Dealing with negative trading thoughts

Trading is an emotional pursuit. You can lose a few trades and become depressed. Or have a winning streak and think you are the world's best trader. When we are engaged in the markets we have hundreds of different thoughts and beliefs. If we are feeling down that emotion is with us when we trade. We might remember the shadow of a last losing trade. Or perhaps we have a strong belief in our trading edge. Both positively or negatively thoughts affect us. Market events are filtered through our thoughts, rules and beliefs. These then affect our decisions. So, how do we deal with our negative thoughts that are ? We have so many thoughts, we need to master our feelings in order to master our trading. So, here are three tips to help us manage our thoughts and their influence on our trading:

  • Be aware
  • Evaluate the usefulness of our thoughts
  • Change your thinking process

Be self-aware

Close your eyes and be still. With your eyes closed focus upon on what you are thinking for a minute. Go on, do it's just a minute.

What did you think about? Where are your thoughts located? What did you notice?

Now the part of you that notices what you are thinking is the 'observer part of your mind'. Your mind can actually have an the ability to fulfil the role of an 'impartial observer'. So, we have the mental capacity to weigh our own thoughts. We can be self-aware. Tap into this 'self-awareness' each morning, How are you feeling? Observe yourself and your thoughts using the observing part of your mind. You can develop your self-awareness technique by tuning into the sounds around you. What sounds can you hear? To become aware you need to be aware of your thoughts.

Evaluate the usefulness of your thoughts

Once you have become aware of your thoughts then ask yourself this question, 'how useful are these thoughts for me?'. Evaluate your thinking patterns and the validity of your thoughts. It may be that some of your thoughts you are holding onto are really detrimental to your trading: 'Why do I always lose money?'. 'How will I get out of this losing streak?' "If only I had let that last trade run to it's TP'. Thoughts are invasive, pervasive and managing them can be extremely hard. The reality is that you need to control your thinking before your thinking controls you.

You know if someone said to you, 'don't think about a black dog' for 2 minutes. You know what you would do - think about a black dog. If someone then said to you, try to not think about a black dog for 5 minutes - you would find it even harder to not think about a black dog! Suppression is not a great technique for altering your thinking. If you are having to try and suppress your thoughts you will struggle. Just saying, don't think about that last losing trade or just get over your losing streak will not be effective in managing your thoughts. They will re-appear. In the same way that just trying to not think about a black dog you will find it popping into your head all the time. So, let's look at an alternative approach...

Change your thinking process.

Some thoughts we have seem to be factual. They hit us instantly and become all dominant in our thinking. e.g. price is spiking through a key level and we think the market is breaking out, I must join it now. The thoughts like 'I can make back all my losses with this trade' or 'i can't afford another losing trade'. These thoughts are largely automatic and reflect the situation that you are in. They just arrive. However, we don't want to become 'married to these thoughts'. The mind can become shameless in this way!

So, we don't want to just suppress our thoughts. Instead we want to practice observing our thoughts and then 'un-marry' them. Recognise that thoughts are mental events which may or may not be true. They are not commands for us to follow. They are just thoughts, not facts.They can be allowed to come and go. We are not married to our thoughts. Change the way you think.


So analyse your thoughts -

Observe them - be aware of them

Label your thoughts

Change your language by saying 'I am having a thought that....'

Voice your thought coming from a different person 'imagine your worst school teacher saying 'you'll never make it as a trader'. This will help you to see it for what it is, just a thought and not a fact.

Lets take an example, imagine that you are at your desk and you say:

'The USD/JPY is impossible to trade.

Then realise that 'my mind is thinking that the markets are impossible to trade'

Then say that 'I am noticing my mind is thinking the markets are impossible to trade'

You see, this will help you see that you are just having a thought. What you will find is that you will be able to handle your thoughts much better. You will be able to see around those thoughts and they will not dominate your mind in the same way. It will give you space to not let your negative thoughts overwhelm you.