the-daily-trading-coach-101-lessons-for-becoming-your-own-trading-psychologist-brett-steenbarger-_2009_-a23

20 THE DAILY TRADING COACHsustain a consistent self-image. As a developing trader, you are like thatyoung child. Your ability to create powerful mirroring experiences willmake a difference in your ability to sustain the optimism and courage toweather drawdowns and aggressively pursue opportunity.Please take note of the following principle: If you limit your losses,pursue your strengths, and take concrete steps toward mastery, every singletrading day can be a positive experience, even when you’re not makingmoney. You cannot eliminate losing days, but there should never be daysthat leave you feeling like a loser.COACHINGCUEWhen you construct your report cards, grade yourself based on your improvement,not based on an abstract (or perfectionist) standard of success. If youmanage your trades better today than yesterday, that merits a good grade. Yourgoal is to improve; by focusing on improvement, you create powerful mirrorsof self-development. Relative, not absolute, goals will get you to your desiredendpoint, and they will ensure an enjoyable and empowering journey.LESSON 7: CHANGE OUR FOCUSA valuable psychological rule is that if you wish to change the doing, youmust change the viewing. How we see the world colors how we respondto life events. We don’t just react to markets, but also to how we processthose markets. Our thoughts are the filters between trading and trader.Many times we respond in exaggerated ways to markets, not becausethere’s anything unusual going on in the instruments we’re trading, but becausea set of negative thoughts have intruded into our performance. Let’ssay, for instance, that I notice that the ES futures are unable to surmounttheir overnight highs during the opening minutes of trade despite a fewflurries of buying. I then observe that large traders are coming into the markethitting bids. I hypothesize that we cannot sustain strength and that theovernight highs will not be breached. I further infer that we will trade backinto yesterday’s price range and hit the average trading price from that session.I wait for a bounce higher in the NYSE TICK that cannot make a freshprice high and use the occasion to sell the futures. As the position movesmy way, however, the thought enters my mind that I should take quickprofits because I’ve had a losing week thus far. A buy program then hitsthe market and my position ticks higher, eroding some paper profit. Nowespecially concerned, I take a small profit—only to see the market weakennotably and eventually hit my initial price target.