Module 12 Innerworth — Mind over markets

Chapter 144

Getting in Sync with the Market

Professional athletes practice extensively in preparation for a game. It’s critical to be well prepared, ready to perform at your best, and ready to take care of anything that may come your way. But at game time, even top athletes don’t jump into action on impulse. They may be well prepared, but that doesn’t mean they are warmed up and ready to play at their best. They must also develop an initial impression of how well things are going.

The best athletes “feel” out their opponent, their teammates, and their current ability level. Basketball players, for example, stick to 10- and 15-foot jumpers initially, and allow themselves to find their rhythm before stepping back behind the three-point line. Players try to get a sense of whether their teammates are supporting them by setting good picks and allowing them clean shots. After they sense that everything seems to “click” and that they have entered “the zone,” they build on their momentum and take their performance to a higher level. Starting out slowly and finding your rhythm before kicking it up a notch is also a key to profitable trading.

Early in the trading day, it’s useful to “warm-up” and “feel out” the situation. Make a few small trades, for example, 10% of your normal lot size. (And by all means, limit your risk by trading a detailed trading plan.) Putting on a small position usually helps you focus and see the subtle impact of the market factors that may be helping or hurting you. After you’ve entered the market, see if the trades are working out. See how well your indicators and other trading tools are working, your “fellow teammates.” Did they identify a good trade setup? See if you can “feel” the rhythm of the market. Are you in synchrony with it? Are you moving with each ebb and flow? Make sure you’ve entered the zone.

Some days may not be as good as others. Even the star player of the team gets bumped if he or she is having a bad day on the court or playing field. There are times when even the best athletes get stuck in a slump. It doesn’t make sense to keep trying when in all likelihood, your mindset will keep you from performing at your best. That’s why it is useful to see how well you are doing at the start of the trading day. Are you in sync with the markets or is your “game” off? Many seasoned traders suggest standing completely aside when one isn’t having a good day. Perhaps you have a good “feel” for a specific stock, but not the rest of the market.

You may feel that things are going against you. Perhaps, you keep scratching trades. Scratching trades is all right to a point, but if you scratch too many trades, you’ll feel the losses eventually. Ultimately, it may be a good idea to take a long break, try again later, and see if you can find a time during the trading day when everything is going your way. And if you still can’t get in sync, you may want to take the rest of the day off.

When it comes to developing the proper mindset for trading, it is sometimes useful to approach trading in the same way an athlete approaches playing a sport: Warm up first, and see if you can get in sync and play in the zone. Novice traders may need to gain extensive experience before they know if they are really playing in this peak performance state. But with time, they will learn to get a feel for when they can apply their skills and tools effortlessly to score big profits. Experienced traders know when they reach this optimal performance state.

If you haven’t developed this ability yet, don’t worry, with time and experience, you’ll learn how to “warm-up, assess your teammates and opponents,” and get in sync with the market.

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