Josh Lukeman saves what I believe is his best chapter for last in his book The Market Maker's Edge. In the 23rd chapter, entitled The Trading Mind, Lukeman lists several factors that are crucial in developing the proper awareness of the psychological and emotional influences on your actions as a trader. They are as follows:
1. FEAR: "Fear is perhaps the most debilitating emotion a trader can experience. Painful memories produce fear, which warps a trader's focus. When you are afraid to lose for one reason or another, you will end up focusing on loss and, by so doing, will attract precisely the opposite of what you hope to avoid" (272)
2. LISTEN TO THE MARKET: "Waiting for the market to confirm your initial opinion is crucial. The market provides clear signals for the best course of action, regardless of your opinion. You must let go of any preconceptions about what the market is going to do, and instead remain focused on what the market is doing here and now" (273).
3. ACCEPT RESPONSIBILITY: "When you accept responsibility for everything that happens in your life, you empower yourself to create the trading world you would like. By accepting responsibility for your trades, you empower yourself to consistently improve your performance in the future" (277).
4. GREED: "If you are driven by greed, then you are trading in a state in a state in which you are constantly aware of what you do not have. This is called poverty consciousness, and it will work against your goals of creating abundance in your life" (277).
5. FRUSTRATION: "Your success as a trader at times hinges on your ability to conquer frustration. Frustration will always appear on the path toward greatness. Some will triumph over it, while others succumb to its pettiness. When you encounter obstacles on your trail toward achievement, remind yourself that they were placed there in order for you to overcome them, so you can learn from them and become better than you were before" (278).
7. CONFIDENCE: "The best traders are successful because they are able to maintain unshakable confidence in themselves and in their decisions. This serene self-confidence creates a positive state of mind and the will to act" (279).
8. PROSPERITY CONSCIOUSNESS: "As a trader an important question to ask yourself is whether you feel that you truly deserve to be wealthy. This question must be answered honestly. If you do not believe you deserve to be wealthy, sooner or later you will sabotage your chances for success" (281).
9. SECURITY ILLUSION: "When you are trading for security, you are attempting to keep what you have because you are afraid to lose. This fear will inhibit your actions and will make you a less effective trader. When you fear losing, you will actually create losses. You will be unable to cut your losses when they are small, and you will miss great trading opportunities because you are afraid to lose" (282).
10. WRITE IT DOWN: "Write down your trading goals, and be as specific as possible. The goals need to be measurable, so when you achieve them you will know it. Remember to be very specific. Once your brain has the target, it can begin to figure out ways to achieve it" (283).
It is very important that traders get their mind right, for the proper trader's mind is a terrible thing to waste...just ask a losing trader.
See you later...IN THE CROSSHAIRS.