself from doing other things you like or spending time with people just because of trading. That would be contradictory in the first place.