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Browse Topics:    Trading Strategies    Research & Analyze    

Self Coaching for Traders

Discover techniques you can use to help improve your trading discipline by focusing on controllable factors and letting go of uncontrollable ones.

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While some aspects of trading are simply out of our control, you can control your reactions to them. Some of your smartest trades may be the ones that you don't make. As you evolve as a trader, being your own trade coach will help you focus on the things you can change and detach from those you cannot.

Self-talk

How do you talk to yourself when you trade? Self-talk is the conversation we have with ourselves as we engage in a specific activity. It usually stems from our core beliefs about ourselves and the world around us. The importance of this internal monologue is that it not only reflects our thoughts and feelings, but also influences them. It's important to talk to yourself in a supportive way vs. being overly critical. 

Here's an example of the self-talk of two different traders in the same XYZ trade that is currently losing money.

Trader A—"I'm losing money again. I knew I should have waited another day. Why is this always happening to me? If only I were smarter, this wouldn't be happening. I can't believe I did that again."

Trader B—"My XYZ position is currently at a loss. I have not hit my stop, so I will hold the position. It might turn around or it might not. I am managing my risk and following my plan."

Trader A's conversation is charged with emotion, making sweeping judgments that are not only about the trade, but also about the trader. They are blaming themselves and thinking that the losing position is somehow a reflection on them. This kind of self-talk usually does more to amplify the problem than to correct it.

Trader B's conversation is much more measured and less self-critical. The focus is on the status of the trade in relationship to the trade plan. There are not global statements like 'always' or 'never'. Trader B is affirming the reality that some trades make money and others don't. There is no judgment about intelligence or skill as a trader. They are affirming that the most important thing is that a plan is in place and being followed.

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Managing Your Expectations

Take some time to examine your trading expectations. Many newer traders believe there is a market code that can be cracked that will keep them from having a losing trade, a losing week, or a losing month.

The reality is that there will be losing trades. How you choose to react to them will go a long way in determining your trading outlook and, potentially, your success.

Setting up a Trading Environment

It is a good idea to dedicate an area, and possibly a specific computer, to trading. Dedicating a specific space and time for trading will help you maintain the discipline and focus that may make you more effective.

Visualization

It is common for peak performers, athletes, actors and others, to visualize their performances and outcomes before the event. See yourself building a plan and then following it. See yourself relaxed and alert. See yourself closing profitable trades according to your plan and closing losing ones according to the plan as well.

Conclusion

Trading is challenging enough without getting in our own way. Being your own coach will help you be honest about the state of your trading and help you make the right adjustments.

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