The markets of late have been a challenge to many traders. Trading systems that have worked well all of a sudden don’t seem to perform as they used to. Perception or truth, the reality is that many traders have experienced difficulty adjusting their trading to the increased and erratic volatility on the markets. Patterns have been less clear, and sudden snap back moves have been the norm in many of the indices and the currencies too.
I work with a number of professional traders who trade crude oil. The sudden turn a round in crude caught even some of these guys off guard.
The problem is this:
Our minds have difficulty anticipating change in a timely manner and then acting on the new information. The mind is hard wired to work from old reference points. If your trading system provided you with a reasonable return yesterday you are inclined to follow through with the same rules the next day. If your system did not give you a profit the following day it becomes harder to follow the same rules.
The untrained mind is fickle and will start looking for ways to “improve” performance. It does so by checking the memory bank, since it can, similar to a computer, only act on information it already posses.
When the market enters into a different phase and dynamics change the mind lacks the ability to adjust quickly because oftentimes it simply lacks the memory, or should I say information to make those changes in the very moment they happen.
In times of high volatility mental matters get even worse:
Particularly when markets act in a stop and start fashion with erratic moves and long periods of price doing very little: If you are an intra day trader you will know how hard it is to stay in a position when the market appears not to be moving often for hours at a time staying in a tight range of a few pips or points.
Just look at a daily chart of cable. Cable acted very well until the second week or so in July, when dynamics changed. We traded in a tight range which recently got broken in an untidy fashion. I will not tell you that it has been easy to trade GBS/USD of late. The early morning trades I used to take in UK time which were are a sure-fire way to make money have not performed as they used to.
Rather than reacting to the market I chose to stay out for a little while and observe until getting back in. I am aware that my mind is slow to change and wants to make adjustments where there are none necessary. Alas my thinking needed rebooting.
The mind is naturally active
Thoughts are like a busy highway. One thought after another passes by, mostly repeating the same thought, embedding the same energy. That is how you repeat the same old, same old over and over again until something triggers you to change. Usually that will be an evolutionary impulse over which you have little control. Just as in a trending market you can predict where price is going with a high degree of accuracy, the mental rut, oops “trend” repeats over 98% of yesterday’s thoughts today.
Of course most people are not consciously aware of the repetitiveness of their thinking. And here exactly is the rub.
When you are looking for price momentum and it is not occurring, while you sit there and wait seemingly forever for something to happen, you will begin to feel anxious.
The eyes begin to skew the picture on the charts.
The mind sees through the eyes. Alas, it is not the eyes that see, but your consciousness.
You will only become present to how your mind alters what is in front of you on the charts when you have had considerable awareness training.
Most traders simply have not been trained in honing their inner awareness, hence they are finding it very hard to remain in their emotional center and not react to those periods of inactivity. They are reactive while also being mentally asleep. They feel at the mercy of their emotions rather than being in being detached from them.
The emphasis is not on control, rather it is on detachment. There is a very significant difference.
Detachment brings you effortless control: You won’t be “forced” to react to your immersion and instead observe what is going inside as well as outside of you.
The mind is like a permanent cinema. It is always spinning you stories, most of the stories are totally irrelevant to what you are doing. And they are untrue!
What your mind tells about how you should trade is nonsense for the most part. The sooner you get that the mind does not know very much at all, but your innate abilities are the true knowledge base your will have taken the first step to significantly improving your trading.
By the way, this above also holds true in your general life: You repeat the same behaviour patterns in all areas of your life, but trading. Because of its intense and fast nature will sooner or later force you to take a reality check.
I know that this is what has happened and is happening to many traders right now.
I am not going to tell you that this market is easy to trade. There are many mentors out there who say it is incredibly easy and you should never say that the market is difficult. Well, I beg to differ. When you experience something as challenging, you must acknowledge it. This kind of honesty will help you to remain humble and on track.
Everyone can make money in a market that is trending well.
It really isn’t rocket science. Right now trading requires a great deal of dexterity and experience, but above all it requires your willingness to expand, be open to learn and grow as a person.
When you grow as a person you will develop the skills of patience, and calm detachment from your emotional impulses and become a better trader.
I have said it many a time before in different permutations:
Your ability to return consistent trading profits is a matter of developing internal resilience and mental dexterity. That in turn opens the door to your innate abilities.
Market volatility is set to stay with us for some time. We are entering into a big cycle of change of consciousness, which I talk about a lot on my YouTube channel and on my website. Understanding the bigger picture which goes way beyond your trading is vital right now, so that you become more comfortable with managing the many shifts that are happening in all areas of our lives right now almost daily. This pattern will continue to affect the markets as old correlations change and
