Are You Trading Other Traders Trading Emotions

I want to share an invaluable insight I had last year while trading a difficult market which has enabled me to bring much greater awareness to my trading and help you in identifying where you may be lulled into bad trading habits without realising it. 

If you have received trading psychology coaching from me you know that I make you look for areas in your life where you are repeating a persistent, poor trading habit. I do this because all habits are in essence patterns. What plays out in your trading also plays out in othr parts of your life.

While patterns repeat, they also come in infinite varieties and this is what makes them difficult to spot. Believe me, if pattern spotting were easy nobody would have issues in live, or in trading.

Last years' most memorable trading lesson

I have had the good fortune to be coached by a professional top hedge fund trader for several years and this has made me the person I am today. All the seminars I have attended could not have given me anything close to the personal coaching I received.

Last summer, when the market was very volatile I was trading alongside a very successful professional trader who I have known for many years. I had decided to change my trading style and this trader seemed to fit the bill.

Here we were trading DAX and Euro Dollar. Some of you may recall the unprecedented volatility that suddenly hit the markets. Trading platforms were ceasing, stops were hit, prices moving through the stops and this happened to me and this trader and several other traders on that memorable day.

What I was to witness amazed me. Here was this professional trader going absolutely bananas. Not only was he losing it, but his evaluation of who was to blame and what he was going to do to retaliate left me speechless.

The most amazing  thing about the entire scenario was that he would not drop the issue and  carried on about it for several days afterwards.Talking of developing poor trading habits, here was a new dimension to that entire idea.

As you may have guessed at this point I had decided that this environment was not for me. After all, I had spent years learning to trade in a more Zen like fashion and learning to become detached from the markets, with varying degree o success to this day.

Granted, when you have a position on and you cannot get out as it happened to us on that day and you see the losses mounting as price moves against you tanking through your stops, it is not a pretty scene. However, unless one bets the ranch it is a mere blip and you know that you should never risk more than 2% absolute max of your capital and only trade a certain portion of your entire trading capital. (I will cover this most important topic in another article.)

So big deal. Once the dust had settled and I had to walk away from trading for a little while as I realised that I was buying into fear.

At some point I became aware that this fear was not mine but the fear of all the other players in the market place.

This is precisely what happened to the trader I was trading with. He , like I have done many a time, bought into the group consciousness of traders and the market panic and processed it as if it were his. 

Stay out of the trading collective and trade YOUR set ups

 Conscious awareness made me see with immense clarity where and how I have been buying into the collective consciousness of market action. I am no exception displaying this pattern. Everybody is wired this way. It is also an expression of universal oneness and allows us to tune into othr peoples felings and emotions and display compassion.

Yet, we mistakenly believe that all of our thoughts and emotions belong to us. In reality only a tiny portion, perhaps less then 10% are truly your own. The vast majority of thoughts and feelings derive from our ability to tune into everyone's feelings. Distance does not matter.

Learning to be detached from your actions and postioning yourself in all your activities, be it short term trading, swing trading, investing or any other activity as the observer of your feelings and thoughts is the key to the golden paradise of calm which brings happiness and joy to one's life.

Learn not to be bothered by a losing trade. I used to get really upset about losing. The reason: I was identifying my trading skills with every trade I made. It was an ego thing and an emotional roller coaster. Maintaining the ego costs a lot of effort and energy.

You do not need to get rid of the ego, actually it is impossible to do this, but you need to let go of the need to feed it. Winning or losing are the result of your inner state and not the result of your trading skills or lack of them. This is true whether you are a beginning trader of an advanced trader.

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Trading, just like any other high performance activity is about understanding how you work and then implementing a trading style that suits you. You need to know the rules, for sure, but once you know them you need to know how to bend them to make them fit for you and develop good trading habits that fit your personality.