Why Thinking Gets In The Way Of Trading Profits

by

"To the still mind the entire universe unfolds". This is a basic truism derived from Buddhist teachings which holds true for life, and when applied to your trading pathes the way to trading profits. However, our busy minds are so used to interacting with external influences that we have completely forgotten what it means to be still and to "receive".

In fact, our ability to truly "receive" from the world around us is so overshadowed by our opinions on the market, our need to do what is expected of us, that in actual fact very little mental space is left for reading market information from an inner place of emptiness.

Awaken your trading mind

The real trouble is that we are totally unaware of this scenario playing out every day without fail in our trading. We are so used to the internal noise in our untrained trading mind that we literally don't know what stillness and receiving are all about. Most traders don't know what it is like to have a still mind.

The internal chatter runs on autopilot in the background, and most of it is subconscious. Did you know that as much as 97 percent of your thoughts and subsequent actions are performed on auto pilot?

Most people aren't aware of this fact, which, incidentally, is being backed up by the latest scientific research.

Imagine what this means for your trading: Put simply, you are the unwitting victim of your trading emotions and you probably don't even realise it. Your thoughts, feelings and emotions are predominantly the conditioning you have received before the age of seven. In addition to this you process information you receive from media commentaries, like Bloomberg and CNBC, the Wall Street Journal, etc. taking on these views as your own, of course mostly without your conscious awareness. When the talking heads say "sell AAPL" you go and check the charts immediately, when someone says, the DOW is going up, you are looking to buy. Oh well...

The consequence?

Unless you have learned to stay in your centre, you are participating in an emotional roller coaster, swaying with the mood swings of the markets like a drunkard. Small wonder that so many traders have great difficulties following their system. It isn't that they are undisciplined. I work with many traders and can tell you that general trading discipline is certainly not an issue that features as a major problem for most traders. The mental chatter does loom large though in one form or another. Training the monkey trading mind should be a top priority for any trader, particularly for all beginning traders.

How to stop thinking

I am going to share with you a very effective method to start getting out of the habitual thinking mode. If you follow this advice you will experience cognitive shifts that will benefit your trading and your life beyond trading in many ways.

Make a habit of noticing what you are judging during your day. Ask yourself these two questions:

  • Where in your trading and in your life are your judgements limiting your choices?
  • How are your judgements of you, your trading results and the markets limiting your trading profits?

If you could make it a habit asking these two questions regularly and notice how you are going about your day judging everything and everyone, you will start de cluttering your mind and your trading emotions will begin to gradually subside. I am not promising one day miracles here, but I can promise you that this technique works. You might be amazed.

Stop judging your trading skills

When you realise how your judgments are for the most part absurd, and probably not even your own opinions, but formed from other peoples' opinions which you absorbed without ever checking whether they are true for you. you might dismiss many of your thoughts for what they are: Irrelevant to your desired reality. How often have you judged your trading skills on the opinions of other traders? I bet the answer, if you are honest might actually be quite scary.

The market does not care what you think, and neither should you care about your thoughts. I am not asking you do dismiss them, I am asking you to just notice them for what they are. In and of themselves thoughts are meaningless, random noise designed to distract your trading mind from the essence of what you should be doing, namely receiving what's presenting on the charts.

You have learned to live with your thoughts as if they were meaningful and you have given your thoughts pole position by allowing them to pass as real. There is no good, bad, right or wrong here. It is just how we have learned to operate. If you want to trade consistently profitably and above all enjoy the process of trading it probably is time to adopt new behaviours.

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About the Author

I have traded my own account since 2001, trading stocks, futures, FX and have a love affair with the markets and its psychology. One of my special favorites are gold and silver stocks, as they so clearly illustrate crowd psychology and give us great clues about the innermost workings of behavioral finance.

I am also the author of "The Buddhist Trader" and other trading psychology related books and a trading psychology coach.

Buddhist teachings have influenced my trading and investment style and my views of the world a great deal.

For many years I was mentored by a professional trader with strong Buddhist leanings. Over the years I have incorporated these ideas into my way of reading market action which is quite unique and works well for me.

My approach is based on the understanding that everything is one and therefore everything is interconnected.

I love sharing what I am continuously learning on my trading path in articles, and my e-books on trading psychology and behavioral finance. I believe that we learn continuously from each other, becoming better traders and more rounded individuals in the process. In working on ourselves, learning and continually expanding our awareness we make a better world too.

I am hoping that I am making a small worthwhile contribution to helping other traders and investors with my writing, and have more joy and success with their trading and investing. Since success in one area spills over to success in other areas of our lives, this is the real beauty of becoming a successful trader and investor, which is often overlooked. 

BuddhistTrader

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