Did you know that when you trade Forex, you make the rules?
You trade in an unlimited environment, free to choose to buy, sell or stay out of the market as you please.
Success or failure is totally dependent on your skill, your knowledge and your psychology.
With this responsibility comes power – the power to empty or fill your trading account.
What are you doing or thinking to attain peak trading performance?
Here are 10 tools – some of them modes of thinking, some of them actions to take – to inspire flawless execution of your trading plan.
Tool #1: Think of trading as a game
Don’t get this wrong – trading Forex is a serious business.
But as an elite mental strategy, it’s helpful to think of trading Forex as a game – a game where you make the rules. And you can choose to make the rules so that you win.
Tool #2: Visualisation, like an elite athlete
Here we take a lesson from sports psychology and apply it to Forex trading.
Visualising (i.e. mentally rehearsing your performance prior to the trading event) enhances your ability to execute flawlessly.
Visualise yourself confidently and calmly placing trades exactly per your trading plan.
Just as importantly, rehearse how you react to situations that go wrong.
At the Seoul Olympics, when a reporter broke the rifle of defending champion shooter Malcolm Cooper a few days prior to the gold medal match, he didn’t get upset and alarmed. He had already mentally rehearsed this scenario and coolly walked off the range to get an orange juice instead.
Rather than let this disaster take him out of his optimal state, Cooper went on to win his second consecutive Olympic gold medal a few days later.
Tool #3: Rate yourself before you trade
The lesson behind this article is that although you are learning 10 tools that will help you trade better, it is actually you who is the ultimate trading tool.
Each of these 10 tools is designed to sharpen you, like an anvil and file are used to sharpen a saw.
Before you settle down for your trading session, or before you make any decisions, you want to be sure you are oiled up, razor-sharp and ready to cut. If you are dull and blunt then you should put yourself back on the shelf.
Rate yourself out of 10. If you are feeling low or distracted, then don’t trade. If you rate yourself 9 or 10 out of 10 then be wary of over-confidence.
Tool #4: Maintain an optimal state using the breath
Your thoughts change your world…
These are NOT optimal trading states.
Have you ever made a decision when you were angry?
How did it turn out?
Top traders regulate their emotions as they arise, both prior to and during their trading. If they are not centred, they will recognise this and take steps to regain their composure.
One simple technique that can be used even during the middle of trading is to breathe deeply.
Take 5 breaths in through the nose, deep into the stomach and out the mouth. Then gently close your eyes and reopen them, ready to face the markets with a cool head.
Tool #5: Develop a positive intention
Do you know The Secret?
It’s the topic of a book by Rhonda Byrne.
The secret contained within her book is that you create what you desire – both positively and negatively.
Your subconscious mind is a blank canvas. You tell it what you want and it finds ways to make that happen.
If you trade each day with the intention to make the right decisions and come out a winner at the end of the day, you are much more likely to make it happen.
Tool #6: Prepare your workspace
Feng Shui is a Chinese philosophical system of harmonising human existence with the surrounding environment (Wikipedia).
When you practice Feng Shui for your workspace, you help your personal “chi” or energy to flow and attract luck to your trading.
Even if you don’t go down the path of Feng Shui, you want to have a trading area free of distraction and clutter. This also includes your computer. Keep your desktop clean and close down website browsers that divert your attention from your trading.
Tool #7: Hunt for a low-risk idea
Note: This tool comes from Van K. Tharp.
This tool is about the approach to take when you sit down and analyse your charts.
It can be easy to sit down and look for a pattern or a signal instead of an actual trade.
A low-risk idea is a trade that has a high probability of success (50% or greater) with potential profits at least three times the risk.
Before you enter a trade, ask:
“Is this a low-risk idea?”
Tool #8: Progressive muscle relaxation
To combat the harmful effects of stress on your trading, you need to activate the body’s natural relaxation mechanisms.
One way of doing this is progressive muscle relaxation. You can do this by following the steps below.
Tool #9: Follow the steps to flawless execution
Note: Again, this tool is based on the work of Van K Tharp.
Flawless execution does not happen in a vacuum.
Prior to settling down to trade for the day you will have your strategy prepared and know what to look for. You will also know exactly how much you are planning to trade.
When you see a trade you want to be ready to react without hesitation. To do this, you can follow these five steps:
Tool #10: Gratitude
Another recommendation for traders from Van K Tharp, gratitude is the emotion of expressing thanks for what one has.
When you deliberately cultivate the habit of gratitude you will feel happier and have an improved sense of wellbeing.
At the end of your trading, review both your day and your trading.
Take note of what you did right, and the good things that happened. Note I said what you did right, not if you actually won or not.
Finally, try to feel inside yourself an intense sense of gratitude for each item on your list.
Over to you…
There you have it –10 tools to help you stay sharp, be in the zone and achieve peak trading performance.
The rest is over to you.
What tools are you going to add to your trading arsenal?
(Originally published June 10, 2014)
The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.
Understand the details about performing technical analysis on financial assets, the pros and cons of technical analysis and how it compares to fundamental analysis.