Trading with an attitude of abundance

At the root of many trading problems is a sense of scarcity or a lack of belief in the abundance of
wealth and opportunity. To trade effectively, I believe, a person needs to have a sense of life's
potential bounty.

The Oxford English Dictionary (OED) defines abundance as an overflowing state or condition; as
superfluity; as plenteousness. Abundant is defined as more than enough. Scarcity is defined by the
OED as frugality, parsimony, meanness and as an insufficiency of supply. With abundance we have
more than enough. With scarcity we have barely enough or not enough.

Successful traders have confidence that the markets will provide abundant and recurring opportunity
and that they can identify and take advantage of those opportunities. The same is true in general of
people who are successful in life. Successful people believe that life offers a cornucopia of
opportunities and that they can identify and take advantage of some of those opportunities. For them
it's really a matter of selecting which advantageous possibility they will commit to and go after.

A look at successful traders and entrepreneurs also shows that they have been able to survive
failure as many times as they have had to. They use failure as feedback. They learn from it and
make changes and go on. Many super traders have experienced crushing loss in their early trading
years. All of them picked themselves up, and with the sure belief that they could make it back, they
did just that. They never said, "It can't be done."; or "I can't do it." They never said, "With that money
gone, the game is over." Successful traders and entrepreneurs find ways to replenish their capital
and proceed toward their goals.

Successful traders are able to ride through periods of draw down easily because they believe the
draw down to be only temporary. They hold an attitude of recurring abundance. Their confidence in
their methods and their ability and their vision of what the markets can provide reassures them about
their future success. Any period of loss is impermanent and therefore unimportant.
Confronted with a drawdown, a trader who comes from lack will stop trading or change methods or
systems only to junk the new methods or systems at the next drawdown. Of course, I'm not saying a
trader should stupidly keep doing what doesn't work. What I am saying is that a trader with a sense of
abundance and a verified methodology won't crumble under temporary loss because she'll know she's
simply passing through a difficult time that will end.

I'm not saying you should like loss. Winning traders don't want to punish themselves, but successful
traders don't dread loss either because they know that whatever happens, they can make it back. The
markets offer endless and plentiful possibilities for wealth creation.

Strangely enough, failure is often a necessary stepping stone to success. Those who are too fearful of
failure may never get to the success they long for. Fear can lead us not only away from the thing we
fear but also away from the thing we seek. Ironically, fear frequently leads us directly into the thing we
fear. If we fear loss or lack, we can create it.

The reason fear can bring about what we fear is that we focus on the dreaded idea and supercharge it
with strong emotion. Thus we act like a magnet for the thing we fear.

What underlies the fear of failure? Very frequently failure and the fear of failure are driven by a sense
of scarcity of supply and/or personal unworthiness of riches-personal and financial.

So just exactly how does a sense of scarcity effect trading?

Scarcity can freeze a trader and keep her from pulling the trigger when she needs to get into a trade.
Can keep her from ever trading. Can keep her researching, researching , researching until her time
and money runs out and she still hasn't traded.
An attitude of lack and insufficiency can keep a trader from recognizing and taking a loss. Can lock
him into a losing trade until he buries himself. Can keep him from trading smoothly thereafter.

A sense of scarcity is also behind the fear of missing out. When a trader is fearful of missing out, he
can overtrade in terms of size and frequency. He can jump the gun on a trade or force trades that
don't fit his criteria. He can climb unto a move that is practically over. Enough early, late, or forced
trades will ultimately result in loss, thus bringing the very opposite of what the trader intended.

Fear of missing out can cause a trader to throw away good money management principles and trade
in excessively large size. The end result of overtrading ultimately overtaxes the account and in certain
cases actually leads to financial ruination.

Because underlying the fear of missing out is the notion that there are a limited number of
opportunities, greed is produced. Greed is often based on the panicky feeling that there will not be
enough. For the truly greedy person, whether the greed is for food or money, there never will be
enough. There can't be, because if there's a universal scarcity, how can there be enough?

Have you ever experienced overwhelming remorse for a missed trade or a missed investment?
Traders often report that the anxiety and regret of a missed trade is far more painful than a trading
loss. At the core of such remorse is the lack of focus on opportunities yet to come.

This same belief in limited resources is often the cause of a profit ceiling, a wealth cut-off point. I see
this with traders who get their accounts up to a certain amount and each time, proceed to give it all
back. Such traders doubt their worthiness to accumulate wealth. Underneath this thought is the belief
that there is not enough to go around, and that they are unworthy of more than a certain limited
amount, what they consider to be their fair share. If they were conscious of an abundant supply, there
would be no need to cut themselves off.
One way to avoid such a personalized limit is to find a cause you truly care about. Find something
larger than yourself and begin tithing your trading profits to this cause. The more you make, the more
you can give. The more you give, the more you can make.

In advocating an abundance consciousness, I'm not writing about easy come, easy go. No. That's the
inability to value wealth and let it grow. A spendthrift doesn't honor the accumulation of wealth. Those
who divest themselves of their wealth as soon as they get it don't see wealth as something good
which they deserve.

We need balance. We need to save money and let money flow. We earn. We save. We spend. We
invest. We risk. We give. We wisely enjoy our money even as we make it grow.

With a sense of abundance we can allow ourselves to invest, to trade and to risk. We can afford to
risk-in a calculated and controlled way-because there is more out there.

Balance is vital to the equation. It's important to value wealth and to value opportunity, and not to
squander them. You don't want to squander and you don't want to grasp.

How do you value opportunity? By being alert to it and by taking advantage of it. By selecting
carefully. You don't want to take an opportunity that doesn't exist and you don't want grab too much of
it either. Nor do you want to treat an opportunity with indifference or casualness. As a trader, you take
trading seriously and you trade consistently knowing that the rewards can be even greater than you
dreamed.

If, however, you do miss a trade or leave a trade too soon, there's no need to stress over it. Learn
from it and vow to do better in the future as you sustain an optimistic view of your future abundance.

Now, I know it's easy to focus on lack and poverty and homelessness and the genuine suffering in the
world and fail to notice that opportunity is all around us waiting to be discovered and utilized.
Please allow me to end this article on the importance of appreciating the abundance of supply by
briefly reviewing this aspect of the Bible story of Adam and Eve in the richly plentiful Garden of Eden.
According to the story recorded in Genesis, God had provided for every possible need of Adam and
Eve until one day the serpent beguiled Eve by asking her, "Yea, hath God said, 'Ye shall not eat of
every tree of the Garden?" Eve replied, "We may eat of the fruit of the trees of the garden: but of the
fruit of the tree which is in the midst of the garden, God hath said, 'Ye shall not eat of it, neither shall
ye touch it lest ye die.' "
Well, the serpent persuaded Eve to overlook and forget about the plenty she did have and directed
her attention to that one tree which was forbidden. Despite all the plenty God had given her, she ate
the forbidden fruit and she persuaded Adam to do the same. God threw them out of the Garden of
Eden and kept them from ever reentering the garden. He cursed the ground, so that Adam had to
struggle outside the garden with thorns and thistles and to sweat for his bread.
It's easy to overlook the supply. What one thing do we know about our supply, the markets? They are
there and will continue to be there with plenty of movement and possibility. They provide us with rivers
of opportunity. Pay attention to that. Count on it.


















"Accepting the Unknowable Future"

Are you the kind of person who sneaks a look at the last chapter of the page turner you're reading? I
am. Unfortunately, you can't do it when you trade. Nor can you do it with your life. The wildness lies in
wait as does the tedium.
Successful traders realize that the future is not knowable. They understand that all they have are
simple probabilities. And they trust that probabilities utilized over time are sufficient. They are able to
be friendly and comfortable with uncertainty even as they prepare for the improbable to occur. Just
because you've never seen a black swan or a purple swan does not mean there are none.
Successful traders take precautions before a trade goes against them. This means they will always
manage the risk by using actual or mental stop loss orders. They limit the size of their trades because
they know they don't know.
Acceptance of inevitable uncertainty creates an important difference in the way you trade. When the
outcome of any trade is uncertain, and you fully accept that uncertainty; you will not be blinded by
stories or opinions. You understand that so called gurus and experts don't know the future either. You
will not over-trade or under-trade. You will protect yourself against undue risk. You will be willing to
act in a timely fashion because you understand that you will never have certainty until it's history, and
even then it's sometimes murky.
The random event or set of circumstances waits to happen. You don't dwell on it, but you do buy your
insurance through proper risk management and flexibility of mind.
It is not your job as a trader to know whether any given trade will be a winner or loser. Realizing this,
you relieve yourself of a huge burden. It is your job to recognize your entry and exit signals and act
upon them. You feel no need to second guess yourself because you've created methods that put the
probabilities in your favor, and those probabilities will work for you over time, just not every time.
Some people have an inordinate need to be right. Deep inside they feel that something terrible will
happen if they're wrong about something. This can have two effects on their trading. First, such a
trader cannot act quickly. She will hesitate before entering a trade and once in may hesitate to get
out.She's always looking for confirmation because she needs to be right. By the time confirmation
comes, however, it's usually too late. Second, such a trader may be so endowed with the need to be
right that she cannot receive information contrary to her position.
I have seen people for whom it is more important to be right than to curtail a loss. I'm thinking of one
particular man who let a short position on a stock go 60 points against him. He had most of his money
and a lot of his clients money in the trade. He'd written document after document on the company that
had no earnings and would not for some time. But there was a story that excited people about the
future of the company. They were betting on future earnings. This man was powerless to cover the
short position. His self esteem was dependent on being right. He put stops above the highs and
cancelled them as the stock rose. He lost another 40 points for a total of 100. Only when the pain of
losing any more money was greater than the need to be right was he able to take off the position.
Since the successful trader has no particular need to be right, he can keep an open mind to the
information that the market gives him. He won't pit himself against the market. He can want what the
market wants and go with the flow. He can accept the inherent rightness of the market.
The future, alas, is not knowable. All we have are probabilities. A profitable trader accepts uncertainty
and even enjoys the unknowable quality of the process. It is here that the fun, excitement, and
interest lie. As well as the game. After all, if we could know for certain, the game would be over.

AFFIRMING BETTER TRADING

"Any thought put into your mind and nourished regularly, will produce results in your life." John Kehoe
An affirmation is a statement made in the present about the future as if it had already occurred in the
past. Let me say it more simply. An affirmation is a simple statement about what you want to become
true in your life. You state it in the present tense as if it were already true. You repeat your hopes and
dreams. You declare the opposite of your fears. For example, the fear that you could lose all your
money becomes: "I grow my capital through consistently applying my winning methods."
Be careful to word the affirmation in the present tense. Statements made in the future stay in the
future. "Next month I'll turn my trading around." stays out there in the future. Now is when you need to
turn the trading around.
Affirmations can be repeated to yourself silently or aloud. You can incant them with feeling or whisper
them to yourself. You can record them and play them, or write them and read them. A good time to
assert them is just as you're falling asleep or waking up, or any other time of the day. You can say
them while you drive or wait in a bank line or as you watch the market or manage a trade.
And here is a little miracle. You don't have to believe the truth of the affirmation in order for it to have
an effect. Of course, it's better if you imagine it to be true or becoming true.
Sometimes it's more believable if it's a process statement. "I am slender" can change to "I am
becoming slender." "I am consistently profitable" changes to "I am becoming more consistently
profitable." There are times when the process is more credible than the reality.
You can also turn the statement into a question. "In what ways am I becoming a better trader?" "How
am I becoming a more professional trader each year?" The mind accepts the truth of the question and
searches for evidence.
We think in language. The words we think fill our minds and crowd out opposing thoughts. A word
encompasses an idea. Ideas are stronger than will power. Ideas seduce and return as reality. By
reiterating thoughts they become a part of our natural thoughts and become our beliefs and express
themselves in our actions.
You want to state your affirmations in a positive form. Negatives produce the opposite of what you
want. "Don't lose money." enters into the mind in the form of "lose money". Clearly you don't want
that. Much better to say,"Today, I make money trading." "Don't lose money" becomes a worry, and
you begin to imagine losing money and you feel bad. Thought mixed with emotion attracts its
essence.
Keep your affirmations short. Don't get lost in convoluted sentences and paragraphs. A simple
sentence ten words or less will do it: "I follow my trading rules." "I take every valid entry." "I stay with
my winning trades." "I cut my losses right on time." "I act on time right on time." "I apply my methods
to the market." "I want what the market wants." "I can handle anything that comes up."
You can also use a single word: "Courageous." "Consistent." "Steady." "Professional." "Winner."
"Confident." "Clear Minded." "Detached." "Patient." "Effective." Who are all these words? You are. The
"I am" is implied and understood.
Affirmations are used to bring into being what Earl Nightingale calls the strangest secret: We become
what we think about. When you affirm, you're filling your mind with repetitive notions. They seep into
your subconscious mind, and manifest themselves in your actions.
What if you could affirm your way to trading success?

Always Be Learning
When you lose, dont lose the lesson.
Dalai Lama
When you love to do something, you enjoy learning more and more about it. Most active traders
would rather trade than do just about anything else. Do we enjoy the learning? Depends upon how
we come upon it. When something is a core value, our fascination with learning more about it is
endless. You cant get enough of it. However, when we learn through painful experience, such as
the hard knocks of trading, enough certainly is enough.
Losses are tough. Errors and mistakes are bothersome. And, yet theres almost always a lesson in
there if you remain alert to improving. Ive always said that mistakes are okay if you acknowledge
them and learn from them. James Joyce said, Mistakes are portals of discovery.
As I trade and make mistakes, I say to myself, I dont have to do that again. And I feel reassured
and optimistic about the future. Of course, I do, do that again. We all do. There are certain default
attitudes and positions we naturally fall prey to. But with an attitude of learning, we do it less and less
until we (hopefully) stop repeating the unhelpful thinking and behaving.
When you trade with an attitude of constant and never ending improvement, you are alert to small
and large ways to get better. Not perfect, just better. You pay attention to what you are doing that
works so you can repeat it.
I like to end the trading day asking myself, What did I learn today? Then I ask myself, How can I
utilize that tomorrow?
You always want to be careful to ask yourself those questions that will get you where you want to
go? How can I become a better trader? How else can I become a better trader? are both good
questions. Never ask yourself toxic questions such as Why do I always lose? Worse still, Why am
I such a loser? As Carl Jung said, To ask the right question is already half the solution of a
problem.
As a trader you want to be in a vigilant and continual process of personal and professional
amelioration. If youre seeking to get better all the time, you wont get worse, at least not for long.
Onward Traders!


An anxiety Cure
"Hope is not a strategy: it's a simple emotion." said retired army Major General William Nash. He was
speaking about the war in Kosovo. I laughed and thought about trading. I remembered times when
hope was just about the only strategy I had.

One could say this about almost any emotion and trading. Greed is not a strategy; it's a simple
emotion. Fear is not a strategy; it's a simple emotion. Sometimes, unfortunately, fear or greed, hope or
determination does become a trader's basic strategy. Trading becomes dictated by emotion rather
than a consistent strategy for entering and exiting the market. Simple emotions are not an effective
strategy. The Major General was right; a strategy built on emotions will be at best, inconsistent and
disastrous at worst.

An emotion is a response to a thought that expresses itself in the body. That is why we call them
feelings. We feel the emotion in the body. Emotions are the body's response to a thought. An emotion
responds to a thought and soon that emotion affects other thoughts as well as actions which in turn
express themselves in more emotions felt in the body. We build an interactive cycle between thought,
feeling, and action.

Most traders say they don't want to experience any emotion. They want to respond like a computer, a
machine. Traders aren't isolated machines, unconnected to a feeling body. They're humans with
potential for feeling. Mind and body interact. They are correspondents.

If you want to respond as a computer, you can set up your trading to be completely computerized. You
can even have the computer place the orders electronically. This takes you completely out of the loop.
No harm here, but you won't have human input as to visual patterns or current events. My computer
mentor tells me that computers are simply a combination of on-off switches, and don't begin to have the
power of a human mind. Probably not, however, if the human mind is hopelessly emotionally
conflicted, the computer is a good idea. My guess, nonetheless, is that if a person is emotionally
entangled, she won't be able to leave the computer to do the work without her intervention.
Because most of us are intimately involved with the trading process and because mind and body
interact, it is essential for us as traders to acknowledge the emotions we experience and to shift them
in ways that will enable us to still accurately perceive the information the market is giving us. We
need to act in a timely fashion, based on the conjunction of outside information and our trading plan or
strategy. A consistently winning strategy cannot be based on emotion because our perceptions and
our behaviors will be skewed. Hope causes us to give extra meaning to each little up or down tick.
Fear causes us not to see the trend or general movement of the market.

Pure positive emotions could cause us to overtrade or to fail to apply risk precautions. Pure negative
emotion could cause us to hesitate or even freeze.

If emotions are human and inevitable, how do we deal with them? First, we acknowledge the emotion
for what it is. We recognize that we're feeling something and we pay attention to just what it is we're
feeling. Each emotion, positive or negative, is giving us a message. The message contains important
information.

In this article I'll be focusing on the emotion we call anxiety. Anxiety is a future oriented emotion.
Think about it. We don't get anxious about events that have already occurred. Suppose we had been
anxious about an event but now it's over. We no longer feel anxiety. We might feel relief, remorse,
disappointment, sorrow, or some other past oriented emotion. Anxiety is focused on the future.

Anxiety is telegraphing a message that there's something in our future for which we need to prepare.
This is a vital message. If you're anxious about anything, ask yourself, "What can I do to prepare for
this event?" If you're anxious about your trading, ask yourself, "Is there anything else I need to do
before I can trust my trading?" This might involve research, verification, or personal growth. Get
yourself ready.

If, after you've prepared, you're still anxious, you can use this sure-fire anxiety squelching exercise.
It's very, very simple. Just go out in your imagination to a few minutes after the anxiety causing event
is completed. Look back on the successful conclusion of the event. The anxiety dissipates, like
magic.
If you've done the necessary preparation, the only reason the anxiety persists is that you're imagining
an unsuccessful conclusion of the event. This became manifest to me in the case of a professional
singer who came to me to resolve a problem. He was missing high notes in his performances as a
church soloist. I asked him what he thought about before the service. "Well," he said, "I imagine
missing the B flat and afterwards nobody will look at me because they feel sorry for me." Of course,
he missed the B flat! He was giving himself vivid suggestions for failure; he was imagining the
unsuccessful conclusion of the event.

The same thing happens with the trader who can't pull the trigger. She's imagining all the ways the
trade could go wrong. And we know that when imagination and will power are in conflict, the
imagination wins every time. If she's imagining loss, she won't take the trade. All, the king's horses
and all the king's men couldn't get her to put on the trade. She's intensely conceiving loss.
Furthermore, she's looking for reasons-and there are always reasons-not to take the trade because
she doesn't want the discomfort of being in the trade as she expects loss or the pain of actually losing.

I suggested to one client who was having difficulty taking every signal that he imagine a winning result
to each trade as soon as he gets the signal to take the trade. "Just imagine," I said, "the trade going in
the direction of the probabilities." He responded, "Oh, Ruth, then I'll feel so disappointed when I do
lose!" "Well," I said, "do you want to feel bad both before and after the trade?"

Disappointment, or the fear of it, keeps many people from expecting success. The problem here is
that we need to anticipate success in order to succeed. Can you imagine what would happen if a
professional athlete expected to fail? Such a thought just never crosses the mind of a truly good
athlete. An outstanding athlete operates "in the zone" fully anticipating his own flawless performance.

In his new book, Trading in the Zone, Mark Douglas convincingly and clearly outlines a basic trinity
of attitudes necessary to be a successful trader. A trader needs to accept loss. A trader needs to
accept the total uncertainty of the results of the next trade (or any given trade). A trader needs to think
in terms of over all probabilities.
Now, I know my suggestion to imagine the successful conclusion of a trade appears to fly in the face
of these truths. Successful traders accept and expect losses. Losses are endemic to trading. Losses
are a simple cost of doing business just as inventory is an acceptable cost to a merchant. A merchant
never sits and whines and says, "Oh, dear, I hope I don't have to buy any inventory this season." of
course not! Neither does a successful trader sit and whine, "Oh, I hope I don't have any losses this
quarter! Oh, I hope this trade isn't a loser!" The consistently successful trader accepts deep in her
heart, deep in her bones, that her winnings will be tempered with inevitable losses. So what! She also
anticipates her ultimate triumph because she's structured the probabilities in her favor. She takes the
long view.

Since we never know what will be the result of any given trade, since each trade is unknowable and
only one in a series of probabilities, it's probably better not to imagine the success of an individual
trade. It's best to keep your mind open to the uncertainty of any given trade. Remember it's not your
job to know whether any given trade will be a winner or loser. It is your job to apply the probabilities of
your method.

So, unless you're really stuck being unable to put on a trade, don't imagine the success of a given
trade, but rather go out into your future and look back on the successful conclusion of the day's, the
week's, the month's, or the year's trades.

Here's, how I do it. I envision my time in this life as a line in space. You could call this my time line. My
past is behind me, my present right around me, and my future is an upward rising path in front of me.
(Other people may have a different configuration such as past to the left and future to the right, or
something else.) In my mind I float up over my time line to just after the end of the year's trading. I
settle down on my time line and in my imagination I experience the successful conclusion of the year's
trading. I watch how events re-evaluate themselves. Then I float back to my present and any anxiety I
might have had is simply gone. I couldn't care less how any one trade comes out. It's meaningless in
the scheme of time.
There is a caveat here, however. Remember that anxiety or fear is an emotional messenger telling
you that there is something in your future to prepare for. You mustn't use this technique to avoid
preparation. Before speaking to large audiences, I go out into my future to just after a well received
speech. I sometimes even imagine a standing ovation. It removes any nervousness I might have. But
I always remind myself that just because I'm not fearful doesn't mean I don't have to get ready. I
prepare vigorously. Preparation is key to any success, and fear is your preparation alert. Once your
preparation is complete, however, there's no longer any need for anxiety.


Applying Seven Huna priniciples to Trading
Huna is an ancient Hawaiian philosophy that has been handed down through the centuries. Huna
means secret and Ka Huna means the secret (as in, surprisingly enough, the big kahuna). Dr. King
derived from this philosophy seven basic principles that apply very aptly to living in any time.
From the moment I read them, these principles struck me as a unique and powerful way to live,
trade, or pursue any endeavor. They are as follows:
1. The world is what you think it is.
2. There are no limits
3. Energy flows where attention goes.
4. Now is the moment of power.
5. To love is to be happy with.
6. All power comes from within.
7. Effectiveness is the measure of truth.
My next seven columns that will appear on my website and on TradersPress.com will pursue in depth
how each of these principles can be utilized to effectively develop oneself and evolve as a trader.
Lets look at each principle briefly in the trading context.
The world of trading and investing is what you think it is. Do you think its dangerous, confusing,
unpredictable, or overly risky? It will be. Do you think the market gives interpretable clues and is
abundant with opportunity? It will be. In other words, we all dont live in the same worlds, trade the
same markets, or get rewarded equally. Whatever you think, youre right.
There are no limits to your trading profits or losses. You apply your own risk/reward parameters. You
need to look at any formerly imposed boundaries youve put upon yourself. It is possible to expand
your own ideas of what can be done, what you can do and earn as a trader or investor.
Your courage, fears, and perception will flow where you put your attention. Are you seeking to follow
a method? Make money in any old way? Avoid loss? Grow your capital through right action? Your
strengths and weaknesses will go where your attention is placed.
Now is the moment to interpret events and price movement. Now is the moment to act. You cant
trade yesterdays or tomorrows markets today. Opportunity passes like a cloud. Choose a timeframe
in which you personally can act in a timely fashion. Stay present, and stay in your timeframe.
How do you feel when you trade? Do you start each day with curiosity, excitement, and optimism?
Do you love what you do? Its common knowledge that successful traders love to trade. If youre
miserable when you think of your trading, something is going terribly wrong. Something needs to
change.
Your power as a trader comes from within you. It is up to you to perceive and to enter, exit, or remain
in a trade. You are in control. The winds will blow, but you alone set your sail.
One of the beauties of trading is that we know the measure of truth sooner rather than later. You may
have a concept of what is supposed to happen, but right now you are either making or losing money.
Indeed, your effectiveness is the measure of your trading truths. Dont fool yourself.

How Beliefs Drive Trading
What you believe, consciously or unconsciously, propels your trading in its many directions. It might
be so simple a matter as whether you believe a market is going up or down or nowhere. Traders
have biases that distort their perceptions and effect their actions, and they need to guard against
these with various protections and bias detectors.
Other beliefs are more veiled and ubiquitous. For example, you may consciously intend to make
money, but you have a counter impulse that thwarts you due to unconscious beliefs that go against
that intention. Perhaps you unconsciously believe that money is the root of all evil, or that rich people
are corrupt, or that there isnt enough to go around and so you shouldnt be greedy, or that you should
be laying up your treasure in heaven, and not on this earth. Perhaps on some level you believe you
shouldnt make more money than your parents.
When you want something, you have to really want it and not be ambivalent about it. It has to be your
desire, and not some alien value set by your parents or society. The flower loves the sun, and
stretches to receive its rays. The plant loves water and digs its roots deep seeking the object of its
desire. If you want to make money trading, you really have to admire money and have good
purposes for its use. If you want to be a master trader, you have to be comfortable with that role, and
not see trading as wasteful gambling, or an unworthy profession.
Perhaps you believe that you dont deserve to make money trading, or that you have to work hard for
your rewards. Maybe you believe that only the big boys win, that the market is stacked against the
ordinary trader. Maybe you believe that its impossible to make money in the futures markets or,
worse, any market. Maybe you believe its possible to make money trading, but its not probable that
you can keep your winnings. All such ideas run in opposition to easy and effective trading.
Just as insidiously you may doubt that your system really works, or that it wont work this time. Some
traders get superstitious: for example, they believe that they always, or tend to, lose money on
Fridays, and so, of course, they do. When any of their superstitious factors occur, somehow they
manage to lose.
Strong emotions also get in the way of winning. Underlying each emotion is some belief about what is
happening. The interpretations you give events color your reality. Underneath each interpretation is a
rock core belief. Thats just the way it is. you say. Such a statement flags a belief. Is it really the way
it is? Do you feel guilty, scared, angry, or depressed after a losing trade? Perhaps you believe that
you shouldnt lose, that one losing trade implies you cant trade, that one losing trade portends many
more losing trades, or that youve jinxed yourself for the rest of the day or week.
Equally or possibly even more important are the positive conscious and unconscious beliefs that you
hold about trading and investing.
To begin with, to do anything well, you need to believe that it can be done, that you can do it, and that
you deserve to do it. Youre in trouble if you doubt any of these three. Your trading is at risk if you
dont firmly believe that money can be made trading, that you can make money trading, and that you
deserve to make money trading.
Ive listed many supportive trading and investing beliefs in my books on trading psychology, but let me
list a few here for handy reference.
Trading is a series of probabilities.
Any one trade is insignificant, be it a loss or a profit.
The probabilities of your trading favor you over time.
You are the one responsible for your trading decisions.
You make good trading decisions.
Theres no need to be right all the time.
Any drawdown in funds is temporary.
The future of your trading is positive, and you feel optimistic about it.
You can keep your perceptions clear, and check your ideas against market action.
There is an abundance of ideas and wealth to go around.
If you lose money, you can make it back.
As a trader and investor, you are continuously improving.
The only person you need to compare yourself with is your own self.
Anything can happen at any time for better or worse, and you can handle it when and if it
does.
Its important to manage the money and the risk, and you do.
Trading is fascinating and fun.


The Confident Trader
Confidence overcomes fear. Confidence also overcomes greed because a component of greed is
an underlying sense of scarcity. To be confident doesnt mean that every trade or trading day will
be profitable. What it does mean is that when you look to where you want to go, you know that
you can figure out a strategy that will get you there. And you know you can execute that strategy
in a consistent manner. A successful strategy doesn't mean anything if you dont or cant or wont
employ it.
Theoretically we should be as successful at trading and investing as our trading and investing
strategies. Unfortunately the vast majority of traders and investors fall far short of the results of
their strategies. They trip over themselves again and again on the way to employing their
methods. My work as a trading coach is to enable traders around the world to become as good as
their methods.
Confidence need not waver when you have dips and troughs and plateaus in your trading.
Confidence is developed when you realize you can correct mistakes and learn from failures. You
dont persist in failing. You learn and move on. You dont fear repeating the failure either, you
simply anticipate correcting it.
Self esteem is basically the sum total of all the thoughts we have about ourselves. This is quite
important because we do tend to become what we think about ourselves. The noted philosopher
and psychologist, William James, said, People, in general, become what they think of
themselves. Not only did he say this but he added that this was the essence of all we had learned
in psychology in the prior 100 years.
What do you think of yourself as a trader? Do you believe that your dream of excelling as a trader
is possible? Do you have a set of philosophies that support your dream? Are you as good as your
methods? If not, its time to do something about it.
Consider my coaching program. I speak for an hour on the phone each week with the traders I
coach. We review your trading, beliefs, attitudes, habits, and philosophies. I help you do more of
what works and stop doing what doesnt work. Through exercises, assignments, and repetitive
listening to the CDs I send, you can become as good as your methods. The money you invest in
yourselfespecially in difficult timesis truly the best investment you can make. It will pay you
exponentially because you never leave yourself. Call me at 800-692-0080, and well discuss it.



Are You Ready and Willing to create Great wealth?
"Wealth is a Head-Trip. It begins in the mind." L. Michael Hall

When you think about wealth, what do you think? Pause right here, and notice what ideas first
come to your mind.
When you think about wealth, what do you feel? Take a moment and get in touch with your
feelings regarding wealth.
Each of us has different associations and different connotations to wealth. Some feel obligation
when they think of wealth; the responsibility to grow it and protect it, or to pass it on to their
children. Some feel the responsibility to do something "worthwhile" with it. It might be to create a
significant collection, participate meaningfully in philanthropy, or use it to help people they know.
Others think of money as freedom and independence. Still others think of security. Some think of
fancy cars and large houses and social status. Some feel it proves they personally have value.
Others feel that wealth implies a shallow and materialistic preoccupation and hence impedes "true
spirituality". At the extreme ends some perceive wealth as the highest good and others see it as
venality or even evil.
Since the purpose of trading; or investing is to create wealth, or at least money, it is critically
important how you, a trader or investor, interpret the accumulation of financial wealth. If you feel
on some level that there's something inherently wrong or selfish or evil about amassing large
financial fortune, you and the market will find a way to work together to diminish or demolish your
winnings. Trading is not the arena for those who are conflicted about the value of money
accumulation.
I know one trader who feels a growing tension within himself when he is winning. He consciously
knows that he is not specifically stealing from another trader just because he is winning. He
consciously knows he needs to create wealth for himself and his family. And yet, in the back of his
mind, he feels he is taking from others when he wins and he feels bad about it. As he starts to give it
back, he begins to feel a kind of relief. This trader has the limited pie theory of abundance: he
believes there's not enough for everyone; therefore, why should he have more than the bare
minimum?
Several years ago I worked with a floor trader who was averaging $5,000 a day trading. He wanted to
make $10,000. It looked like an easy task to me. If you can make $5,000, you can make $10,000.
Unfortunately, this trader valued himself at $5,000. That was what his father had made before him. He
learned that he had the right to grow beyond his self imposed limitations.
When I mentioned this situation to a colleague of mine, she said, "Ruth, that's a disgusting desire for
money! That's not ecological! I replied, "That's why it's a good thing that I'm the one who's working
with traders. I'll always help a person get thinner, or healthier, or wealthier." Always check out the
values of your trading mentor or coach.
In my next column, I'll be exploring beliefs that support wealth creation. Until then, ask yourself, "Is
there anything I believe that is getting in the way of creating and sustaining wealth?" There are certain
ideas and thought viruses that can cost you money all your life.

"Desire and Fear in Trading"
Desire and fear alternate in the minds of traders as they go through the day. But let me ask you
whether desire or fear dominates your thoughts and feelings as you trade?
For many traders the primary emotion is fear. They fear loss: losing profits, losing money, losing
equity and even their margin. Some fear losing their touch, their feel for the market, their focus,
their luck, the respect of their boss, colleagues, or mate, or worse, their own self esteem.
Other traders are flooded with the emotion of desire. They look forward to what the day will
produce. They like the thrill of the chase. They have a sense of unlimited potential and abundant
opportunities for profit. They anticipate improving their skills, intuition, and understanding as they
go through the trading day and week.
Keep in mind that desire is not greed. Greed is an inordinate wanting. It is excessive desire and
comes from a sense of scarcity, a feeling that there is not and will not be enough. Desire is
healthy: greed is unhealthy.
What you feel depends upon your mental focus. Do you place your conscious and unconscious
attention on the possibility of loss or the probability (hopefully) of gain?
What you hold in your conscious attention colors your reality and becomes the quality and fabric
of your life and trading. In your life, do you look for whats missing, or do you pay attention to what
you have and can create? Do you think about terrible things that have happened and could
happen again, or do you think about wonderful experiences youve had and expect even better
things ahead? Trading is a microcosm of life. What you do in life, youll do in trading.
You can through conscious volition change your focus from loss to gain. You can imagine failure
or success. You can anticipate improving your skills and understanding, or you can worry about
getting even worse.
We tend to develop in the direction of our attention, so this is not a light matter. Its crucial. Fear
loss: get loss. Desire gain: find a way to create gain. Its true, of course, that trading is a
balancing game. We must balance the possibility of loss against the probability of profit. We
need to keep both in mind, because while we must reach for opportunity we cannot overly risk our
capital. The question is one of where you put the primary focus of your attention and intention.
We balance the size of the profit against the size of the loss. Lots of small profits and a few giant
losses and youre doomed to failure. Lots of small losses and some large and larger wins and
youre on the road to major success.
You can choose, and choose again, where to place your attention. This effects your perceptions
and your interpretations. What you perceive and how you interpret that perception effects your
conclusions. Those thoughts underlie your emotions which in turn generate your actions. Fear
and desire determine the kind of trader you are.

Fear causes you to jump out of winning trades way too soon, causes you to cling to horrible losing
trades, makes you freeze doing nothing when the moment of opportunity comes, and makes you
chase those trades that have long since passed you by.
Desire enables you to learn and thoroughly test winning methods. It enables you to trust those
worthy methods and facilitate them in a timely way
Let me make it simple. Focus on what you desire. Reduce your fears to reasonable cautionary
planned actions, and look away from what you fear to what you do really desire. You want and
choose to be a winning trader.

Effectiveness Is the Measure of Truth"

Applying Huna Principle Seven to Trading


In trading as in life, effectiveness has to be the measure of truth. If something doesnt work, there
is no point in continuing to do it. Misperceptions, false unconscious or conscious beliefs, and
unhelpful behaviors can contaminate and desecrate your most sought after results.
Imagine the frustration of a trader who perceives that a market is changing direction when in fact it
is persisting in its original thrust. Or consider, for further example, an investor who bought into the
belief that buy and hold is a valid investment strategy. That investor had to have experienced
devastating losses over the past year. Or ponder the trader who repeatedly fails to utilize stop
losses and experiences numerous outsize losses because he wont accept a loss.
When you choose effectiveness as your measure of truth, you can learn from your mistakes. You
can make plans, take action, receive feedback, and assess the results. You can revise your plans,
take new actions, receive new feedback, on and on, until you find a viable strategy that will work
most of the time.
When you fear loss, when greed overcomes you, when you get reckless, or when you hesitate,
you become grossly ineffective. When youre confused or ambivalent yet think you need to take
action, you do yourself no good. In each case you need to sort through your thoughts, develop a
clear focus, search for the high probabilities, and take prompt and calm action.
After a series of trades, its advisable to analyze and assess the results. You can then determine
whether to go forward with confidence or to make changes.
Listen to Serge Kahili King, Ph.D who derived these principles from Huna:
Effectiveness is a universal, powerful, unconscious drive. Adding conscious desires makes it even
more powerful. Adding skill, derived from knowledge, experience, and practice, turns it into a
potential force for unlimited achievement.
What is it you desire to do with your trading? How do you desire to trade? Where does the
greatest opportunity lie? Do you have an edge? What is it? What are your strong points? How can
you take better advantage of them? What are your weak points? How can you resolve or bolster
them?
In short, where are you effective in your trading? What works? Do more of that. Where are you
ineffective? What doesnt work? Do less of that or stop doing it entirely.
At the end of each trading day, sit down with pen and paper and ask yourself what you did right.
Ask yourself how you can do more of that tomorrow. Then ask yourself what mistakes you made.
And be sure to figure out a way to keep from repeating the same mistakes tomorrow.
Oh, and by the way, along the way, forgive yourself. And move on.
What would happen if every morning, you started the day by asking yourself, How can I be more
effective today? Your trading and your life would have to expand into ease and joy as workable
patterns become routine and reliable habits.


Focused concentration produces focused energy. When you concentrate your attention on
something your energy will intensify in that area. Concentration condenses energy, and that
condensation makes the energy more potent for exerting influence. according to Serge Kalili
King. This is true both physically and mentally.
When you think about your trading, what kind of energy do you generate? In other words, how do
you feel? Do you feel excited, fearful, depressed, bored, or curious? What are you thinking about,
and where is your energy flowing?
Ed Sekoyta famously said that each person gets what they want from their trading. This is
probably true and true about life as well. Therefore, we need to clarify and define what we want
from our trading and from our lives.
In my experience as a coach, I have observed an addition to Ed Seykotas often quoted
statement. It is simply this: Each person gets what they want or dont want from their trading. By
that I mean they also get a good supply of what they dont want. Energy goes where attention
flows. And that energy produces results.
When you think about trading and investing, do you think about the unlimited potential for gain?
Do you think about where the opportunities are? Do you search for the probabilities for profit? Or
do you think about past disasters and the possibility of future loss?
One thing humans absolutely can do is direct their conscious focus. I would urge you to direct your
attention to what you want and how you can get it.
Great athletes utilize not only physical practice but mental rehearsal as well. Have you ever heard
of a superb athlete practicing the wrong moves over and over or mentally rehearsing failing in their
competitions? It has been said that it isnt practice that makes perfect, but perfect practice that
makes perfect. Well, forget the perfect part. Neither life nor trading nor athletics are games of
perfect. Lets just go for effective. Effective rehearsal produces effective results.
Sit down and close your eyes. Breathe in the energy from the air around you. Imagine what you
want from your trading. See it clearly and specifically in your mind. Feel the excitement and the joy
of the game. Rehearse trading successfully in a way you have verified that works. Believe in your
methods. Believe in yourself. Turn it over to the invisible universe. And open your eyes.



Very often we learn more from our failures than from our successes. The path to success travels
inevitably through certain failures.
A look at successful traders and entrepreneurs shows that they have been able to survive failure as
many times as they have had to. They use failure as feedback. They learn from it and make changes
and go on. Many super traders have experienced crushing loss in their early trading years. All of them
picked themselves up, made adjustments, and with the sure belief that they could make it back through
better trading, did just that.
Successful traders are able to ride through periods of drawdown easily because they believe the
drawdown to be only temporary. They distinguish the difference between simple losses and loss that
comes from mistakes. Their confidence in their methods and their ability and their vision of what the
markets can provide reassures them about their future success. Any period of loss is viewed as
transitory.
Fear of failure keeps many traders from the success they so dearly want. They are afraid to fail and
therefore either afraid to trade or to admit the failure and learn from it. I'm not saying you should like
loss. Winning traders don't want to punish themselves, but successful traders don't dread loss either
because they know that whatever happens, they can make it back. And they can learn.
Strangely enough, failure is often a necessary stepping stone to success. Those who are too fearful of
failure may never get to the success they long for. Fear can lead us not only away from the thing we
fear but also away from the thing we seek. Ironically, fear can also lead us directly into the thing we fear.
My thesis is that underneath fear of failure is a sense of scarcity.
Confronted with a drawdown, a trader who fears failure will often stop trading or change methods or
systems only to junk the new methods or systems at the next drawdown.
The winning trader will not inflexibly keep doing what doesn't work. His open mindedness allows him
to recognize the difference between market conditions and methodologies that do or don't have a
probability of success. A trader with a sense of abundance and a verified method for trading won't
crumble under temporary loss because he'll know he's simply passing through a difficult time that will
end. He distinguishes between loss and inept or error prone trading.
The flexible trader with the willingness to admit mistakes will learn from the failure, honor that failure
as feedback; make corrections, and proceed with the improvements. The winning trader, just as the
winning athlete, is in a constant and never ending process of development and growth.
Look at the history of your trading and write down several major failures. As you study each failure,
look for similarities and differences between them. Look for the lessons. Identify and define the
problems. Look for valid solutions.
As you trade each day, do the same thing with individual mistakes. Write them down as they occur
along with the lesson learned. Look for repetitions. Commit to your own development and growth as
you learn through experience. Remember, if you can't make a mistake, you can't make anything,
including money.


Focussing on the Vitally valuable
I have written before about the amazing insights of the Pareto Principle also known as the 80-20
rule which states that 80% of results come from 20% of causes. Applying this to trading, it would
imply that 80% of profits come from 20% of trades, and that 80% of losses come from 20% of
trades. The remaining 20% of results would spread between the middle 60% of efforts.
Approximately 20% of your set-ups, if handled properly, could result in rich rewards. In addition
about 20% of your random, impulsive, or preconceived bias trades probably produce most of your
serious losses.
Sit down with a paper and pen and explore just what exactly is working for you. Look earnestly for
what is not working for you. Then ask what might work.
There are really only four things we can do: We can do more of something; we can do less of
something; we can start doing something; and we can stop doing something.
Successful people concentrate on what they want and how to get it. What do you want from your
trading, and how can you get it? Do you want to make consistent and recurring profits? How can
you do this? How else? What should you do more or less of? What should you begin doing, or
stop doing?
Unsuccessful people think about what they dont want. If you think about not wanting to lose
money or not wanting to be wrong, the problem is youll probably end up with more of that. When
losing traders get what they dont want, the tendency is to make up excuses or look for what or
whom to blame. These traders need instead to turn their attention to what they do want and how
to get it.
As a trader its vital to look for what is important and what is merely interesting. Its easy to get
distracted by uncritical events and ideas. Ask yourself, what is the most significant aspect or
development for you to pay attention to at this time? Then ask yourself what is the most valuable
use of your time right now?
Another way to analyze your trading is the following:
What am I trying to do?
How am I trying to do it?
What are my assumptions?
What if they are wrong?
If wrong, how can I correct my course?
You can also clarify your trading down to the simple principle of does it work? Is it working for you
right now? Are you effectively working what works? Sit down and make a written plan to get what
you want. Then, start each day by focusing on the plan and refocusing as the day goes on.
Determine where your vital focus needs to be, and keep returning to the important.

Forgiveness and Trading
Do you forgive yourself when you make a mistake trading? Do you hold it against yourself when you
lose? Do you disparage yourself for results--not good enough, or horrible?

Do you forgive others--your broker, talking heads, various gurus and mentors, or systems mongers?

As you hold grudges against yourself and/or others, what does it do to you?

Some pretty bad things is my guess. When you cant forgive somebody or some situation or event,
you are twice hurt: the original event and your own unrelenting bitterness.

I used to do an overnight trade each night. I would buy 1,000 shares of one or more stocks in the last
few minutes of trading and sell them in the first ten minutes of trading the next morning. One
afternoon I was filled on my limit order in a particular NYSE stock. Later that night I realized it was not
in my account. The stock that had been in my account had simply disappeared. When I gathered my
phone messages, there was a message from my broker saying the NYSE specialist had cancelled
the order after the close saying the price was a false print or some such nonsense.

Had I been told before the close, I would simply have gone to the market. This was my nightly MO.
The stock was up well over a $1. on the opening. The missing trade cost me more than $1,000 profit.
I felt at the time that my broker should have taken on the NYSE in my defense, and I felt the
specialist had cheated me.

I was in a rage that night and that morning, but I needed to move forward with my trading. Look,
Ruth, I said to myself, you picked a winner, and you can find more winners. Stuff happens. Forget
fairness. Its a simple ideal. You need to clear your head and find the next opportunity. And thats
what I did. Most of the time the process works. I needed to work the process, let the process work,
and forget about the times when it doesnt.

Im not saying to lie down and be a doormat: I think we have to take action to protect ourselves.
However once that is done, its time to let situations and people off the hook, and get on with our
lives. Forgiveness is freeing. Independence and freedom are some of the highest values of most
traders. How can you be free if you stoke your anger and bitterness against events, others, or your
self?

Some traders are reluctant to forgive themselves because they fear theyll keep repeating their
mistakes. This is one of those things that seems to work in reverse. By scolding and belittling
yourself, you are more inclined to repeat the error. Take the lesson, write it into your guidelines, and
give yourself the benefit of the doubt. You dont have to do that again. If you do (and you probably
will), learn the lesson again, underline your guideline, and move on.

Trading is such a melee of tries and misses and tries and triumphs that a trader needs the balm of
forgiveness in order to prosper. As traders we need to forgive ourselves and others. If we cant
forgive ourselves, we probably wont forgive others; and if we dont forgive others, we probably wont
forgive ourselves.

Because we need clarity of perception and pure intention to profit, we cannot allow grudges and
recriminations to cloud our vision and purpose. Forgive and go free.

Goal Setting as a path to Achievment
"There is no thought in my mind but it quickly tends to convert itself into a power and organizes a
huge instrumentality of means." Ralph Waldo Emerson

Did you make resolutions for this new year? Did you set goals for your trading? For your finances?
For self-improvement? For other aspects of your life?
I hope so. Without goals, without a target, we tend to wander through life drift on our good or bad
fortunes. The fact that we really do have control over the direction of our life is too often
overlooked. We are the authors of our own lives, the script writers of our trading. By setting goals
we set a course.
The goal sets up a tension between where we are and where we want to be. The two must come
together. Imagine a strong rubber band around your two hands. As you pull them apart, you feel
the tension between the two positions. Let your left hand represent your current situation and your
right hand represent your goal, the circumstances as you want them to be. Feel the pressure
pulling the two hands together. To relieve and resolve this pressure, you can either move your left
hand over to your right hand or move your right hand back to your left hand. You can take action to
change your current circumstances and achieve your desire, or you can alter your dream to comply
with the current situation.
It's important that goals be achievable. If they are not, we simply set ourselves up for frustration
and failure. This causes us to weaken the commitment and cease courageous and diligent action in
pursuit of the goal. The goal atrophies. Because the goal was not realistic, we didn't believe in it,
and we didn't try, and rightly so.
On the other hand, if the goal is not large enough and meaningful enough, it has no genuine power to
motivate us. We want to reach beyond ourselves but not beyond the possibilities. Goals must be
realistic.
I have known traders who set themselves the unreasonable goal of supporting themselves and their
families by day trading a $15,000 futures account. The first thing they lose is the $15,000. The second
thing they lose is their self esteem. They have set themselves up for failure through inadequate
preparation and capitalization. When setting a goal for trading, always ask yourself if it is realistic and
achievable based on solid research and experience.
Clients often ask me about setting monetary goals for trading. First I ask if the monetary goal is
realistically achievable in accordance with their knowledge and experience. Then I ask what they
would need to be doing in order to achieve that monetary result.
What do you want? What will having that do for you? When you have a clear conception of what you
want, and understand the powerful why of it, then you can begin to figure out the how of it. With a
clear what, and a strong why, the hows become easier.
How will you get there? How else? And how else? Ask yourself the questions that will get you where
you want to go. What do you already have, and what do you need to develop?
If you haven't already done so, set yourself seven goals for the rest of 07, and start thinking about 8
for 08. Set goals for trading and investing, as well as goals for all areas of your life.To be a successful
investor and trader, you need to be balanced in the rest of your life.
The Role of Grace in Trading
The winds of grace are always blowing, but you have to raise the sail.
--Sri Ramakrishna, nineteenth-century Indian saint
If the winds of grace are always blowing, how do we raise our sails when we trade? We tell ourselves
the truth about what is going on. We understand good trading principles, and we follow them. We are
careful to make helpful interpretations regarding our behaviors and results.
We search for and tell the truth. If the market is going down, we say out loud the market is going
down. If its going up we state clearly and audibly the market is going up. If its going nowhere or
turning around, we say that. If were losing more than were making, we say so. If were making more
than were losing we affirm that.
Weve written a set of guidelines for entries and exits and for money management, and we follow
them. We utilize discipline, courage, consistency, clear perception, and optimism.
We are careful about the interpretations we give ourselves. Ive written many times, and Im not alone,
that it isnt so much what happens to you in life or trading but the interpretation you give to it that
really matters. You do well, what do you think? Do you say it cant last, or do you note what youre
doing and plan to do more of that? You have a bad day/week/ month/etc. trading. What do you tell
yourself? Your stop gets hit. What do you say? You make an error. Whats your conclusion? Youve
paid $5,000 for a mentor to teach you his system, but it isnt working. What do you think? A thousand
other unpleasant ramifications occur. What is your interpretation?
Perhaps you said some of the following in the negative instances:
There I go again.
I cant do this.
It cant be done.
Theyre out to get me.
Im an idiot.
Ill lose all my money.
I better stop trading.
I better get a professional manager.
My wife, husband, boss, client will get rid of me.
Im so bad, I dont deserve to win.
None of that will assist you in improving the situation. We want to be honest with ourselves. We want
to get better. We need to perceive the overall reality of ourselves, our methods, our markets, but we
dont need to put a roadblock point blank in front of our trading perceptions.
We need to look for the good forces in our lives and trading. What can we learn? How can we make
things better? Whats good about this? Is there an opportunity on the other side?
And so you can begin to say some of the following:
I dont have to do this again.
I can make money trading and investing. I can get better.
Money can be made in the markets.
I can choose the best sources of guidance and mentoring.
I have the ability to learn and develop.
I can protect the bulk of my money.
My money is safe as I invest and trade in improving ways.
My wife, husband, boss, clients can begin to appreciate my efforts.
I learn, I focus, I trade in resilient and disciplined ways, and I deserve to win.
Remember the winds of grace are blowing, put up your sails, and find your way.

The Heart and Mind of Trading
Your heart has a mind, and your mind has a heart. In trading we need to bring heart and mind
together. We need to feel intelligently and think with informed emotion. The mind has intellectual
emotion and the heart has emotional intellect.
It has been proven through heart transplants that the heart really does have a mind. Heart
transplant recipients take on many characteristics, connections, habits, and hobbies of their
donors. One woman who had never cared about dancing began to take ballroom dance lessons six
weeks after her transplant. She became fascinated with ballroom dancing and became quite good
at it. It turned out the donor of her heart had been a ballroom dancer. One child who had received
the heart of another child upon seeing the dead childs mother cried out, Mommy, Ive missed
you! And there are many other such reported instances.
It could even be assumed for the sake of this column, that the entire body, cell structure, and so
forth are informed by both mind and heart. This is a column about trading, so lets look at how mind
and heart impact trading. We can start with the metaphors of mind and heart.
What is the heart of your trading? Is it analysis? Is it intuition? Is it thought corrected by feeling or
feeling balanced by analysis? Is it an outside system created by you or someone else that you
employ with emotional or thoughtful action?
Do you trade with heart? Do you put your whole self into it? And does that work for you?
Do you trade with an intellectual detachment? And does that support your chosen results?
What would happen if you brought the two together? What if you traded committed to your hearts
desire but also retained an intellectual remove from immediate results? What if you committed
yourself to replicating a verified and trusted method in the market and retained an optimistic view of
the final results even while you observed with curiosity the current unfolding of the market?
We need balance in life and in trading. By bringing heart and mind and even body into the trading,
we can seek to bring all of ourselves into the equation. We can do it mindfully with heart and clear
purpose.

What is Holding you Up
The biggest obstacle an investor faces is himself. Ben Graham
When it comes to trading, we have met the problem, and nine times out of ten, the problem is
ourselves. That is good news and bad news. The good news is that we are responsible, and
therefore we can do something about it. Its within our control. The bad news is that its us. As one
prospective client once said to me, Ruth, if theres anything wrong with me, I dont want to know
it.
Know thyself. It has often been said, " How well do you know yourself as a trader?" When it
comes to myself, if theres a bad thing a trader can do, Ive probably done it. Hopefully, I dont keep
doing it. In what ways are you your biggest trading/investing obstacle?
Does fear or greed dominate your trading decisions? Or do they alternate depending on
conditions? Have you learned to moderate fear to caution and greed to desire?
Do you act too quickly or too slowly? Do you try to gather so much information before you act that
by the time youre ready to act, its too late? Traders often have to trade on the rumor and get out
on the fact. When the facts finally arrive, the move may be over. Do you precede your trading
signals by jumping in before you have a valid entry only to find yourself in a losing position for a
trade that never develops? Do you just pop in to see what happens only to regret it?
Does your greatest difficulty lie in your methods or in the consistent application of your methods? If
your chosen methods produce more losers than winners, youre already in trouble, particularly if
you consistently apply them. On the other hand, if your methods produce more winners than losers
but you cherry pick the trades so that you have more losers than winners, youre also in deep
trouble. You need to know which it is and correct it.
Is your intuition reliable? Are you in touch with it? Do you trust it? When that still, small voice tells
you to act, is it experienced inner wisdom, or is it merely the voice of emotions getting excessive?
Can you tell the difference between subconsciously trained valid insight and the rumblings of wild
emotion?
How do you feel about loss? Do you accept it as simply the cost of trading to win? Do you hate it so
much, you fail to cut your losses in a timely fashion and hang onto the growing losses until they
overwhelm you? Do you wait until the pain of staying in is greater than the pain of getting out? Or
to avoid undue loss, do you place your stops too close and experience death by 1,000 stops?
Are you able and willing to honestly assess your strengths and weaknesses, so that you can utilize
your strengths and overcome your weaknesses? Or do you justify poor trading results with a rash
of false explanations? Do you, on the other hand, blame yourself when its merely a rough, tough,
patch in the market? Make it your business to know the truth as best you can, so that the truth can
free you up to be the best trader you can be.

Unexplorable changes
Since change is ubiquitous and permanent, we might as well become experts at adapting. We can
get comfortable with change and look forward to its permutations and surprises. We can train
ourselves to become adept at learning, unlearning, and relearning.
On the other hand, we dont want to be whipsawed back and forth through too rapid repositioning.
Nor do we want to keep switching methods and systems. We need to find the balance between
being steady and too speedy a responder. We need to comprehend that markets, like the ocean,
have waves, tides, and tsunamis. Each needs to be handled differently.
We want to make change an acceptable reality rather than a soap opera. We need to be flexible
and versatile. In being flexible we observe reality clearly and adjust our actions. In being versatile
we utilize our trained ability to perceive and react effectively.
Volatility in markets can be embraced as opportunity or feared as danger. That shot of adrenaline
you feel as you trade can be exciting or terrifying depending on how you view the situation.
Interpretation is at the essential core of our trading.
A good way to start each trading day is by asking some questions: Where are the opportunities
today? Are there any impending risks to my positions? Where might the opportunities or risks
develop?
In the midst of unfolding turmoil or stagnant stalling, we need to distinguish between the
fundamental and technical changes that are structural and therefore important and possibly
extensive, and those that are merely headlines passing through and therefore only interesting and
probably short lived.
In any event, accept whatever is happening, utilize your methods and guidelines, take a deep
breath, and do your best. Remember, as it has been said, All you can do is all you can do, and all
you can do is enough.

Justice and Trading
In my last column I explored the values of Socrates: truth, justice, courage, moderation, and
wisdom. I looked specifically at how truth is central to trading. In this column, I want to examine the
impact of justice upon trading.
Justice is swift and relentless. Get sloppy, come unprepared, let your attention wander, get greedy,
become reckless, become fearful or timid, hesitate, rush, violate your methods or your rules, and
you immediately or ultimately reap your just rewards.
Okay, sometimes you get lucky. You sold when you meant to buy as you hit the wrong button, and
you made money. You overtraded, and it paid off big time. You took a tip from your neighbor, and
you got rich. But these things don't repeat. There are no consistent rewards for poor trading.
Justice trains us. We fail to do the right thing, and we suffer. We say we'll never do that again, but
we do it again, and again. Finally, however, we learn and correct. Justice is our friend and our
teacher.
Sometimes, unfortunately, we do everything right, and we still lose. We have to recognize the
difference between mistakes and simple results. Right actions don't always bear rewards. They
will, nevertheless, prosper us over time. The trick is to know the difference.
Surprisingly, justice is not always evenly applied to price and the underlying fundamentals of
markets. Crude oil can be chasing $95 a barrel while there is plenty of available oil for those who
need it. Rumors and speculation, true or false, can create vast distortions. A rumor about Merrill
Lynch or Citibank can bring the entire market, not just the financials, to it's knees. A company
reporting record earnings can drop 20% or more. One day everything soars, the next day
everything craters, and back again, while truthfully little has changed. So where is justice? It seems
as Shakespeare said in King Lear: "Handy dandy, which is the justice, which is the thief?"
Somebody once told me to put justice out of my pretty, little head. When I look at markets and
fundamentals and conflicting reactions, I sometimes wonder if I shouldn't. When I examine the
problem of evil, that good things happen to bad people and bad things happen to good people, I
wonder some more.
And while we may be able to agree on a definition of justice, we certainly will not all agree on the
proper application or administration of that idea. So where does that leave us as we think about
justice and trading?
I have to go back to what I know. Find out what works in trading, verify that it works, and do it. You
have found a proven method, fundamental, technical, or both. You've verified that it will work over
time. You trade it consistently. Surely, over time and through time you will reap the fruits of your
labors; your just rewards.




Metaphors for Trading



Creation of empowering metaphors is one more tool you can use to enhance your trading. The
metaphors you use regarding your trading have a direct impact on your approach to trading and
consequently on your profitability.

Usually we don't choose metaphors consciously and yet they're in the back of our minds guiding
our interpretation of what's happening and our expectations of what will occur. Sometimes they
support us and sometimes they don't. A metaphor is a comparison of one thing to another. "My
love is a red, red rose." wrote the poet. Well, his love was not actually a red, red rose but he
likened her to a red, red rose with it's beauty, it's fragrance, it's vulnerability, and so forth.

Life's a bowl of cherries, say some. Life's the pits, say others. Life's a bitch and then you die. Or,
life's a bitch and then you marry her. It's a jungle out there. Life's a ball, a delicious smorgasbord,
a picnic, a contest. Life's a game.

The Myth of Sisyphus tells the story of an extended life metaphor. Sisyphus was condemned for
eternity to push a giant rock up a mountain and watch it roll down. Only to push it back up again.
Try that as a metaphor for your life or your trading and notice how you feel. Now try saying that life
or your trading is a sacred gift. And notice what that feels like.
Metaphors are symbols and as such carry mythic power. They liken one thing to another and in so
doing cause us to assume - quite unconsciously -- that what is true of one part of the comparison
is also true of the other. Now, of course, if we addressed it logically and consciously we might say
it wasn't so.

A metaphor can bring instant beneficial power and can also bring nagging and persistent
limitation. A limiting metaphor can be toxic to your life or trading. On the other hand, an enabling
metaphor can work wonders for you even while you sleep. Metaphors are subtle and as such,
they can have a profound effect upon how we view ourselves, our lives, our trading, our work, and
our relationships with others.
A metaphor is a symbolic representation of a belief and like a belief it's usually selected without
conscious awareness. Sometimes a metaphor is simply part of the culture. It may or may not support
us, so it's important to consciously review and consciously choose and use only helpful metaphors.
These metaphors will be your behind the scenes nurturing guides.
Think about the metaphors you use to describe living in general. Do you have one prevailing
reference, in other words a primary or dominant metaphor for life? Or do you have a bunch of them? If
so, are they all pretty much the same? These metaphors could be organizing your life, so ask
yourself, "Do these thoughts support me?" If not, choose others.

Let's look at some metaphors that traders and the trading culture as a whole use to depict and explain
trading.

Common metaphors for trading involve sports and warfare. Trading is perceived as a contest between
two sides. I win. You lose. You win. I lose.

Combat metaphors are rife. Think about how many times you have read or heard traders referring to
trading as a battle. If thinking of trading as a combat enables you to trade more effectively, all well and
good. But warfare demands that you bring up all of your resources. It's an all or nothing affair,
involving ambush, pillage, rape, scorched ground, wounding, life and death, victory and defeat. A
trader goes out each day to do battle with the market. He is at war with the market. No wonder he or
she is exhausted at the end of a trading day or week!

Exhaustion is the least of the difficulties. Thinking of trading as warfare could cause you to overtrade
or under trade. Attack and retreat. Such a metaphor could cause you to lose money trading.
If you are at war, who is the enemy? Are you at war with other traders? Are you fighting the market?
Is the enemy yourself? Or is it a nameless, faceless enemy? If you are at war with the market, you
have an unequal contest. The market is much bigger than you are. The market has more battle
intelligence in the sense of information and certainly more forces. No matter how big a trader you are,
you're puny compared to the market. Even if you're George Soros! Same thing if the enemy is the
other traders. You against all the other traders? I hope not.

Some market gurus urge the trader to take a Samurai approach to trading. I think that's great, but it
still presupposes that trading is war. I read one article where the author urged the trader to approach
trading as the samurai releasing fears and trading in an egoless state having made peace with a
future outcome---so far so good, but he went on to say---because you are willing to die. Willing to die?
I thought. Isn't this conceding the possibility of total wipeout? And speaking of total wipeout, how
many times have you said to yourself, "I got killed in the market." Or, "If I do that, I'll get killed!"

These things are subtle and even if the conscious mind can make sense of it, please remember that
the unconscious mind interprets whatever you say literally. To illustrate this, let me tell you a story. A
woman came to see a hypnotist colleague of mine because she continually ran a low grade fever.
Medical doctors could find no cause for it, and she was literally burning herself up. In trance they
discovered that after surgery, she had been in the recovery room when a nurse said, "Keep her warm
or she'll catch her death." Fortunately, together they were able to resolve the problem. He gave the
unconscious new instructions.

When you say you'll get killed or you're willing to die, what does your literal unconscious mind think?
No wonder so many traders hesitate before entering the market and jump out of trades well before
they should.
Now I'm well aware that I am a woman in a male dominated field, so for a long time I never
challenged the metaphors of war. Your trader is a hunter-warrior. A good friend of mine, Julian
Snyder, wrote a book for traders called The Way of the Hunter Warrior. Recently I asked him about
the use of such a metaphor for trading, and he conceded that it's total nonsense in the light of what he
now knows. "You have to trade without ego, and any contest elevates ego," he said.

I'm more of a nurturer gatherer. Trading to me is more like harvesting. Researching and preparing to
trade are more like tilling the ground and planting the seeds. Over the years as I've worked with
traders, I find myself shifting their metaphors away from warfare, life and death struggle, to something
more cooperative, less intense, and it works for them. They become more comfortable in the market,
less fearful, less overly aggressive.

I tell my clients to think of the market as a river of opportunities, constantly flowing. Also I tell them to
think of trading itself as an arena as abundant with wealth as the ocean is with water. Sure there are
waves and tides and you can ride these, but you always know the low tide will be followed by the high
tide and back again, and that there will continue to be wave after wave after wave. I also say the
ocean doesn't care whether you go to it with a bucket or a teaspoon. There's just so much.

"Try thinking of the market as a friend or a business partner." I say. If the market is your partner, you
can work together. You can want what the market wants. You are in a win-win situation with the
market. If the market is your partner, it will show you what it's doing. It will tell you what it's doing.
You'll feel it's direction. You'll have agreements on how to succeed. Clients tell me it's much easier to
trade thinking of the market this way.

Sometimes I suggest that traders think of trading as a dance. Together you're responding to the beat
of the music. I also suggest that they let the market do the leading in this dance.
One very successful trader I work with describes the market as a friend he drifts in and out of contact
with. He also thinks of the market as a many forked river that flows, while he drifts down, looking at
the eddies and the rocks, exploring for interesting forks he can take. He also looks at trading as an
abstract painting that he doesn't know just how it will look when he's finished, but he knows it will
come out all right. His metaphors manifest his confidence and ease in his relationship with the market,
and support him in his trading.

If you like sports metaphors, think of trading as a game you're good at, a game you like to play. Don't
think of it as an all important contest that you're afraid you'll lose! Think of it as fun! Think of it as
sport. Think of it as play.

If you like basketball, you can think of each trade as but one point in a game, and each trading day as
but one game in a series. If you like tennis, for goodness sake don't think of each trade as match
point. In other words, realize that your trading is truly a series of probabilities, a string of events, no
one trade makes or breaks you.

If you like golf, think of yourself focusing on a tight target as you imagine the ball arching up gracefully
to go to your target, or seeing the ball roll along a path on the green to drop into the cup as you hear it
drop, and then imagine your trades going in the direction of the probabilities right to your target as you
pick up the phone and place the order.

If you like baseball think of yourself swinging at each high probability trade forcefully and easily,
always keeping your eye on the ball.

Some people think of trading as hunting. The hunter goes out knowing exactly what he's hunting
whether it's big game, or rabbits, or pheasant. He goes where the game is. He's got the right
equipment. He quietly and patiently waits for his prey. When he sees the prey, carefully he lifts his
gun and shoots. No hesitation. Just like a cat waiting for hours until the moment is right and then
pouncing on it's prey.
Others think of trading as fishing. Here you manifest patience. Or you go searching for the fish,
looking for the birds, and casting into schools of jumping fish.

I like to think of trading as sailing. Here you harness the forces that are there. You take into account
the wind direction and velocity, the currents, and your destination. You've got your charts to guide you
and you constantly adjust to nature's forces, sometimes pointing into the wind, sometimes running
before the wind, sometimes tacking, but always in partnership with your boat, your crew, the wind,
and the currents. Sure, storms can come up, but you can always let down the sail and anchor and
wait out the storm. You work with the forces that are there, the forces that are much bigger than you,
but you enjoy the journey, the day, the sport, and you're confident you can get to your destination,
your port, your safe harbor.

Try out different metaphors and experience which ones feel the best. Maybe you are aggressive and
like to work in a treacherous arena. Then by all means keep the combat metaphors. Or maybe you'd
rather just go fishing. It's purely personal and certainly up to you. How do you install a new metaphor?
Simply by thinking about it. It's that easy.









Moderation and Trading
This is my fourth column applying Socrates' values - truth, justice, courage, moderation, and
wisdom - to trading. Let's look at moderation which has to be central to trading.
At the core of trading lie the two emotions fear and greed. Allow either one of these to dominate
and you either don't trade or you over trade. Fear needs to be diminished to caution, and greed
must recede to desire. Both need to be present.
Let any attitude or emotion get out of control, and unless you get really lucky, you're in deep
trouble. Recklessness or timidity, anger or resignation, hyperactivity or laziness, intensity or loss
of focus, perfectionism or sloppiness, all lead to loss of profit or outright deficit.
Trading is balance, balance, balance. And yet, as Aristotle said we must practice moderation in
moderation. We need to know when to step up our size and take full advantage of an outsize
opportunity. We need to know when to recognize danger and stand aside or get very small in size.
Sometimes, in trading, even Oscar Wilde was right when he said, "Moderation is a fatal
thing...Nothing succeeds like excess."
However, most of the time the following proverbs do apply to trading:

Now is the moment of Power
Now and its gone. Now and its gone Did you hesitate when you saw that trade, and now its
soaring way beyond you and youre empty handed? Did you pause when you saw that moment to
take that profit or cut that loss, and now youre upside down in your trade? Your body is overly hot
or cold (depends on you), and your heart is sinking.
Now is, has to be, the moment of power, because now is the only time you can actively think,
decide, or act. Of course, past thinking, decisions, or actions are affecting you now; and current
thoughts, decisions, and behavior will impact your future. But change resides in the now. Now is
the moment to change your course of direction or to hold the course steady.
Now is fleeting. Its here and then its gone. Your perceptions, understandings, interpretations do
extend over time, but what they are in the moment is what propels your concurrent decisions and
actions. The actions can come too soon or too late which is critical to trading.
In trading and in life, we all know that opportunity passes like a cloud. You cannot place a
yesterdays trade today. You can, however, with a stop or limit order place a trade for fulfillment
tomorrow or many tomorrows hence. If the train is pulling out of the station, youd better board it
immediately. If the bus is bearing down on you, youd better get out of the way instantly.
The outside worldprice action, news, random and planned eventsare occurring now. This is
the moment to respond or to delay response. Your power lies in deciding to act or not to act.
As a trader, you need to choose a time frame or chart that reflects your best response time. Some
of us need to ponder and respond deliberately and slowly. Others of us best operate like lightning.
We need to select an operating world (market, timeframe, and chart) that utilizes our natural
propensities. And we need to remember that now is our true moment of possibility and potential.
Tomorrow is always a mystery. We know what happened yesterday if were being honest with
ourselves. The present can be crystal clear or impossibly confusing.
Sometimes it helps to say out loud your description of what the market is doing in your timeframe.
For example: The markets going up. The markets going down. The market is going nowhere.
And you can even take your hand and trace the chart on your screen. In so doing youre
translating the visual into auditory and kinesthetic expression.
Where traders get into trouble is with their refusal to accept current reality and with their inability
to respond in time appropriately. If you are having trouble in these areas, its time to assess your
tendencies. Do you tend to be too early? Do you wait too long and chase? Do you simply sit there
and do nothing? Do you do all of the above?
I know that in mentoring my clients, one of the major orders of my business is to assist them in
learning to perceive and respond to current reality with inspired and timely action. They learn to let
go, trust, and act. Money spent in coaching comes back exponentially in trading. Money not spent
to correct your personal issues will continue to cost you inordinately.
The Myth of Security
Security is mostly a superstition. It does not exist in nature,
Nor do the children of men as a whole experience it. Avoiding
danger is no safer, in the long run than outright exposure.
Life is a daring adventure or nothing at all.
Helen Keller
You often hear the last part of this quotethat life is a daring adventure or nothing at all. But how
often, if ever, have you heard the first partthat security is mostly a superstition?
Change and the unknown are the fuel that drive markets. We make our living because of this in
whirling uncertainty and fast paced alteration. We place our money into this mix, and yet we seek
financial security.
We seek security in other areas as wellemotional, physical, mental, and spiritual, not only in this
life but the life hereafter. The area in which we are most focused is the area in which we grew up
most insecure.
It occurs to me that most of the values we long for in our lives are nothing but elusive ideals. We
seek love, freedom, independence, happiness, beauty, and security.
What if they are merely fleeting experiences to be enjoyed while we have them, but not clutched
or demanded? Oh, but we want to know we have them securely now and always. Well need
resilience and optimism to see us through.
Most traders hold independence and freedom as their highest values which have a financial
ingredient at their base, so lets talk about financial security.
As traders and investors we are constantly having to place some part of our financial
cushion at risk. We throw our money into the daring adventure and get rewarded or punished for
our courage or fool hardiness. We continually have to balance what we have with what we want.
Its the bird in the hand and the bird in the bush syndrome.
Ironically, if we do nothing, our money diminishes through inflation. Money in the mattress is not safe,
and our most secure investments are being seriously depleted by inflation. Our most risky
investments or trades are handsomely rewarded only to be devoured shockingly overnight. We
gather ourselves up, and proceed with our daring adventure, our profession. We must to remain in
the game. Here and its gone. There and it grows. Unless we are willing to lose some of our
secure finances, we cannot trade or invest. What a dilemma! What a state of affairs! Where is our
security?
What are we to do? It seems to me the only thing we can do is to realize that financial security is a
state of mind and not a number or a physical stash. The only gold that is safe is the gold of the
human heart and mind. Security comes from believing in our skills and our ability to develop and
hone out trading and investing abilities. Security comes from admitting our mistakes and learning
from our successes and failures. And we look backwards and forwards and realize we can always
create enough money to meet our needs and wants.



There are no limits Second Huna principle
When you sign papers to open a futures account, you understand, because theyve made it very clear,
that there are no limits to what you can lose. And when you decided to open the account in the first place,
you were thinking, no doubt, that there were no limits to what you could make. Okay, it cuts both ways in
trading. And thats the glory and the sometimes tragedy of the trading story.
So too, I think, in life. There are no limits to what we can lose or gain. But we do, sometimes wisely and
sometimes unwisely, limit our losses and our gains. Usually these limits are self-imposed. Consider some
of the self-limiting constructs we create and impose on ourselves.
Certain thoughts pass through our minds erecting barriers to success. I could never do that. Thats just
not me. It cant be done. Its not possible. They wont let me. Its not the right time. Im too old. Im too
young. Its too good to be true. Its already been done. Its too hard. Its too much work. Its too
unpredictable.
To all this we add the ever ready what ifs, maybes, and sooner or laters. What if Im wrong? What if it
goes against me? Maybe Ill lose my job. Maybe my wife is cheating on me. Sooner or later Ill fail at
trading. Sooner or later we all die. And on and on we go creating boundaries where they dont need to be.
Lets flip this around and look at it the empowering way. What do you want? What do you really want?
Assume that you can have it and figure out how to get it. What is the price in effort, time, money, and so
forth to achieve what you want? After considering the cost, if you still want it, decide to pay the price, and
go for it step by step. Youll get feedback and can alter your course along the way.
When there are no limits, you realize you are the one who is writing your life story. Why not write the story
of your trading over the next year? Take a day a year from now and imagine yourself where you want to
be. Write a short script describing the day. How did you get to this point? What did you start doing
differently? What mentors did you seek out? What skills did you develop? What did you believe in order to
achieve this?
Now examine where you are in the present. What are you doing right? How can you make certain you
continue doing more of this? What mistakes are you making? How can you correct these mistakes? What
did you learn from todays trading? How do you want to trade tomorrow? What do you need to believe to
trade like this? As traders this is a very good exercise to do at the end or beginning of every day and at
the end or beginning of every week. The goal is to do more of what works and do less of what doesnt
work. The goal is goodnot perfecttrading.
The Power of the Right question
Since we basically walk the paths in life prescribed by our questions, it makes sense to ask those which
can take us where we want to go. Marilee C. Goldberg, Ph.D.
Are you asking helpful or harmful questions about your trading and when you are trading? Questions are
important because they direct your thinking and your energy and ultimately your actions. Answers give
you an assemblage of facts, but questions set up the groundwork for those facts. Questions establish
your direction.
There are questions that empower and questions that are toxic in life and in trading. Sometimes we're not
even aware of the questions we're asking, but still they direct the vital focus of the mind.
Some people tend to stay away from asking questions because they are not comfortable with not
knowing. Others have a vibrant curiosity and automatically ask questions when confronted with a
situation.
The interesting thing about a question is that it not only presupposes an answer, it also presupposes the
authenticity of the question. The question sets up a gestalt that ultimately engineers an answer. Wrong
question: wrong answer. And the answer seems believable.
If your trading is not going well, ask yourself, "What is the question I need to ask right now?"
Questions are the answer. They lead us out of a morass. Some helpful questions to ask in trading
would be the following:
What is the market telling me now? What are the probabilities? How can I make my trading better?
Have I verified that this method works?
What is my risk?
Where is my target?
Is this a valid signal?
Do I have a sound money management policy?
Am I following my rules?
Is there a better way to do this?
Some unhelpful questions would include the following:
What if I lose?
What if I'm wrong?
What if I can't succeed as a trader?
What will my broker--my wife--my boss think?
Why do I always lose? Or worse, why am I such a loser?
How can I make this trade work out? (You're already wrong: get out.)
Remember, there are questions that illuminate; and there are questions that destroy or confuse and
stagnate. You have the power to construct the questions that will move your trading forward.
Whenever you're in a quandary or things aren't going well, ask yourself, "Am I asking the right
question here?" What if you could learn to ask yourself questions that will make you a winner over
time?
All power comes from within
You are trading. Do you feel the power is within yourself? You have the power to assess and take
action or not take action. You have the power to apply proven methods of entering and exiting your
positions in the market.
You are trading. Do you feel the market is acting on you? Do you feel overwhelmed, ambivalent,
confused, victimized, or grasping? Have you given your power to forces outside yourself?
Clearly when you yourself are trading, its really only you doing the action. The market is not acting on
you, you are acting in the market. The power is yours to buy, sell, or do nothing. The power is yours to
choose a market, a timeframe, and a method for analyzing that market. You have the power to stay or
walk away and come back another day.
Finding a method that works is up to you. Applying that method to the market is also up to you.
Perception, interpretation, action are all generated from within. That trader in the center of your being
needs to be purposeful, flexible, willing, clear minded, balanced, and ready to be continually learning
and forgiving.
How or where do we find our power? Its given to us when we are born. Its our part of the universal
spark or source. First, we need to recognize our inherent power. Then we need to discover the
ramifications and expandable qualities of that power.
Once you realize the power is within, there is no longer any reason to feel helpless or victimized or
out of control. Ask yourself what happens to your power when you act in a reckless or fearful manner.
Because our power comes from within, then our situations are within our control. We can observe and
respond however we choose. This is why I love what I do. I help clients access their power and use it
for their higher good. They can stop being victims of circumstance. They can step around barriers and
find their way in the world and the world of trading.
You have the power to learn from experience and to develop your understanding and skills. Of course
you also have the power to conflict yourself and impede the graceful flow of your learning. However,
when you become clear about who you are and what you want to do, you can always find a way.
"Man has his future within him, dynamically alive at this present moment." Abraham Maslow
Remember in my last column I wrote about the importance of setting goals that are realistic and
achievable. There is no point in setting yourself up for failure, and you will have no motivation to strive
for something that you don't believe is possible. That doesn't mean you can't dream big (and I
encourage you to do so), but do it in realizable chunks.
Choose goals that are meaningful to you and in alignment with your own values. Make sure you make
a distinction between your values and those of others. If a goal is not important to you personally, it
won't have any power.
Then, language the goal into a simple sentence. Make it specific and measurable. That way you know
exactly what you're going for and you'll know whether or not you get it. For example, "I make a
minimum of $1,000 a day by following my trading system."
State it in the present tense. "Next month I turn my trading around" won't do. Next month never
comes. You could, however, use the present tense and date it in the future."I double my trading size
July 1, 2007."
Word it so it's towards what you want (as against away from what you don't want)."I follow solid
money management principles." Not, "I stop over trading."
Once you have your goal formed into a sentence, make a clear picture of your goal already realized,
as if it had already happened. Step into the picture so that you're looking out of your own eyes, and
adjust the qualities of the picture so that it has a strong impact. Try making it larger, brighter, more
focused. Step out of the picture, so that you see yourself in the picture as if somebody had snapped a
picture of you in the future.
Now take that picture and place it into your future time line.
Because time is elusive, people often visualize time as if it were space. Picture your life as a line or a
path. Where is your past? Where is your future? Some typical configurations would be your past
behind you and your future in front of you, or your past to your left and your future to your right.
When you have determined where your past and future are in relationship to your present self,
imagine taking the picture of your goal accomplished in your hand and float way up over your time
line. Breath life into the picture and go out to the place in the future where your goal will be realized.
Insert the picture into your time line.
Now notice how all the events leading up to the completion of the goal reevaluate themselves. Come
back to the present and commit to the realization of your goal.
You';ve got the goal. It's time for action. Make a list of steps necessary to achieve it. What is the first
step and the second step and so forth? Once you've turned the goal into tasks, begin by taking action.
Each action will either further your progress toward the goal or bring you valuable feed back so you
can change your course of action.
Keep stating the goal to yourself as you languaged it, see the goal accomplished, and let yourself feel
the joy of it already achieved. And keep taking action. You know what you want, you know why you
want it, the hows will manifest themselves as you pursue your goal with faith, courage, and diligent
action.
What if you could be the successful trader you have chosen to be?
Your power house of Possibilitiy
The possibilities of thought training are infinite, its consequences eternal, and yet few take the pains
to direct their thinking into channels that will do the good, but instead leave all to chance. Brice
Marden
Your mind is a powerhouse of possibility. We can do mentally what often eludes us in reality. If you
cant trade consistently in real life, you can do it in your imagination. Without the surprises and the
tension of real life trading, without risk entering the equation, you can learn to follow your rules in your
mind. In this way you create an experience that you can later rely upon in actual trading.
Some years ago there was a well known and documented experiment conducted by psychologist
Alan Richardson. A group of student basketball players was divided into three groups and tested as to
their ability to throw a basketball into a basket. One group was instructed to practice every day for a
month. Another group was told to imagine throwing balls into the basket for thirty minutes every day
for the same month. The third group was told to do nothing, not even think about basketball.
After a month the first group, the group that actually physically practiced had improved an average of
32%. The group that did the mental rehearsal had improved an average of 31%. The third group was
unchanged in skill level.
I experienced a similar improvement in my tennis game by doing mental rehearsal during the winter
when I was not playing tennis. I used to apologize before playing in the spring saying I had not played
all winter. When I played strongly, people simply didnt believe me. I stopped the explanations and
knew that I could rehearse before any match as I lay in bed. There were no bad bounces, no
surprises. I could practice all my strokes with consistency. When the game came, I could handle
anything that came up.
I teach my clients do the same kind of mental rehearsal with their trading. They trade consistently,
following their rules, accepting losses and profits, taking the long view, as they mentally rehearse
following their plan. As they do this, they are setting their intention to trade their methods effectively in
the next live session.

Now, this is different from paper trading. Paper trading is useful to understand a method and to verify
that methods profitability, but it does not teach the trader the ability to actually trade. It does, in fact,
do quite the opposite. The trader learns simply to observe and be immune from risk. Paper trading for
too long a period teaches a person to simply be a spectator, not an actor. When they later start to
trade, they may not be able to pull the trigger.
Mind rehearsal is different. You imagine putting the trades on and accepting whatever the market
gives you. You imagine your ultimate, long term success even as you accept temporary losses and
set backs. You hold the faith as you build your faith. You build your confidence as you build your
skills. You build the experience of consistently doing the right things. You strengthen your
weaknesses as you build on your strengths. Then, when you actually trade, you have the support and
the background experience of having traded effectively.
You can do this by simply imagining yourself going through the trading day applying your
methodology to the market. Better yet, you can purchase my Power Trading for Power Profits audio
course which includes a mental rehearsal CD. I strongly recommend it. Youll be amazed at how your
trading improves.
The mind is a powerhouse of possibility. We can develop skills and build confidence and trust through
thinking. We can change the meanings we give to events and we can change our results. In short, we
can alter our factual reality through using mental rehearsal. We can do this to create what we want
as opposed to what we fear or dont want, which is what most people do unwittingly. What if you could
take control of your trading through effective mental rehearsal?

Questions are heart of the matter




"Since we basically walk the paths in life prescribed by our questions, it makes sense to ask those
which can take us where we want to go." Marilee C. Goldberg, Ph.D.
If you're not making money through your trading, you are probably not asking the right questions.
The reason questions are so important is that they direct your thinking and your energy and
ultimately your actions. Answers give you an assemblage of facts, but questions set up the
groundwork for those facts. Questions create the architecture of your thinking and establish your
direction. They direct the vital focus of your mind.
There are questions that empower and questions that are toxic in life and in trading. Some
questions keep you stuck in the past and some move you forward. For example, "Why do I always
lose?" presumes that if you have lost in the past, you will lose now, and in the future. Furthermore,
it establishes your identity as a loser. On the other had, "How can I increase the probabilities of
winning?" assumes that you can create an edge to change your trading in the future. It creates a
potential for becoming a winner and identifying yourself as a winner.
Some questions are virtually unanswerable. "Why am I such a loser?" is a simple condemnation
and is not answerable. "How can I change this? How can I begin to win?" implies possibility and
calls for an answer. The first question focused on the problem and would remain stuck in the
problem. The second and third questions, focused on the solution and presumed that there is a
way out of the dilemma.
Some people tend to stay away from asking questions because they are not comfortable with not
knowing. People who become anxious about not knowing have a very difficult time trading
because trading is nothing but uncertainty. Courage lies at the heart of creative questioning (and
trading) because it requires the willingness to ask questions that might have no answer or might
challenge your current position or way of thinking and perceiving. Other people have a vibrant and
easy curiosity and automatically ask questions when confronted with a situation.
The interesting thing about a question is that it not only presupposes an answer. It also presupposes
the authenticity of the question. The question sets up a gestalt that ultimately engineers an answer.
Wrong question: wrong answer. And the answer seems believable.
Sometimes we're not even aware of the questions we're asking. A simple statement or thought often
has a silent or implicit question behind it. A person who stays frozen and can't pull the trigger to enter
a trade might well be unwittingly asking himself, "How can I be sure this trade will be a winner?" The
unspoken question causes him to wait for confirmation, and by the time clear confirmation comes the
trade has passed him by. Opportunity passes like a cloud.
In my book, "Exceptional Trading: The Mind Game", I write about positive and negative worry. Worry
starts with a simple question: "What if. . .?" "What if, I'm wrong?" What if, I lose?" "What if, I lose all
my trading capital?" The person doesn't say, "Now, I'm going to think about all the terrible things that
could happen to my trading and make myself feel bad and maybe bring it to pass." No. She simply
quietly thinks "what if" and soon she's off visualizing disastrous results. Strangely, thought mixed with
emotion tends to attract that which we think about.
Positive worry is just the opposite. You start with the same simple question: "What if. . .?" Only this
time you ask for what you want. "What if, this trade is a big winner?" "What if, I become a really good
trader?" The process is the same. You begin to imagine what you want and soon you're feeling good
about it. Once again thought mixed with emotion acts as a magnet for what you're thinking.
You can use positive worry as a shield or a sword. If you catch yourself doing negative worry, flip it
immediately with the opposite "What if. . .?" "What if, I can't do this?" "What if, I get really good at
this?" That would be using positive worry as a shield from the negative worry. You can also use it as a
sword: simply begin with what you want to happen and precede it with the "what if" question. "What if,
I relax and just accept what the market offers me?" "What if, I really can view my trading as a series of
probabilities?"
At any time when your trading is not going well, ask yourself, "What questions am I asking myself?
Am I asking the right questions? What is the question I need to ask right now?" Questions are the
answer. They lead us out of a morass. They lead us where we want to go.

It's important to make a distinction between the questions that are helpful to ask while researching
and the questions to ask while trading. Trading and research are two quite distinct activities and roles.
Researching involves thinking and exploring and checking and rechecking, creating methods and
verifying them. Trading involves doing: perceiving and acting in a timely manner. Trading is simply
applying your methods to the market. Because these two aspects are so different, they require a
different type of attitude and questioning.

Some helpful questions to ask while researching might include the following:
How can I make my trading better?
How can I put the probabilities in my favor?
Where is my edge?
What else could I do?
What possibilities exist that I haven't thought of yet?
What assumptions am I making, that could get in my way?
What is the simplest solution?
Have I verified that this method works?
Do I have a sound money management policy?
What else could I do in terms of position sizing?
Some unhelpful questions to ask while researching could be:
How can I develop a perfect system? (There is none. Trading is not about perfection.)
What filters can I put on so I never lose? (It's not possible to trade and never lose.)
Some helpful questions to ask in trading would be the following:
What is the market telling me now?
What does the market want?
What are the probabilities?
How much can I make?
What is my risk?
Where am I wrong?
Where is my target?
Is this a valid signal?
Am I following my rules?
Am I following good trading principles?
Has anything changed?
What would I think if I wasn't in this trade?
Is there anything I'm not seeing?
Some unhelpful questions to ask while trading would include the following:
What if I lose?
What if I'm wrong?
What if I can't succeed as a trader?
What will my broker--my wife--my boss think?
Why is it always so hard?
How can I make this trade work out? (You're already wrong. Get out.)
Remember, there are questions that illuminate; and there are questions that destroy or confuse and
stagnate. You have the power to construct the questions that will move your trading forward.
Whenever you're in a quandary or things aren't going well, ask yourself, "What is the question I need
to ask now?" What if, you could learn to ask yourself questions that will make you a winner over time?

Maintaining sanity in Sanity in a Schizphrenic market
The current market seems to be manic depressive without even a shred of memory from one day
to the next. How does a trader preserve control and commitment when faced with this challenge?
I think the first place to begin is with the questions we ask ourselves. Is there an opportunity
here? Where is the opportunity now? How can I take advantage of this opportunity?
Then ask yourself, how do I deal with the volatility? Do I decrease size and stretch out the risk
parameters? Do I increase size to take advantage of this extraordinary opportunity? Do I shorten
or increase my time frames to increase my safety and profitability? As traders we are always
faced with the dual needs to seize a significant opportunity and to preserve our capital. This
balancing act is at the core of trading.
Of course, you need to address the underlying fundamentals. What are they? Are they becoming
more so or less so? Are they changing or remaining the same?
Define the problems you are facing and redefine them. Einstein was asked how he would go
about solving a problem if he only had 60 minutes in which to solve it. He answered that he would
spend the first 59 minutes defining the problem. Once youve identified and defined the issues
youre facing, look for workable solutions. See problems as challenges not as threats. I always
assume if there is a problem, there is a solution. Once youve found a solution, test it.
You need to sustain an optimistic outlook. This means not taking market conditions personally.
Know that the difficulties will pass as well as the opportunities. You can learn from difficulties and
let them go even as you learn from and utilize opportunities. Keep honing your skills and see the
glass as more than half full. You can heal your trading by finding a way to understand evil even
as you find a way to make the best of a situation. Any crisis can make you stronger if you dont let
it make you weaker.
So lets go back to the original question. Where is the opportunity here and now, and how do you
go about taking full advantage of it? When you find it, go for it. If you dont find it, wait for it to
develop, and carpe diem (seize the day).

Seasons of Trading
To everything there is a season, and a time to every purpose under the heaven: A time to be
born, and a time to die; a time to plant, and a time to pluck up that which is planted; A time to kill,
and a time to heal; a time to break down, and a time to build up; A time to weep, and a time to
laugh; a time to mourn, and a time to dance. Ecclesiastes
Certainly to everything there is a seasoneven in trading, and especially in trading. We dare not
trade against the seasons, and if we observe the seasons, and trade accordingly, our success is
more assured.
I like the metaphor of seasonal trading. It feels more natural than bull or bear or correction or
consolidation.
Spring is the time for new beginnings, the time for planting, and perhaps also planning.
Summer is the time for allowing things to grow, watering the crop, and enjoying the lushness and
the long days.
Fall is the time for harvesting, and doing what we can do to preserve or sell the harvest.
Winter is the time to wait while the land lies fallow and frozen. This may also be a time to research
and to plan for the coming of spring.
You cannot plant in winter. Youll simply lose your seed, and besides the ground is too solid to
easily dig in the seeds. If you plant too late in summer, your crop will never mature.
If you dont harvest in fall, the crop will spoil. If you harvest too soon in summer, the crop will not
have matured.
Without paying attention to the current climate, as we invest or trade, we can be entering trades
too soon or too late. We can be exiting trades too early or after the move is over. We can be going
short when we should be going long, or vice versa. We can be selecting the wrong vehicle for our
trading.
The seasons in trading can be as short or as long as a few minutes or a few months or even
years. Our time frame has a lot to do with our seasonal reference. Yesterdays season is not
necessarily todays.
The metaphors we use for trading really matter because they translate in our minds as reality, and
we act as if they were actual and not merely a figure of speech. If we use a metaphor of surfing,
we look for waves in price action. If we think of gardening, we think of planting, nurturing, and
harvesting our trades. If we think of warfare, we think of killing or being slaughtered, conquering or
being enslaved; and we may well cower and hide, or become overly and improperly aggressive.
Different metaphors work differently for the diverse personalities of traders. Let me suggest you try
out the metaphor of seasonal trading, and see how it works for you. To everything there is a
season

Key to Traders Self Talk
"And the talk slid north, and the talk slid south . . ." Rudyard Kipling
What do you say to yourself when you trade? Now some of you may be thinking, "Talk to myself?
I don't talk to myself." But of course you do. You're talking to yourself when you think that. That's
how we think. We think in words (and sounds, pictures and feelings). But most precisely we think
in words; therefore, we talk to ourselves.
When you're considering entering a market, what are you saying to yourself? Are you saying,
"What if I lose? "What if I'm wrong?" If you hesitate before entering and have trouble pulling the
trigger, I guarantee you're saying something similar to that.
Since good trading is very much about controlling the risk, often the first consideration is where to
put our stops. You might first ask yourself,"What is my risk?" This is better than asking, "What if I
lose?" However, it still takes your thoughts to risk and loss rather than reward and profit. If you're
hesitating when you should be entering the market, you could change your comment to something
like, "How much can I make?"or, "What if this trade is a big winner?"
Of course, not everybody hesitates to enter a trade: some jump the gun and some overtrade.
These people are anticipating large profits. If you hear yourself saying, "This is going to be a big
move!" or "This is going to the moon!", you'll need to activate caution. Remember, gamblers often
think they've got a sure thing. When you hear yourself promoting a trade, it would be wise to ask
yourself, "What is my risk?" and "What would have to happen to know that I'm wrong or no longer
right?" Our self-talk reveals our biases. If you're talking up your trade or talking it down, you have
a good clue that you've lost your neutrality. In such an instance it would be advisable to ask
yourself, "What is the market showing me now? What does the market want? What do I know for
certain? Have my rules for entry been met?"
If you hear yourself saying, "I don't believe this!" Look out. You're warning yourself that you're not
taking the market action at its face value; an extremely dangerous thing to do. Remember price is
your predominant reality when you trade.
Some traders demean themselves when they trade. They speak to themselves in negative ways they
would never let another person talk to them. They call themselves stupid idiots, failures, fools, losers,
and so forth. While their intention in so speaking might be to motivate themselves to better behavior, it
seldom does. Self-denigration rarely produces good results. Have you ever noticed that the more you
scold yourself, the more your behavior reproduces itself? The strangest secret is that we become
what we say. I tell my clients that I won't allow anybody to speak unkindly to my clients, including
themselves.
Much better to encourage yourself. "You can do better than this." "You don't need to do that again."
"I'll do better tomorrow."
Start writing down the words you say at critical junctures in your trading. You'll begin to understand
where your thinking is helpful and harmful, and you'll be able to change the direction of your thoughts
by shifting your words. There's an article on my website discussing the critical importance of
questions. Check it out. What if you could learn to direct your words and thoughts in such a way that
you truly support your success in trading?
Some Rules of Living applied to Trading
I ran across these rules for living, and thought they apply beautifully to the process of trading
successfully. They are as follows:
1. Show up.
2. Pay attention.
3. Live your truth.
4. Do your best.
5. Dont be attached to the outcome.
Show up. Woody Allen has said 90% of the story is showing up. And I think that can be true for
trading. Showing up means being prepared and ready before the market opens. It means getting
your entry and exit orders in the market in a timely fashion. Youve done your research, and
youre clear about your intentions.
Pay attention. Watch the price action. Be cognizant of what your chosen indicators are saying.
Know what news is breaking, and watch the markets reaction to the news. Be alert to twists and
turns in market direction. Dont wander off mentally or physically.
Live your truth. Your truth could be fundamental or technical or a combination of the two. But if
you dont trade in accordance with your guidelines, you can get yourself on the wrong side of the
situation and yourself. Be who you say you are as a trader. Are you honest, perceptive,
courageous, steady, and disciplined? Are you trading in the manner you have chosen or
committed to trade.
Do your best. Honestly, all you can do is your best. But your best can get better as you practice
and learn. Learn from your mistakes, and forgive yourself past digressions. Each day is a new
day, and each day brings new opportunities. Its your job to capture what you can of the
opportunities even as you rigorously protect your capital.
Dont be attached to the outcome. This is the hard part, and this is the essential part. The results
of any given trade or trading day are really not indicative of whether or not you will be profitable.
One trade or day is simply not the measure of success, and is really irrelevant. If youre showing
up, and paying attention, and living your viable truth, and doing your best, you can accept
whatever outcome develops. Of course, if the outcome is disastrous over time, you need to go
back to the drawing board and develop better methods.
Story Power
What story are you telling yourself about your trading? No doubt its some version of the story
youve been telling yourself about yourself, your past, your life, and/or your future.
As we live our lives, theres a story line that runs underneath us. Its an explanatory line that
passes for inevitable truth, but is really just a story that weve accepted as undeniable inevitability.
Its a ready made repeatable explanation, excuse, or worse, a self fulfilling prophecy.
Some scarcity making examples are the following:
Theyre out to get me.
I need to be perfect.
Theres not enough to go around.
Life is rigged and unfair.
Only the wealthy can do this.
Lifes a struggle.
You have to work hard for everything.
Ill never be or have enough.
If Im not in control, Ill be out of control.
The government should do something about this.
No one in my family gets ahead.
Its not my fault because of what my parents did.
Its all a case of blind luck.
Well, it doesnt take much imagination to see what such story lines could do to ones trading. Ive
talked with traders who honestly believe the minute they put on a trade, some force out there is
committed to turning it into a loser. Ive had traders suggest they have to have a perfect system
and perfect execution in order to succeed; and, of course, they cant create the system or even if
they could, they cant implement it. One trader told me he became uncomfortable when he was
winning because he was taking money from others. He actually was relieved when he lost.
Another trader was told by his father that only the big boys could succeed in futures. The trading
explanations go all the way down the story lines, and seriously impede the trading.
As traders and investors what can we do about it? First, we need to discover what stories were telling
ourselves, what stories were living. Look for what repeats itself in your life. Ask why something
happened or happens. The explanations will reveal your stories.
Next ask yourself what story would better serve you. Lets rewrite the above sad explications.
I create my own life, and others help me.
Im good enough.
Theres plenty to go around.
Life is full of possibilities and opportunities.
I can do this.
Life is fun.
Things come easily to me.
I am enough. I have enough. (Money, love, time, intelligence, etc)
I can handle whatever happens in my life or trading.
I am responsible for my life.
The past is not the future.
I can change things going forward.
I identify and create opportunities.
Rewrite your story, and then take actions as if that story were true. From time to time youll slide back
into the old default behaviors and explanations, but with repetition of your new story and new actions,
youll start experiencing new results and your chosen story will become true.

Suggestions Or Commandments
Have you written down your trading rules? Do you have rules for entry and for exit with a profit and
with a loss? Do you have a rule telling you whether a market is trending and what the trend is? Do
you have rules stating when the market is in a trading range and what that range is? Do you have
rules saying what markets you will trade and what has to happen to trade them?
Or do you simply shoot from the hip and call it artistry or intuition? Does this work for you?
Do you follow your rules rigidly without flexibility or discretion? Does this serve you over time?
Do you abandon your rules in the heat of trading, only to regret it? Do you stubbornly go against
your rules thinking this time you know better? What would happen if you didnt do this?
Some people dont like rules. They dont want to be told what to do even if its themselves telling
themselves what to do. They even more dont like following rules that came with a system for which
they paid good (any or excessive) money. They have a polarity response to direction even after it
becomes apparent that theyd be more profitable simply following the rules.
Others like to be told what to do, but somehow their rules are conflicting, obscure, or so bound up
with discretion as to be meaningless. These traders may not even be aware that in essence they
have no rules.
Whatever your situation turns out to be, it may be helpful to think in terms of commandments or
suggestions. You may think in terms of absolute rules or simple guidelines.
Do you like clear directions as to what to do? In this case you can think in terms of commandments.
For example, when The Ten Commandments says, Thou shalt not kill, it doesnt leave much
discretion. Reword your rules as commandments that are precise and clear and easy to follow.
Do you resist being dictated to and bossed around by outside forces? In this case, reformulate your
rules as guidelines or suggestions. Give yourself some leeway in certain situations. Reword it so
that when you read it, it sounds like a good idea and not a demand.
However, be certain in advance that whether you choose a suggestion or command, the results will
be profitable if followed consistently or even most of the time. Theres nothing worse than a bad
idea or a rule that doesnt work. Remember the basics: Find out what works. Verify that it works.
And do it.
Action without thought is mindlessness,
and thought without action is hypocritical. Ayn Rand
Ive often said that I could divide my trading clients into two groups of traders: the thinkers and the
doers. The thinkers love to analyze and research, but when it comes to taking advantage of all that
work, they hesitate. They typically have problems putting on trades in a timely fashion, and even
more difficulty staying with a winning trade. They have a tendency towards perfectionism, and we all
know that trading (or life) is simply not a game of perfect.
The doers, on the other hand, have no problems pulling the trigger on trades. Often theyll simply
get into the market to see what happens. Theyll make impulsive, seat of the pants trades, jump the
gun on a signal, overtrade in size and frequency, and begin trading a system with insufficient
verification that it works. Sometimes they are unaware of the fundamentals underlying a position,
sector, or general market.
Consistently successful traders (and people) balance thought with action, and action with thought.
The balanced trader researches methods and fundamentals thoroughly, and then acts in a
disciplined and timely manner.
Most traders, however, have an inclination either towards thinking or acting. Their comfort zone lies
more naturally in one area or the other. They like to research endlessly, or they like to actually
trade. Research without trading is a waste of time in my opinion, a mere hobby, a way to while away
the time. Trading with insufficient research or verification of methods, on the other hand, is a
dangerous activity.
As traders we need to set our intentions to operate thoroughly in both areas, including our area of
reluctance. We need to develop the skills to succeed on both sides of the equation. We need to
practice in both areas until we develop habits of effectiveness as balanced and consistently
profitable traders.
Discipline is doing effectively whatever it takes to get you to your goalswhether or not you feel like
it. Set your intention to pay attention to both preparation and execution, and know which you are
doing when you are doing it. Thinking AND action are your partners in success. They go hand in
hand in trading.
How do you feel about your trading? Do you start each day with a curiosity, fascination, and
excitement? Do you love what you do? As you think about a future of trading, do you get a light,
happy feeling of optimism and interest? Or do you feel heavy with uncertainty or boredom and
overwhelmed by the task in front of you?
Emotions come quite unbidden and they really tell us a lot about our situation. If youre really mostly
happy, you know you like where you are, what you do, and who youre with. If you get up every
morning with dread, or boredom, or basic indifference, you know something needs to be changed.
Of course, emotions change during the course of the trading day, and we do necessarily respond to
our profits and losses as they expand and contract even if we say we dont want to. Were human
beings, and the only way to avoid emotion is to repress it so far we might as well be made of stone.
That really doesnt work because repressed emotions cause some very strange, unwanted
behaviors and reactions. Why on earth did I do that? you ask. The answer lies in a hidden
emotion. Much better to know what were feeling and why. Your emotions are valid and useful
messengers. Pay attention.
Against a backdrop of acknowledged emotion, you can rely on your research, trading plans,
guidelines, and methods to keep you in line. Discipline and courage help you trade the plan.
We can feel any emotion that pops up be it euphoria or fear or regret or anything else. Proper action
taken in spite of errant feelings is what distinguishes the professional from the also ran. Its where
the rubber meets the road.
We need to have the discipline to do what needs to be done to get us to our trading goal whether or
not we feel like it. Emotions are one thing; behaviors are another.
Having said all this, it remains true that when you love what you do, in this case trading, it ceases to
be threatening, boring, or a burden. Love is electric and magnetic. It seeks and it attracts. I believe
that all good traders love trading. According to Serge Kahili King, love is the driving force that
causes things to happen as well as the gentle energy that melts away resistance. So heres a Huna
secret: you can love your way to success.
Having the right mindset for trading means, having the attitude that you'll put as many things in your
favor, as you possibly can. You can't control the markets or even accurately predict what the
markets will do. (How true this has been recently with the excessive volatility!) There are, however,
certain things you can control.
If you really want to win in the long run, you won't trade until you've put in order everything you
possibly can. You need to stack the probabilities in your favor. What are your bottom line needs?
Sufficient capital. Sound money management. High probability strategies including high probability
entry signals and high probability exit procedures. Accurate and timely data.& Honest fills and
reasonable brokerage. The steady, personal ability and willingness to do what needs to be done.
The commitment and power to refrain from doing those things that work against you.
Being successful in anything means deciding what you want, understanding what it takes to get it,
and being willing to pay the price to achieve it.
Are you having a problem with your trading? Sit down with a pad of paper and write at the top,
"What is the problem?" When you can define the problem accurately, you're halfway there. Sit with
it for a while, and then ask, "What else is the problem?" Now you're ready for the next
question."What is the solution?"
Is the problem insufficient capital? You may have to trade smaller, or stop until you can create and
save enough money to trade.
Are you having trouble with money management? The absolute most you dare risk on a trade is
5%. Most advisors say don't risk more than 2%. What is your reward to risk ratio? If you risk 50
cents to make a dollar, you'll break even if you're only right 34% of the time. Write down your money
management and risk rules.
Do your entry signals give you the benefit of the doubt? Have you tested them in real time trading?
Before you trade is the time for pragmatic pessimism. When you're reasonably convinced the
probabilities are in your favor, then you can trade with cautious and consistent optimism.
Do you have a valid way to exit with a profit and with a loss? Remember the exit is fully half the
equation. Ask yourself if there is a better way, or an even better way to decide to close down a trade.
You don't want to experience capital death by a thousand stops, nor do you want to make money 99
times and lose it all on the last trade.
Do you have the best brokerage information and execution capabilities available? You owe it to
yourself to make this right.
Are you in control of your own attitudes and behaviors when you trade? Remember that you, yourself,
are the key to your success. It really all begins and ends with you.But that's the good news.
I invite you to visit my website and read my books to learn more about how you can be the person you
need to be to achieve your trading dreams.

Truth and Trading
Recently Ive been listening to The Teaching Company CDs while I work out. I was particularly
intrigued by a discussion of Meditations by Marcus Aurelius, a Roman Emperor who had always
wanted instead to be a philosopher. His philosophy could be summarized in this way: Get out of
bed, do your duty, and appreciate things along the way. Not bad.

He believed in certain absolute values for living, and chose the values of Socrates which are truth,
justice, courage, moderation, and wisdom.

Asking myself how these values impact trading I came up with some new insights. But first lets
look at how Marcus Aurelius defined these values. Professor J Rufus Fears, who teaches the
course on Books That Have Made History: Books That Can Change Your Life explained it the
following way:

1. Truth: Truth is an absolute value. Some things are true in all places and times. Resisting evil,
for example, is always right.

2. Justice: Justice consists of treating others as one would wish to be treated. Do unto others as
you would have them do unto you summarizes this concept of justice.

3. Courage: Courage means standing up for justice.

4. Moderation: Nothing should be carried to excess.

5. Wisdom: Wisdom enables a person to know what justice is, to recognize when courage is
required, and to do what is right.
So how do these values play out in our trading? In this column, lets explore truth as it applies to
your trading.

One of the clear, clean things about trading is that truth is immediately and finally manifested. The
price goes up or down or nowhere. Your trade or position is profitable or not. You cant spin it any
other way. Youre right when you make money. Youre wrong when you lose money. Thats just
the way it is.s
There are also other truths involved. You just got lucky. You have a robust and proven method for
trading that you can rely upon over time. Your methods are flimsy at best, unpredictable at worst. You
have no method or you have a million methods which amounts to the same thing. Your impulses
frequently and easily override your methods, or you rigidly apply your rules even when you clearly
should not.

You keep clear records so you can assess what works best, or you dont and at the end of the day (or
the week or the month), you have no idea. Your record of action is either clear or murky. To correct it,
it needs to be clear.

You need to tell yourself the truth as you go along. No excuses. No complaints. No trumped up
stories. If you can truthfully analyze your trading mistakes as well as your trading strengths, you can
make adjustments, and develop a personal style that will lead to trading success.

Telling the truth about each days (weeks, months) trading doesnt mean you have to be brutally
cruel to yourself or gloomy about your trading. What it does mean is that you dont have to do that
again, and you can optimistically look forward to the next days trading. You will know the truth, and
the truth will make you free.

You want to keep your trading in true alignment with any known or possible clues as to the on the
ground truths in relevant areas. There are fundamental truths, technical truths, methodological truths,
inter-relational truths, and personal truths. The closer you can get in any or all of these areas, the
better your prospects. You will seek to know the truth, and those truths will power your trading.

Your Unique Trading Strengths and Weaknesses
Each one of us is born with special unique abilities and we are naturally drawn to them and
develop them along the way. They manifest themselves in all areas of our lives. There are also
things we dont like to do or that are difficult for us to do. It simply makes sense to focus on what
we like and what comes easily to us and avoid or delegate what we dont like or find hard and
stressful to do.
The same is true with trading. There are parts of your trading that youre naturally good at. There
are aspects of trading that you love, that excite you, and give you passion. The more you trade
the better you seem to get in these areas.
What is your special trading or investing capability? Pause and think about it. WRITE IT DOWN.
I cant guide you or even suggest what is uniquely easy and effective in your trading.
The best part of my trading is ______________________________________.
The part of trading I most enjoy is___________________________________.
You can build on these and exponentially improve your trading results and your trading ease and
enjoyment. It also makes sense that your methods and time frames are compatible with these
strengths and tendencies.
Now we need to acknowledge the opposite. Each of us has innate limitations and vulnerabilities
that also affect our trading and investing. There are parts of the trading game that are hard for us,
that we dont like, may even hate. As much as we try to overcome these areas we frequently
relapse into these frail deficiencies. We say well never do that again, and then, of course we do.
Whats wrong with us, we ask as we repeat the errors. What is your area of trading limitation? Its
different for each of us. Yours is yours, and mine is mine. The beginning of liberation and trading
mastery begins with understanding, so take heart and WRITE IT DOWN.
The worst part of my trading is ______________________________________.
The part of trading I hate the most is_________________________________ .
Now look at your methods and time frames to see if there is any way you can avoid having to confront
these weaknesses.
The beginning of personal wisdom and power is the understanding and acceptance of our own
propensities and innate qualities. Spend some time and have the courage to recognize yourself as
the trader you are. Then you will be positioned to become the trader you want to be.


The World is What you think It Is
We all dont live in the same world. We all dont see the same opportunities, live the same
adventures, or receive the same blessings. Nor do we utilize our learnings or absorb available
knowledge in similar ways. Some of us radiate gratitude and joy as we go about our daily lives.
Others of us live in fear of losing the little we have, see treachery all around us, experience
struggle and disappointment, and live in an anxiety of a muffled doom that never comes.
Weve all recently witnessed the global economy rapidly collapse into itself as the world was
repeatedly told it was in a crisis on the verge of catastrophe if massive action wasnt taken
immediately. People saw their personal finances imperiled in the larger economy and their fears
expressed themselves in financial withdrawal and contraction. And their world became what they
thought it was.
Einstein once said that the most important question we can ask ourselves is whether or not this
universe is friendly. Our answer will be reflected in how we experience our world. You want to
see your world as expansive and supportive of you.
Of course, the trading world is not the entire universe. There is more to life than trading; however,
when were fully involved in the trading adventure, it does become a large part of our life and
reality.
How do you view your trading experience? Expansive? Contracting? Benevolent? Sinister? A
source of unlimited possibilities and potentialities? A dangerous black hole? Useful and
readable? Unpredictable? Inscrutable? A neutral and level playing field? An area frequently
upended or disrupted by unpredictable governmental and news incursions?
Some years ago I had two clients who traded at the CME in Chicago. One started each day filled
with excitement. He viewed each day as Christmas morning with unopened packages under the
tree. He knew there would be something wonderful there, he just didnt know what. The other
started each day feeling weak with dread hoping against hope he wouldnt give up his weeks
earnings. It was not even a contest at that point as to which client made more money and had a
better experience. That is until the second client learned to change his anticipation and approach.
As traders and investors we need to realize that we participate in the trading process by how we
view it. When you see the infinite potentiality for success and search with a clear focus for current
opportunities you are well on the way toward creating a viable trading world for yourself. Allow
yourself to imagine unending opportunity.
As Mark Twain said, You cannot trust your eyes if your imagination is out of focus.

Wisdom and Trading
This is the fifth and last column addressing the relationship of Socrates values--truth, justice,
courage, moderation, and wisdom--to trading. Of course, we all want to be wise traders.
Unfortunately, most wisdom comes from experience, our own, or others, usually our own. Getting
wisdom through experience is like taking the exam before you read the book or take the course.
As Benjamin Franklin said, Experience keeps a dear school, yet fools will learn in no other.

We can read the rules, but until we endure the misapplication of those rules or overlook them
entirely, we dont ground our trading in the sound employment of good trading principles.

The problem often is further enhanced by getting the lesson once and then needing to get the
same lesson again, and again. Something there seems to be that resists learning the helpful
lessons with a one shot deal.

We can, however, acquire a phobia with a single experience. A trader can have a huge loss, and
instead of implementing good money management and proper risk control, he becomes phobic of
pulling the trigger to enter a trade. Learning the wrong lesson does not constitute wisdom.

Get wisdom and with all thy getting get understanding. says Proverbs 4:7. When we understand
the reasons behind our collective trading wisdom, its easier to implement our own personally
chosen guidelines. Some of these rules are so commonly known as to become cliches, and yet
there is a good, solid reason underlying them. Let me list a few.

Cut your losses, and let your profits run.
Look at your trading as a series of probabilities, dont focus on any single profit or
loss.
Want what the market wants.
Do your homework. Come prepared to each days trading.
Never take a trade on the open in the direction of that days gap.
Dont risk too much of your trading capital on any single idea.
Remain flexible.
Believe what you see. If the markets going up or down, its going up or down.
Anything can happen. The wildness lies in wait.
Verify your trading methods or systems.
Caveat emptor ("Let the buyer beware.") when buying a trading system or hiring a
mentor.
Your own personal psychology will express itself regardless of your chosen
method.
An opinion isnt worth much, your own or someone elses.
Watch how the markets react to the news.
Learn from your mistakes.
Stay in the now. Dont trade yesterday, today. Dont trade tomorrow, today.
Dont worry about a missed opportunity. Another one is on the way. Besides there
were several that just passed of which you were totally unaware.
If you dont risk, you cant make money. If you lose all your trading capital, you
cant trade. Find balance.
Markets dont go in a single direction. The trend will wobble on its way to its
destination.
The trend is your friend. Unless youre a counter trend trader, and then only its
end is your friend.
Tomorrows another day, a whole new trading opportunity. Be optimistic.
Forgive yourself. Take the lesson, and move on.

There are many, many more. Read books. Learn from other traders experiences and
observations, so you dont have to learn only from your own. Remain in a state of constant and
never ending learning and improvement. Because as Job 1:8 says, The price of wisdom is above
rubies.
Trading without Ego
Make no mistake about it. A trader's self-concept has to be separate from the trading. Who you
are as a person began before you ever thought of trading and who you will be as a person will
extend beyond your trading. When personal self-worth entwines with trading, it not only damages
self esteem, it sabotages the trading.
You hear about it. You read about it. Don't be misled. Traders tell stories. They write stories. They
tell how great they are. Big trades. Big numbers. Big egos. Hubris. And sooner or later, big
downfalls. It goes with the territory.
Consider the outsized egos of certain traders who brought themselves and those associated with
them to ruin. Nicholas Leeson brought down the Barings Bank. Victor Niederhoffer ran his fund
into deficit. John Merriweather threatened the health of our banking system by betting more than
fifty times his capital that his strategies were certain to work, that he could forecast with impunity
the direction of various bond markets. There's a pattern here of seeming or real success for a
while and then collapse for themselves and for those caught up in blindly following them. As
Wayne Dyer said, "Authentic freedom cannot be experienced until one learns to tame the ego and
move out of self-absorption."
In his wonderful book, Pit Bull , Marty Schwartz tells several stories of the times he lost money
because his ego got in the way. In the end he has this to say about ego: "I've said it before, and
I'm going to say it again, because it cannot be overemphasized: the most important change in my
trading career occurred when I learned to DIVORCE MY EGO FROM THE TRADE. Trading is a
psychological game. Most people think that they're playing against the market, but the market
doesn't care. You're really playing against yourself. You have to stop trying to will things to happen
in order to prove that you're right. Listen only to what the market is telling you now. Forget what
you thought it was telling you five minutes ago. The sole objective of trading is not to prove you're
right, but to hear the cash register ring."
Because trading is an uncertain game of probabilities filled with uncertain vagaries, an overly
inflated ego or a fragile ego can easily get smashed. Defending the ego uses up unnecessary
energy, distorts perception, and sooner or later, will destroy the trading. If your self esteem rises
and falls with your trading results, you and your trading are in trouble. Self concept has to be
strong and durable and not at the mercy of the current, last, or next trade.
We need to check our egos at the door when we start to trade. Uncertainty is central to trading. If
we add the uncertainty of our own self image into the mix of the unknowable endemic to trading,
we're in for certain trouble sooner or later.
Some typical symptoms of ego-tizing trading would be the following:
Not putting in stops. The ego doesn't want to be proven wrong.
Hesitating before putting on a trade. The ego wants reassurance before it begins.
Overtrading. The ego wants to prove itself big time.
Getting stuck in a trade. The ego has intertwined itself with a trade and is holding on for
dear life. It cannot cut out. The ego doesn't want to be wrong.
Adding to a losing trade. The ego digs its hole deeper in a massive effort to crawl out.
Grabbing a profit too soon. The ego wants a pat on the back.
How do we separate our ego from our trading? How do we keep from personalizing a trade? How
do we avoid personalizing all of our trading? One way to separate your ego from your trading is to
build healthy boundaries between yourself and your trading. Not only do good fences make good
neighbors; good boundaries make good traders.
A boundary sets limits, makes distinctions, informs you as to what is you and what is not you,
makes clear the distinction between you and others, tells you where one thing ends and another
begins. It distinguishes between past, present, and future. It lets you know that another's ideas,
values, and feelings are not necessarily yours. A boundary is flexible and permeable. It lets
information flow back and forth. It allows you to listen actively without having to take on someone
else's opinions and without having to force your opinions on another person. In trading it draws a
distinction between yourself and your trading, between one trade and another, between one trade
and all of your trading.
One trader would see the signal to take a trade and before she could put the trade on, she'd hear
a voice saying, "What if I'm wrong?" Immediately she'd feel small and diminished. The next step
was simply to let the trade go by as she sat there stalled by her vulnerable ego. She needed a
boundary between her self-esteem and the outcome of a trade. She needed a boundary between
self worth and being wrong. With such a boundary she could give herself permission to not always
have to be right.
Another trader had had nineteen winning trades in a row. The tension was building and he was
strung tighter than a drum when he came to see me. I congratulated him on his recent success
and asked him what would be so awful if the next trade was a loser. He said, "I'd lose my self-
esteem, and without self-esteem you're nothing. What an untenable state of affairs! His self
concept was riding on the results of the next trade. John needed a boundary between himself and
his trading. He needed to know that his ego would be intact regardless of what happened to his
trading.
A healthy boundary lets you know the difference between your business and yourself, between
your trading and yourself. You are more than your business. You are more than your trading. A
boundary also informs you that the results of one trade are not to be confused with the results of
all of your trading. Boundaries guide you as to the difference between the past, the present, and
the future.
Another way to get some distance between yourself and your trading is to look at it from different
perspectives. This is also true in your relationships with other people. In most interactions with
another person there are three different and separate perceptual positions.
The self position is looking through your own eyes, hearing what you hear, feeling your own
feelings, holding your own beliefs, and making your own interpretations. Most of us live our lives in
this position. This is the position that gives you passion. It's where the juice is. From this position
we have access to some information, but not all of it.
The observer position is that of a neutral observer, a fair witness. This is a dissociated position.
Here you watch yourself and the other person. Here you are in the role of a spectator as you listen
to yourself and the other person. As an observer you'll have a third party's commentary. This gives
you an impartial view, but if you stay here too long, you could end up playing the role of the cold
fish.
The other position gives you the other person's point of view. Here you look at things through the
eyes of the other, hold the other's feelings, walk and stand in the other's shoes. This position gives
you the ability to identify with and through another person. Here you see the world through
another person's eyes and get a sense of what they're feeling. If you live too much in this position,
you could be in danger of living in the doormat position.
By going to the observer position, you can gain perspective and neutrality. Some successful
traders move to the observer position when they put on a trade. If you're getting too involved in a
trade, move to the observer position and look at it from that perspective. At the end of a given
trade or at the end of a trading day, take a look at your trading from the fair witness position.
You can also look at your trading through the eyes of another person, for example, a trading
buddy, a trading coach, or a trader you admire. What would this person say? What would they
think? What, if any, advice would they give you?
Ego involves a separateness from all else. Let me recommend an exercise that will help you
experience your oneness with the universe and release egocentricity. Go for a walk, or you can
even do it inside. I prefer to do it walking down by the harbor. Look carefully at a tree, a plant, a
cloud, a wave, or a flower or any other object such as a rock, a sidewalk, or a bench. Notice it's
shape and the space it occupies. Become the object and experience yourself as filling that space.
Keep doing this with different forms. After a while you'll experience wonderful freedom and
energy.