When you have put on a trade, it’s essential to stay focused on monitoring it. You must be able to accurately perceive the signals that indicate the market is going against you, and you must act expediently to protect yourself. Psychological issues, such as self-doubt, wavering confidence, or a lack of commitment, can distract you, however. They may impact your ability to effortlessly execute your trading plan and manage a trade. Although it’s essentially impossible to drive out all psychological conflicts from your psyche, it’s useful to try to resolve as many psychological conflicts as possible, so that they don’t intrude into your consciousness, and interfere with your ability to focus on the trade.
When you have a psychological conflict, it’s in your best interest to resolve it as soon as possible; otherwise, it just lies there in the back of your mind, taking up precious, limited psychological energy. By identifying psychological issues before the trading day, you can decrease the possibility of these issues entering your consciousness when you least expect them to surface. Do you have unresolved conflicts that lie in the back of your mind? It’s hard to just push these conflicts completely out of your consciousness and pretend they don’t exist. Ironically, the more you try to deny the existence of these conflicts, the more psychological energy you will waste. Rather than trying to ignore conflicts, it’s better to acknowledge and face them head-on. Most of the time, the mere acknowledgment of your conflicts will produce a quick resolution. (As Dr. Ari Kiev suggests, if you acknowledge the issue, you can easily let it go.)
Even if you are not the kind of person who has a lot of past conflicts to resolve, there are some conflicts that all traders must face at one time or another. There are many beliefs about trading that hold some validity but are hard to accept. For example, novice traders must acknowledge and address the possibility that a series of winning trades may have been the result of a run of good luck, rather than trading skill. Although it satisfies our ego to think we are brilliant traders, it’s better to acknowledge the possibility that we may not be as talented as we want to be, than pretend we are something that we are not. Since it takes more psychological energy to pretend that you have trading skills that you don’t actually have, it’s better to just admit it and take action to remedy the situation. For example, one can get additional instruction and trading experience, refine his or her skills, and become a top-notch trader.
There are similar beliefs that some traders may be afraid to acknowledge but should. For example, a trader may think, “Perhaps I was a good trader at one time, but the market conditions have changed and I may not be able to live up to my expectations of trading profitably.” All traders face this possibility at one time or another. It may be true or it may be false, but regardless of the validity, allowing such a belief to remain in the back of one’s mind takes up psychological energy. It’s better to acknowledge the possibility, and if it is false, remind yourself that it is absurd, or if it is true, take the necessary steps (such as learning new trading strategies) to prove it wrong.
Many psychological conflicts remain in the back of your mind. They are there lurking below your awareness, and when you are in a vulnerable mood, such as when you are fearful or disappointed, these beliefs can move from the back of your mind to the forefront. It’s not useful to ignore these potentially distracting psychological issues. It’s better to acknowledge them up front. Once you do, you are more likely to be able to say to yourself, “that may be true, but it is of no consequence right now.” Then, you better spend some time during your “off hours” dealing with it. Conflicts in the back of your mind can have a powerful impact on your ability to focus on your trading. Make sure that you face your conflicts, spend time examining them, and try to resolve them. If you can do so effectively, you’ll be able to achieve the mindset of a winning trader.