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How to Maintain Positive Psychology while Trading

by wrich

By Patrick Reid, co-founder of the AdamisPrinciple.com 

Trading can be a brutal and unforgiving health hazard. If you search on the internet there are dozens of mind coaches and gurus to get you calm and tranquil before the trading day starts. 

The only problem is many of them have never traded at all. When you are at the coal face losing your shirt it’s hard not to mock these coaches. The last thing you need is someone going all Zen on you. 

Being positive has a direct correlation to the amount of risk you take. Risk controls fear. If you can define your risk you remove the fear. That makes you positive by default. 

At any one point I know exactly how many trades I’ve got in me before I stop. I plan for risk events and when there is a liquidity shock I know what to do. And I always have a stop in place. Many retail traders think the big banks don’t use stops and they are flat plain wrong.

Patrick Reid, co-founder, AdamisPrinciple.com

I’ve read a few books and one that still stands the test of time is Mark Douglas “Trading in The Zone” It was my first “mind coaching” book which taught me probability but not in the conventional sense. 

One of the many nuggets I gleaned was realising that if you take a loss it is just 1 in a thousand trades. If that is true then why worry? Also, some of the best traders in the world loose billions. Look at Bill Ackman and how he came back from shorting Herbalife? Now that is a perfect example of a positive mind set. Respect. Now he’s back to making billions with a scorching last year with his hedge fund Pershing Square. 

Some of the practices I use and teach on my masterclass programme is to understand ratios and what they do. Win: loss and risk: Reward are crucial and being mentoring by the best bank and derivative traders on the planet I quickly realised that one is 50:50 and the other needs to aim for 3:1

Another tip is having a non-trading goal in mind. Buying a house, giving to charity, owning a golf course or even going back to study are many long term plans that can help with being positive – especially if you are having a bad run of form. Remember to stay fit, love your family and eat what you want – within reason. I gave up partying 7 years ago and never looked back. I’m sharper for it. All adding to positive mind set. 

Research, preparation and practice. Nothing in this world matters more than doing your homework. I look at markets each day with structure and amazement but once in a while I get caught short in the headlights of crazy moves. Again I have a plan and execute it most of the time. I am human after all. 

If you are having stress in your day job we can help you navigate past the pitfalls of fear and anxiety with the Adamis Principle’s Absolute Masterclass

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