Jamie’s trading results were falling short of her expectations. Overall, Jamie was a good trader, but she wanted to improve. Reviewing her trading results, we could see a pattern that most of her losses were coming in the first trade or two that she made each morning after the market opened. She blamed the “Smart Money” traders. “They manipulate the market and wrong-foot me every time,” she complained with exasperation.
There are many reasons why traders lose money, but how we think about those reasons and what we do about it can make all the difference.
Where Jamie Went Wrong
Jamie was blaming the so-called Smart Money traders for her losses. She viewed them as powerful forces that she couldn’t control. And she was right; she can’t control other market participants or the market. The only thing under her control is herself. This includes her thinking and the actions she takes. It is the same with every trader.
Blaming the Smart Money, the market, indicators, charting software, the weather, etc. puts the power onto external factors over which we have no control. While these things may have an influence on trading results, they are not determining factors. What you do and how you think are much more important. The good news is, these are the things over which you have direct command.
What She Did
The first steps Jamie took was to set aside concerns about the Smart Money and to focus on what she could do differently that might have an impact on her first trades of the day. She began with better preparation. This included an assessment of the overnight trading during the two hours before the market opened. She looked for the tell-tale signs of supply or demand during this period as a way to have a better understanding of the type of trade to make off the market open. She called this, “My early morning radar.”
What Happened
Jamie tracked this over a few weeks. She kept notes on the overnight trading and a record of her first trades of the day. Not surprisingly, her results began to improve.
As her results improved, so did her confidence. She no longer talked about the Smart Money. She had taken control of her trading and was immersed in the process of getting a clear read on the early market activity. After following this procedure for three months, her concerns about external factors had changed. When asked about what the Smart Money might be up to, this is what she said: “I don’t know and really have no control over what they do, but I do know that if I focus on what I can control, I’ll do well. That’s my edge.”
Use Jamie’s Experience to Improve Your Trading
If you are having difficulty in your trading like Jamie, start to pay attention to your self-talk – i.e., the things you are telling yourself. If you hear yourself blaming outside forces like other traders, government interventions, your charting software, etc. recognize that it may feel good to scold an external force, but this does not help your trading. Instead, take responsibility and consider actions you can take to turn the difficulty into an asset like Jamie.
Follow These Steps:
- Be specific about the area of concern. Define it carefully.
- Ask yourself: “What actions can I take that will help me address this difficulty? What can I do differently that will impact the situation?” Be specific here, as well.
- Track your progress. Use a trading journal to log progress. Address any setbacks right away. Remember, no one hits the bull’s eye with the first arrow. Keep working to improve.
The trading journal is one of the most effective ways to develop your trading. If you haven’t already done so, check out the Trader’s Daily Reivew – It’s a brief, easy way to begin using a trading jurnal, and it’s free.
You will receive six important questions you can use to coach yourself, complete with guidelines and examples. Get it here: Trader’s Daily Review
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