The voices in my head (Daily annotation, rinse and repeat)
Welcome Decisive traders and anyone new to the site, this weeks subject is about the multiple voices that crop up in our heads whilst trading. I will go over a couple of techniques that I use to combat them and also show you how I annotate my charts as the day progresses.
Accepting trading schizophrenia. Don’t worry it’s not just you, we all have damaging voices that seem hell bent on ruining our trading dreams. There’s generally two sides; the present reasonable and logical side and the emotional irrational damaging side. Most of us come to the market with a clearly defined plan, I have mine written out like commandments that take up an entire large whiteboard right above my trading computer. We know exactly what we should be doing and the plan we should be following.
An entry candle presents itself, you look at it carefully and see that actually it’s trading right onto a management point. You know deep down that it just doesn’t meet your criteria, its no good and its an easy skip. But suddenly you hear a voice “But what if it crashes past the management point and it makes me lots of money” “I do like money” “I don’t want to miss out” you enter the market and take, not only a financial loss but also a sense of knowing you’ve failed yourself today.
So what can you do about it? First of all accept that these voices will always be there, in all my time of trading they have never gone away. Start Meditating, I meditate 10 minutes every single day and use “binaural beats” tracks from youtube that are free to listen to. The big question though, does it actually work? I can honestly say that in my years of meditating I have never felt any different from it, shocking comment I know. I wanted to write that because a few of my friends have tried it expecting to float around afterwards hugging strangers, smiling peacefully stuck in London rush hour traffic with not a care in the world. It’s not like that, for me what it does do is build a larger and larger gap over time between your present self and the “egoic or thinking mind”. Now when I trade I can almost physically feel a damaging thought starting to develop at which point I’m more able to recognise it, understand it and let it go.
My neighbours think I’m crazy. I talk outloud to myself an awful lot whilst trading, its my way of talking things out between what I really know to be true and what my mind might be “thinking” I find this incredibly effective and I know that once I start getting sucked into the charts and I go quiet, there’s only one voice that is about to be heard and that one will lose you money. Last week I nearly tried to jump back into a trade after taking a loss, looking for a quick bit of revenge, I actually shouted at myself “What the **** are you doing?” and launched the mouse across the living room. So have a good chat with yourself, tell yourself exactly why this trade isn’t good and why you’re going to skip it. Even better than this, annotate your charts for every entry that you are going to skip and why. This is probably my most powerful tool in trading that I have found so far, I label potential entry candles and write a small tagline as to why I’m not taking it. This builds discipline and a habit of looking for reasons not to take trades. Every time I skip a trade and write my reason(s) why, I give myself a solid pat on the back and feel content knowing that I have just stuck to my plan. I can genuinely have a day of skipping entries and feeling like if I just keep doing that, then I can be one of the best in the world.
When you find the right one, you will look for reasons to skip and something to write about but you won’t be able to come up with anything. This is when you should be entering the market, with a sense of confidence that you have just executed your plan correctly, win or lose you have just traded like a professional. Keep rinsing and repeating this process and soon it will all become second nature.
FTSE and DAX Trades with annotations from the day
Yellow arrows are trades that I have skipped
Blue arrows are trades that I have entered and taken Breakevens for
This actually turned out to be a really great however frustrating day of trading, I managed to get in to 3 trades on the Dax. For Decisive traders, you will notice my last double top entry I take the close back through the EMA8 as the signal. In my plan I am allowed to do that when the market has made a double top or bottom at key levels, in case you wondered. All of these entries took me out at the break even level but I am happy with all of 3 of them and also happy with all of my skipped entries for the day, for me that’s a great day of trading and I know I am on track with my discipline and trading plan.
Thanks so much for reading, this weeks blog post. I really hope you take some ideas away from it and can implement them into your trading. Please feel free to contact me with any questions at firstname.lastname@example.org or you can connect with me on instagram “darrenboness” or leave a comment in the comment section below, I read every single one and do my best to reply to them all.