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What is Your Mental State When You Trade?

This discussion is dedicated to your state of mind when you trade.

  • Are you Feeling Excited And Energized?

  • Is Trading Stressful And Depleting?

Controlling your trading emotions is vital!

  • Please describe how you feel before a trade, while in a trade and exiting the trade.

  • Please post daily your state of mind for these three modes.

*Do not discuss or mention your P&L (That is your business) but discuss your emotions and feelings in the context of your trading.


This discussion is dedicated to your state of mind when you trade.

I am Energised to trade - but want to be more disciplined
Yes… and i still want to do it… depleteting… I do good then i do bad…

Controlling your trading emotions is vital!

  • Please describe how you feel before a trade, while in a trade and exiting the trade.
    I believe i plan my trade… and wait to enter… and get discouraged when it goes against my plan… i exit to early or i have too tight a stop loss**.

When I am in the trade… I get nervous … i feel anxious… not relaxed
when i exit a trade - if it is good i feelo great… …whenit is bad… i also fell depressed. and have to motivate myself again…

I want to learn to master my emotional stated…

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Please analyze your state of mental process daily that you are going through when you trade and record in this journal accordingly.

Here are the five steps:

  1. No Trading (tranquil, excited, or fearful)
  2. Gathering Data for Trades (Objective, Precise/Systematic, or Biased)
  3. Placing a Trade Phase One-Deciding to Long or Short (Patient, Controlled or Eager)
  4. Placing a Trade Phase Two -Deciding how to execute a trade via limit order, stop, or at the market (Timely, Aggressive or Hesitant).
  5. While the market monitoring the trade:
    A) Feeling the trade is easy or hard?
    Exiting with a profit (Positive, Noncaring or Over Confident)
    Loss (Accepting, Fearful, or Discouraged)

Follow these steps daily and share how you handled them daily. You will see the “magic” or exploring yourself as a trader and a human while exposing yourself to the market.

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I like this approach because when traders are all looking at the same info and coming up with completely different outlooks, it is imperative to ask what your mental state is but also the potential mental state of the market and other traders.

Same reason why sell offs are typically more violent than rallies, panic and fear.

Here’s my process and emotions (or rather emotional awareness) while I trade.

  1. Sit down and breathe. Look at charts and observe while making sure I’m comfortable, hydrated and mentally clear.

  2. Watch the market for at least 5-10 minutes, no trading or speculating. The idea here is to just absorb the information without bias or need. (How many times have you caught yourself saying things like “it HAS to sell off now” or “I need to make this trade a winner”?)

  3. Top-down chart analysis to identify levels and overall trend while developing a strategy for the day.

  4. When levels are identified and drawn, I start to focus on order flow and cluster charts to watch price action from sellers and buyers. I recently added the Nasdaq chart and DOM to gain some reference on how the markets are moving together.

  5. Enter a trade that is inline with my strategy for the day. When I enter the market I may bid and offer multiple times to just get my feet wet. Then when my order is filled I start observing the market. I ask things like:

  • What do I want to see to validate my hypothesis?
  • How am I feeling already about this trade?
  • Am I nervous, fearful, happy, confident, etc?
  • What do I NOT want to see when I’m in this trade?

Many times I just talk out loud about what I’m seeing in the market. This step is super beneficial to me because when I say it out loud I can force myself to hear it as if another person is saying it.

Then when I’m short and I am saying “I see more active buying than selling. It seems price is hitting support at this area (go back in my charts to confirm). I feel tension in the market and the buyers are very strong right now”, it helps me process that information more objectively and trade more objectively.

  1. When I think something, feel something or see something I state it out loud. If I hear myself say “the buyers aren’t backing down” it gives me a chance to process that information while setting aside my emotions or needs. When I don’t say it out loud I tend to find myself immediately saying in my head “I hope it comes back or sells off.”

Even more importantly, I observe when I’m not clearly processing information and I can tell myself to sit out for a bit. This gives me a chance to get up and walk around, drink some water or look at charts.

At the same time, I also find it helpful to dive in on a smaller lot size to start monitoring my emotions and feelings.

Think of it like this, when you are in the market with a position on, it’s almost like you are turning on a monitor that shows your emotions and thoughts. It makes it real. Visualize an actual screen that is showing your mind that turns on when you have a position on. If you can look at this and watch what your mind is doing you’ll start to see many things that can easily be changed.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

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I’ve found the best trades are when I’m in the flow (also called “in the zone”). I’m watching order flow and keeping track of who is long, who is short, and where each party is likely to stop out. It is like watching a film and quite engrossing to see the order flow play out. Entering/exiting trades almost becomes automatic. When I’m in this state, I’m generally achieving extremely low MAE (0-2 ticks) and am able to make good calls on when to take profit. I’m also aware of when I’m getting tired and losing flow, and it is time to take a break.

So my mission this month is to work on not trading unless I have spent enough time to build a picture of the current order flow situation. When I watch order flow intently to build the necessary picture, it is meditative and I get into flow state naturally.

The emotions I have that work against trading are:

  • FOMO
  • Impatience
  • Giving in to gut instinct
  • Having a bias
  • Boredom
  • Addiction/Gambling
  • Being distracted by something new (new platform, new data feed, etc)

I’ve been identifying specific actions that alert me to being in the wrong state. The one that is most noticeable is when I want to use a wider stop or no stop “because I know the trade is going to work but I don’t want to get stopped out by some short term market manipulation or volatility”. This usually means I’m impatient/FOMO and am not waiting for the best entry. An example of this is entering on a breakout without a clear place to put a stop that is within my required stop distance. Usually, even if the trade does work out, I don’t have confidence in it because I can’t tell where I’m wrong.

Another noticeable action is when I start to take profits early because I’m scared of losing gains. This usually happens towards the end of the day when I’ve been pleased with progress so far and don’t want to mess up the day. Usually my strategy is good, with a tight stop and low MAE, but I’ll take profits much too early. The problem is I then get frustrated with my lack of performance and this takes me out of flow and the other negative emotions can then show.

The current emotion I will be working on this week is being acutely aware of the time I’m in a winning trade. Sometimes it will see like I’m in a trade for hours, then I look at the stats afterwards and see it was only seconds. So I’m going to use an analogue stopwatch with a solid click-click button to see if that helps me with this time distortion.

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@autobahn Thank you for making an effort to write this lengthy post.
The points you have mentioned above should be the blueprint as far as what beginner traders should watch.

The “trade execution” is one of the critical elements of an operation. Being aware of your minuses during trading keeps you alert, objective and may pave the way to improve the process for your trades.
The more you can learn from your past mistakes, the less likely they will come back to haunt you down the line.

It is only a matter of time before we encounter various limitations. These are the areas where we need to be careful and (again) remain alert at all times.

Myself, I have to deal with the “I Get It” aggressiveness that followed after good decision-making. I learned to exhale and potentially avoid any decision-making until this feeling goes away entirely.

Matt Z
Optimus Futures

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.

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Hi Matt, again let me thank you for the trapped traders video, it has made me think and concentrate on the way I feel. Yesterday for instance I had made a nice profit for the day but then decided to do ‘just one more trade’ when I was tired, a bit tetchy after an argument with my son and a little distracted. I blew my profit and made a significant loss on the day. It was not a good time to trade but did it anyway. So its this inability to stop when necessary that I need to conquer.
When Im alert and making good trades, I am referring back to longer time frames, reasoning proper risk management and taking small profits with the possibility of extending into larger ones. I am good at seeing the trends from market shape and wait until there is a confirming move before opening a position.
When Im trading badly, I reduce my referring back, stop drawing on trend lines, am horribly tense and even when going well am anxious. This is a compulsion but I have, I think, recognised it for what it is and now try to think through what I have been through. Sometimes it takes a weekend break for me to break through the disappointment and rationalise where i am. In this case your seminar video has prompted me to be reflective. Its tempting to hide from myself and pick up where I left off next week. That I think is the most dangerous. I think that as far as recognising a good profitable trade I am now good enough to make money, but … and its a big but, I am still concerned that when in a bad place to be trading, that mood has me at my keyboard making bad decisions.
Work in progress! Money spent worth every penny, but at a point of decision as to whether to carry on as without committing a little more into my account It may make me even more anxious. I have committed to this and am nowhere near what I was prepared to put in, but at the same time dont want to go down the path of concealment and my fear of becoming a compulsive gambler…hence this reply!

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Today I feel:

Tired but clear-minded

Picking my spots carefully and being patient.

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