Monthly Archives: May 2015

Improving Performance by Optimising Your Time Perspective

 

Part of my pre-session routine involves a quick review of my Motivation Journal.

The Motivation Journal is simply a folder containing various pieces of text or image material which I find sufficiently motivating; the aim being to ensure I face each trading session with focus and commitment and, most importantly, confidence.

The YTC Price Action Trader discusses the sections and contents of my journal in Chapter 10. While the content itself changes from time to time, I've been consistent in following that same format for the last six or so years.

However, last weekend I came across a video which I found fascinating, and which has led me to consider changing the format of my Motivation Journal.

It's a TED Talk by Psychologist Philip Zimbardo who you might know from the 1971 Stanford Prison Experiment.

The topic of this talk is "The Psychology of Time"

Here's the video. Please watch it. It only takes seven minutes.

 

If the video does not show here, try these alternate links: TED Talk or YouTube

If you have time (pun intended) there is a link at the bottom of this article to a longer video presentation showing a lot more detail. Highly recommended! If not… the 7 minute video shown here will be sufficient to cover the basics.

Prof. Zimbardo suggests that the optimal profile for balancing time perspective is as follows:

  • Past-Positive => High
  • Future-Positive => Moderately High
  • Present-Hedonism => Moderate

Nothing surprising here in that it's all overly biased towards the positive side.

This is a great way to view life.

But I think it also has application in daytrading, in providing structure to our Motivation Journal and ensuring it addresses all three time perspectives.

The benefits of our pre-trading routine including a motivation session based upon the optimal profile, as listed above, should be:

  • A greater likelihood of commencing the trading session with a positive and focused mindset.
  • And a subsequent increase in likelihood of quality performance.

So here's how we could structure our journals:

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Professionals Traded Here! What Were They Seeing That You Couldn’t See?

 

We've talked in previous articles about the fact that the best opportunity is found close to the edges of the market structure.

Or another way to express the idea… "Confirmation is risk!"

Typically when posting these sort of articles I get a comment or two of the following type:

But again, let me come back to the comment provided in last week's article, "Confirmation is Risk! (Part 2)"

"Why shouldn't we try to pick tops and bottoms? That's where the risk is smallest and the profit potential is greatest."

Standard TA won't make you money! You can't just do what everyone else is doing. You need to be smarter than the crowd.

You have two choices.

1. Look at a chart at a point of reversal and say with stubbornness:

  • "It's not possible to enter there."

2. Or look at the same chart with curiosity and say:

  • "Professionals traded here. They didn't wait for confirmation. So what did they see that I was missing?"

Curiosity and it's associated growth mindset will get you a lot further in this game than stubbornness and a fixed mindset.

Let's look at a few examples, from different markets and timeframes as those offered in the earlier articles.

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Confirmation is Risk! (Part 2)

 

I don't recall who said this… and I'm paraphrasing… but I absolutely loved it when I heard it and it's stuck with me ever since.

"Why shouldn't we try to pick tops and bottoms? That's where the risk is smallest and the profit potential is greatest."

(If you recognise the actual quote can you please provide me with a source so that I can provide appropriate credit! Maybe Sam Seiden… it sounds like something he'd say!)

So yes… I try to pick tops and bottoms.

And that freaks some people out. I know… they send me emails. And they're not always nice!

But the fact remains… the tops and bottoms are definitely where the risk is smallest and the profit potential is greatest. Someone is trading in those areas, selling at the tops and buying at the bottoms. If it's not the retail trader, who typically waits for confirmation, then perhaps it's the professional. Maybe you should be ask yourself how you can see what they're seeing?

Last week we re-explored the concept of confirmation being risk. Real opportunity is found as close to the edges of the market structure as you can get. Where the risk is smallest and the profit potential is greatest.

Is it easy? No. It requires greater skill at reading the sentiment within the price movement.

But is it worth exploring as a means to improving your edge? Absolutely!

This was the trade we examined last week:

Confirmation is Risk

See the prior article here if you missed it: http://yourtradingcoach.com/trading-process-and-strategy/confirmation-is-risk/

As mentioned at the end of that article, this session went on to provide some further, very similar, opportunity. So let's explore them today.

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Confirmation is Risk! (Part 1)

 

(Note: Not for beginners! This takes a bit more skill and experience. File it away for now… or practice on the sim… if you're not ready for this.)

We looked at this idea previously, that confirmation is risk:

However, it's been well over a year since that article so I thought it a good time to revisit this concept.

Confirmation is Risk

Confirmation is Risk

Confirmation is Risk

Confirmation is Risk

Confirmation is Risk

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My Daily “Trading Psychology” Routine

 

Here's a great question I received recently:

Q. What do you do during a session to maintain a positive trading psych mindset?

What I do during a session cannot be talked about without also discussing the pre and post-session routines. It’s all a part of one whole approach.

I've shared an image previously which I'll include here again, which gives a summary of how I see trading psychology (or performance psychology which is probably a better term).

mindmap of my performance psychology plan

You can see the article related to that image here if it interests you – http://yourtradingcoach.com/trader/creating-the-conditions-for-success/

What I want to do today is to approach this question from a different angle, by listing everything I do with a performance psychology focus as I work through my pre, during and post-session routines.

As noted though in the above image, I see there being two areas of priority for practical application of performance psychology:

  1. State Management
  2. Focus on process

 

State Management – My aim is achievement and maintenance of my Ideal Trading State. The Ideal Trading State will vary from individual to individual and will typically be found only through trial and error. But for myself, and I suspect most others, it's a calm and focused environment with no distraction.

Focus on Process – My aim is to ensure I follow the process as outlined in my Procedures Manual. It's commonly stated that we need to trade without emotion. That is rubbish. You're human. You can't trade without emotion. Your aim instead should be to ensure that you follow process, despite the presence of emotion which might otherwise interrupt or interfere with your process.

Everything I do pre, during and post-session is done with the intent of enhancing performance in one or both of these areas – state management and focus on process.

Before I step through my routine though, let's first drop back a bit and set a foundation.

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