Wednesday, November 1, 2017

Simple Trick to Improve Your Trading | Trading Psychology

Today's Trading Psychology Question Is...

“How do I keep improving each week? 
Do you have any tricks to help me become a better trader?
What’s the most effective way to keep getting better each day?"

Great question, and like all trading psychology, this is a multi-part answer.

First, you need to know what you’re already doing well.

Remember… it’s a lot easier to become great at something that you’re already good at… than trying to become good at something you’re horrible at.

One of the things I’ve learned in the last 10 years of teaching traders is that you only need to be good at a few things to be successful.

I would rather be really great at two things then be average at ten different things.

So… the first think you need to do is define what you’re good at, and focus your energy on doing more of that.  In other words, focus on your strengths first, not your weaknesses.

How do you know your strengths?

This is where your trading journal comes in handy. 

I would recommend a digital journal, like a Word Doc, which is saved on a cloud drive like Google drive, so you can get access anywhere you are.  You can buy fancy journal software, but in my opinion, keep it simple.

Starting today, I want you to start keeping a journal, and every time you do something that comes easily for you, and you seem to do it well, I want you to highlight that section in your journal with a specific color, which will make it easy for you to clearly see where you were successful.

So… start keeping a daily journal, and highlight all your STRENGTHS in green.

Now that we have that ball rolling… let’s move to your weaknesses.

This is where a journal is really important, because most people will allow their successes to overshadow their weaknesses, which means they never truly see their weaknesses for what they really are…

Your weaknesses are means of improvement.

Think of it this way… how many times have you had a breakeven day… meaning you took a few winners, took a few losses, and finished the day without making or losing anything.

Those types of days are great examples of how your weaknesses are most likely being swept under the rug because of your strengths.

Rather than just closing down at the end of the day, satisfied with a “breakeven” day, these are the opportunities to address those weaknesses so that next time, you don’t breakeven, you make money because you’ve improved on those weaknesses.

This takes discipline, trust me.  It takes a strong dedication to keep addressing your weaknesses even when you’re not losing money… but that’s the difference between the GOOD and GREAT traders.

Here’s what I suggest…

Starting today, using your journal, and a specific color, keep detailed notes and make sure to highlight the times when you can see there is room for improvement.

For example, any time you make a mental mistake, like chasing a trade, or moving your stop-loss… even if you made money on that specific trade... if you didn’t follow your rules, it’s considered a weakness, and it needs to be marked correctly in your journal, no matter what the outcome of that trade was.

Now… if you’re anything like me when I was learning… you might have a journal that is nothing but weaknesses, and that’s ok, we all have to start somewhere…

Like I always tell my new students… if you want to be great at something, you have to be content with being horrible at it for a little while.  Nobody’s born great at anything, it takes hard work and dedication when times aren’t going our way.

…and remember, one of the biggest reasons why you invest in your education and work with a mentor (like me for example) is because a mentor will help transfer his/her strengths over to you, to balance the scales.

So let’s recap…

At this point we’re keeping a journal each day, using a specific color to highlight your strengths and your weaknesses, with the goal of doing more of the strengths and improving on the weaknesses.

That sounds great… but how do we actually execute that?

Let’s start with the charts first…

The first step in keeping this journal is to keep track of all the trading information from today.

I recommend saving a copy of your chart, with all the support and resistance levels, all the executed and all the non-execute trades marked on the chart.

In other words, at the end of the day, I want to be able to see exactly why I entered each trade.  I want to be able to see the trend-line I used as support and signal candle that gave me reason to enter.

Every trade you take tells a story, and you should be able to tell that story behind each trade to your accountability partner (which we discussed in a previous video).

Don’t forget to make notes on the trades you DIDN’T take as well.  You want that chart to show the trades you executed, and the trades you liked, but didn’t take.  Those non-executed trades are your room for improvement.

For me, I save a copy of this chart, and I keep organized by date and the “day type” in a big archive, which is backed-up to a cloud drive so I can access it anywhere that I need it.

Now let’s talk about the journal itself, because this is where it all comes to life.

The goal of the journal is to tell the story of what YOU thought and felt about the chart that you used today.

Think of it this way, when you read your journal at the end of the day, it should sound like you are narrating the entire day’s price-action, so that when its combined with the chart, it tells a clear story of what was going on in your mind at that specific moment in time.

You can’t do too much in this journal, and over time, you will find your own style of writing that’s easy for you to do consistently, and easy for you to read at the end of the day.

Here’s another trick…

In combination with writing in your journal, start recording your screen while you’re trading. 

I use a software called ‘Camtasia’ to record my screen for my Nightly Newsletter, and that will work perfectly for this purpose as well. 

You can find free software online, but just remember, most of those free software programs are going to cost you something, and it’s usually your computer’s performance, so invest in yourself and buy a good screen-recorder to do this the right way.

So, now we’re keeping a journal… and the biggest mistake that most people make is they never invest the time to actually go back and READ it.

I know, it’s the end of the day, you just worked hard all day… the last thing you want to do is read your journal and think about all your strengths and weaknesses, trust me, im the same boat… I work long hours each day with my clients… so I have a strategy for you.

Before you finish each day, take 5-minutes and read your journal, highlight your strengths, highlight your weaknesses, and then write a quick summary at the end of today’s notes.

This won’t take you very long, (5minutes max) and it will reinforce what you learned today, adding it to your long-term memory, but more importantly, it will make it easier for a weekly review.

Speaking of weekly review…

At the end of the week… go back and read your journal in full detail.

Now.. if you’re anything like me, you might not be in the best mental condition on Friday afternoon.  I found myself making excuses NOT do read my journal on Friday because my brain was fried from the hard work I had put-in that week…

…so I like to do it on a quiet Saturday morning with a cup of Matcha Tea with Lions Mane Mushrooms, but that’s just me.  You can do it anytime you feel you’re in a positive mental state.

I don’t recommend doing your weekly review when you’re tired, or frustrated, or anxious, etc., because it’s not going to give you the best results.

I’ve made it a habit, every Saturday morning I look forward to a few hours of reading my journal. 

Find a way to work this into your weekend, and trust me, you’ll see almost immediate improvement in your trading next week.

Let’s recap the journaling…

·       Take detailed notes each day Monday through Friday (end of trading)
·       Make your highlights and write the summary at the end of each day
·       Do a forensic read-thru at the end of each week (I suggest Saturday)

I know this is a long-winded answer, but keep following me on this.

Now let’s talk about what I call the “Index Card” Trick…

Now I want you to take a 3x5 index card, yes, something small, that you can fit in your pocket. 

I don’t recommend doing this on your iPhone, use real paper and real pen for this. Like this.

After reading your journal, you know your strengths, and you know your weaknesses.

On the front of the index card, you’re going to write down 3-5 strengths that you’re going to focus on using MORE next week.

And on the back of the index card, you’re going to write down 3-5 weaknesses that you’re going to address next week.

Why do I recommend a small index card for this?

Because in my experience, there is a point when you’re using a checklist that too many things will signal that little voice in your head to say…  “this is too much, I’ll never get this stuff done, I quit.”

You know what I’m saying, right?

How many times have you made a list of things you need to do this week, but the list is so long, you wind up procrastinating and NOTHING gets done.

Or even worse… you cherry-pick the EASY stuff and none of the REAL stuff gets done.  I think we all do it.

So… I want you to really drill down and define what are my 3-5 biggest strengths and 3-5 weakness because that is all that will fit on that 3x5 card.

Then… I want you leverage social pressure, which we know is extremely powerful, and tell your “accountability partner” what you’re going to be working on this week.

Now, bring that index card with you everywhere you go, and if you need help remembering to use it, put a rubber-band around your wrist, because every time you look at your wrist, it will remind you to read that index card and keep improving.

I’ve used this “index card” trick for years, and you will be amazed at how much improvement you can make by focusing on 3-5 things per week.

Wow… we’ve covered a LOT of great stuff in this video, let’s bring it all together.

·       The best way to improve your trading is to become GREAT at something you’re already doing well at.
·       At the same time, we want to methodically improve our weaknesses.
·       The most effective way to do this is with a daily journal.
·       Your job is to document your charts, write in your journal, and even record your screen while you’re trading... to truly capture the environment at that time.
o   There’s nothing more important for a new trader than real-time price-action, before you know what’s happening next.
·       At the end of each day, read your journal, highlight your strengths and weaknesses with different colors, and write a short summary of what happened… where you did well, and where you need to improve.
·       At the end of your week, read your journal, and use the “index card” trick to drill-down to find the 3-5 most important things you’re going to focus on next week.
·       Tell a friend, who will act as an accountability partner, because the fear of letting them down will be an effective way to stick to your plan.
·       Each week, go back through your journal, create another “index card” and watch your strengths become stronger and your weaknesses start to disappear.

Oh, and one more thing… this trick also works for pretty much everything.  Health, Wealth, Relationships, etc.

I hope you learned a lot in today’s trading psychology lesson, and I hope you’ll share this video with other traders who can also benefit from this strategy.

And I need your help… I am always looking for new ideas for these videos, so post a comment below this YouTube video and tell me what weaknesses you’re working on, and any other trading psychology topics you would like me to cover in the next video.

And don’t forget to come join me Monday through Friday @ 8:00am EST in my Trade Room with the members of SchoolOfTrade, and check out my Nightly Newsletter every evening before 8:00pm EST on my blog at

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1 comment:

  1. Hey,
    Very useful post you shared!! Really thankful to you. Keep posting.


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