Change is a common theme of my Lesson’s From the Pros articles. That’s because too many traders are not getting the results that they want, and they need to “change” something (thoughts, emotions, behaviors) in order to get different results. I have often talked about tools, techniques and concepts that are designed to help you think, feel and do differently. In today’s blog we will take a closer look at the thought process and the importance of not only “what” you say, but “how” you say it. In other words what are you using to carry the load of what you’re describing has a lot to do with the impact of that thought on your emotions and of course your behavior.   The language that you use to describe what happened in a particular financial instrument, what you are doing while managing a trade, the results you got from a trade, etc., has a huge influence on your feelings and your subsequent actions. Actually, every result that you get is determined first by what and how you think. Thinking determines how you feel. And how you feel will drive how you respond. So, it is imperative that you hold your thoughts close to your vest and monitor how you are saying what you say. This is how you begin to first make sense of and afterword effectively manage the swirl and sway of all those trading variables. Now, if you haven’t figured it out already, we are talking about “metaphor”.

Metaphor is a literary figure of speech where we use an image, object or story to represent or explain an idea and the reference helps us understand. When the markets are described, they are often referred to as “a fight between the bulls and the bears” to explain their adversarial nature. Or, when a loss is incurred some might talk about how it is “eating away at them” as a way to illustrate the emotions that they feel about that loss. Or, what about “trying to hit a home run” when entering into a trade – this would define your extreme intentions regarding the kind of profit you were pressing for. Each of these examples is an image or symbol and tells a story to represent the situation that you want to convey. Even though each example is only a brief phrase they convey a lot of information. That’s part of the power of using metaphors. It’s like the picture that’s worth a thousand words, the metaphor through images and symbols tells a story; and often the story can be emotionally compelling. Here are a few more. In order to get something done you “step up to the plate.” With difficult choices, you’re “doing the heavy lifting.” You “grab the bull by the horns” when you accept a challenge. The lexicon is replete with metaphor, and it is powerful. Emotions are activated on conscious and as well unconscious levels through metaphor due to the rich symbolic association with concepts, both painful and pleasurable.

Metaphors can be really inspiring, supportive, motivating and uplifting or they can be daunting, disturbing, unnerving and destructive to your performance. You see, they are often closely connected to your core paradigms and mental models about life. They would present as a mental structure that embodies your rules for living, and rules for trading. Take a look at this statement, “the market’s out to get me.” This brief phrase can be highly toxic to how you envision the markets and more importantly to how your react and/or respond to situations in your trading; for example, when someone says something like, “the markets out to get me” they are setting themselves up for failure and accepting of a notion that they have very little power to perform. What you tell yourself determines how you feel and how you feel drives what you do. Going further, when you use a powerful image-rich phrase that is connected to your inner most limiting beliefs about your ability or “inability” to succeed, you are creating a barrier between you and the results that you want. In order to create substantive change, it’s important to identify and reconstruct the underlying metaphors that drive your stories about you, your abilities and the markets. For example let’s take the metaphor, “I am as dumb as a rock because I lost on this trade.” If you said that to yourself, what kinds of emotions would you probably feel? Most would feel a level of anxiety and anger. Negative emotions like these don’t promote positive actions. They rob you of stamina and the ability to follow through with your rules while focusing on what matters most in the trade meaning that they rob you of getting the results that you want. On the other hand, if you use positive metaphors that are motivating they will help to establish rock-solid responses to trading situations through uplifting images and symbols that are connected to core beliefs. What about the metaphor example, “I am trading with the courage of a lion?” As you consider this metaphor, take a look at how you feel. Your emotions are probably much different from the metaphor, “I am as dumb as a rock because I lost on this trade.”   This is how you ratchet up your ability to create changes in your thinking. By uncovering negative metaphors and changing them you put yourself on a fast-track of doing things differently and therefore getting different results.

Change comes from facing fears, and doing things differently. But, you can’t do differently without thinking differently. Becoming self-aware is crucial to your development as a trader. You must monitor your thoughts, feelings and actions in order to begin to modify those that aren’t working for you – especially metaphor. Bringing your A-Game to the platform and doing what it takes to keep it there is what will make the difference in your performance.

Peak performance trading bridges the gap between wishful thinking and getting the trading results you want. The most powerful tool you have is right between your ears, as long as you learn the combination to unlock your inner self and unleash this strength. And, of course, to unlock your inner strength you must be in the moment, for the moment, fully available and in the “now” of the trade. This means that you are aligned physically, mentally and emotionally; in other words your system is geared to work in the same direction and on the same goals. If your system is aligned, you are accessing and activating your internal resources to bear on the task at hand. But, how do you align your system and overcome all the noise of counterproductive thoughts stemming from limiting beliefs, and erratic unsupportive emotions that ultimately drive behavior that … well, let’s face it, that lead to bone-head trades? One thing for sure is that you’ve got to engage your passion; you’ve got to identify what you are most jazzed about and connect that to your trading protocol and keeping your commitments. When you are motivated by a deep seated, inner desire, for instance the desire to be a “great” trader as opposed to a “mediocre” trader; you would become driven by a fire-in-the-belly intensity to do only that which is in line with being consistent in your follow-through. When you are intensely focused on raising the bar of your game, it becomes less about whether or not you made a profit in any particular trade and more about the excellence of your execution.   A magnificent obsession is developed around the details of the play and being meticulous about your strategy. Wouldn’t it be wonderful to have a magnificent obsession about doing everything that it takes to be consistently successful; where success in the trade is defined as how well you executed your strategy and followed your rules? This is the kind of self-discipline that tunes the body, mind and emotions to work in the same direction and on the same goals.

Neurologically, when we are totally engaged in purposeful achievement, the neurotransmitter dopamine is released, which sharpens focus and increases performance while creating a profound sense of well being. If you’ve ever learned to play a game or sport very well, then you have experienced the drive to be “better.” It really is about “how you play the game.” John Wooden, the great UCLA basketball coach with a record 88 wins in a row, which only recently was tied; seldom talked about winning but more about preparing. Roy Campanella, the great Brooklyn Dodger said about baseball, “…you’ve got to love it like a boy and play it like a man.” He spoke about that level of childlike focus that is immersed in wanting to do it well so badly you are willing to be uncomfortable in the service of getting better…and love every minute of it. You’ll practice for hours in the rain, cold and through pain because you want it that badly. Consider a toddler learning about her world. Does she need to be told to listen, to look, to imitate, to try and try again? A child is driven, and if she sees what she wants, she’s got to have it, or if she sees behavior, she must imitate. She struggles, falls and rises, as she is obsessed with learning to walk. She makes sounds and tries to talk with a dogged determination. That baby is keyed into a passion that drives her to see, to listen, to imitate, and to learn. The passion that drove you as a baby is still inside you; it is a part of your humanness. Unfortunately, we are also taught to remove ourselves from the passion as we become socialized into “good citizens.” Socialization can stifle curiosity, creativity and that playful spirit that sees life as a series of games and puzzles to figure out. When this happens, or when we become “grown up,” that inner spark to explore the reasons why, and to be wide-eyed at the wonders of life, is often lost to the detriment of a rich and growth-oriented life. But, when rekindled, this passion galvanizes our energy, curiosity and trial-and-error courage.

Making mistakes in the service of learning becomes a way of life when your passion is engaged. This passionate attunement to doing what effectively magnetizes your desires to you also makes you feel like a hungry lion, driven by the deep desire to do that which gets you the results you want. Consider the prey the lion must stalk and kill in order to survive and thrive; if she does not learn to do that effectively and in the proper sequence, she will not eat and surely will perish. She must learn the process of hunting first in order to be successful in the hunt. Using this metaphor, the protocol of steps involved in successful trading is identifying the high probability target, stalking, patiently waiting, and then entering the pursuit. You first want to ensure that you have that reality firmly locked in your mind. You must develop the intense desire to learn the hunt, or to do whatever it takes to ensure success, and success is defined as faultless execution and follow-through.

The type of motivation is also part and parcel to this conversation. We are not speaking of external motivation, the kind you get from listening to a rousing speech or a riveting trading lecture. This is an outside source. This is a good starting place, but it doesn’t last. It has artificial peaks. The day after the speech, you’re 30 minutes early to your trading desk, doing homework and vowing that you’re going to “do it right.” This may last just long enough for the trade to go against you—then, with one failure to include a stop loss, you’re back in the same boat, and the rules might as well be thrown overboard. This kind of motivation leaves you with a false sense of well-being. You get a shot in the arm, but it wears off.

Then there is the most obvious “fool’s gold” motivation—money. It too is short lived, because money is transient and of itself has no substance; it is only good as a medium of exchange. You can’t eat it, drink it, live in it, drive it or wear it – at least not for very long. Many believe that they want money, but to be specific, what they really want is what money can buy. I would contend that if you had everything that you have ever desired, money would lose all of its appeal. The literature is replete with studies that support the notion that money is a poor motivator. One of the articles written about this subject was a Forbes.com missive by Charles S. Jacobs, March 6, 2009 entitled, Why Money Isn’t A Motivator.   An out-of-proportion fixation on money in any particular trade can be a prescription for greed. Greed distorts reality into a phantom of itself, resulting in decisions based on conjured notions of what we “think” will happen, not what is taking place in the charts. Thus, money as a motivator is a poor prospect.

Then, there is fear: “if I don’t make a profit in this trade then I am screwed!” Fear, like greed, fragments, blurs and moves you to grasp for fading phantoms that leave you as bait in waters teeming with sharks eager to feed on your capital. I’m sure you’ve heard the adage: “Scared money does not win.” The only motivation that moves you to identify what is required for consistent long-term results is that which is forged in the heart space of your inner self where those results are tied to reasons like family security, a richness of life, personal pride in doing a good job, and/or peer recognition. This is where your passion resides.

So, rev up your internal engine around something that you’re jazzed about and connect it to your trading to love it like a child and trade it like an adult; where the child is magnificently obsessed with the joy of doing it masterfully and the adult is focused on what matters most – faultless execution.

Trading is arguably the single most challenging business venture on the planet. It challenges your character flaws, personal issues and weaknesses at every turn. It is for this reason that persistence and perseverance are crucial to your ability to not only bring your A-Game to the trading platform but to sustain it over the long haul. How often have you found yourself at a “fork in the road” of your trading and faced with a choice to either go to the left and violate a rule thereby doing something that is not in your best interest; or go the right and bring your highest and best trader to focus attention on what matters most. Tapping into this type of energy is what can make a distinct difference in following through with you plan and your rules.

The definition of persistence is basically never giving up. Perseverance is going on despite hardships, opposition and setbacks. Don Bennett is a mountain climber and he climbed one of the highest mountains in the world Mt. Rainier in very demanding conditions that may have broken the average climber. But Don went on out of sheer desire to do what he had set out to do. When he had finished a reporter asked Don how he did it. Don told him that he saw every move along the way on the mountain about 100 times per day. The reporter then asked, yeah, I hear that all the time from people that they are able to imagine the goal, and that’s good, but what I want to know is how did you do it with one leg? Don, took a breath and said, one hop at a time. Some people do not allow obstacles; setbacks, opposition or hardships get in their way when they want something bad enough. Don Jackson is a black man who was dyslexic in the late forties and early fifties at a time when most professionals didn’t even know how to spell the term much less what it was. He grew up labeled as retarded in special school systems. But, Don knew inside that he was not retarded, he had a light emanating from his Spirit into which he plugged his heart and decided that he too wanted to learn like everyone else. When he decided to go to college everyone who knew him or read his school history tried to discourage him, most of the time thinking that they were saving him from major disappointments and pain. But Don never gave up. Even though it was very difficult for him to read because of his disability, he did so and remembered it well. He passed his remedial studies and was admitted into college whereupon he not only graduated but today is a Ph.D. in education and works with young people whom society has given up on. He had persistence and perseverance; he would not allow anything to keep him from his burning goal. He never lost sight of his vision. He created solutions to his problems. Through his vision he maintained his commitment, held on to patience, and understood the value of never giving up.

There are 5 critical steps to attaining and maintaining strong levels of persistence and perseverance:

First, rekindling and refueling the vision of your purpose everyday charges the emotion that sustains you. It reminds you daily of the rewards and benefits of the goal. If you haven’t identified your purpose for trading you’ll want to take care of this right away. Your purpose is the starting point for successful trading. It is where you connect the “what-matters-most” of your life to the “what-matters-most” in the trade. It is how you infuse a passion for remaining on task to the process of your trading. The vision is what galvanizes your strength and drives you like a turbo jet towards your trading goals.

Secondly, the journey of 1000 miles begins with one step. You must firmly anchor the attitude by using this heartfelt statement as your own; “I can achieve anything I set my heart and mind to, nothing is impossible for me to achieve if I want it badly enough and am willing to pay the price, for no matter how much work is involved, or how long it takes, or how difficult it is, I can and will achieve”. This belief in self is imperative to remaining focused.

Thirdly, remember to view setbacks, losses and failures as learning opportunities – those things that hurt, instruct. All great achievers have made innumerable mistakes and have failed, that is what provided the “experience” and the “education.”   This is necessary to manifest your trading vision.

Fourthly, always increase your market knowledge by identifying the mechanics that will help you to form a foundation in the markets that you have chosen to trade. This can also be termed “a results orientation.” Experiment with different approaches, perspectives and paths.

Fifthly, transform your work into fun. Make what you have to do, into something that you want to do. Work toward your life goal shouldn’t feel like a sacrifice because it is what you want more than anything for you and your family. As you gain more “process mastery” in your trading you will increase the “joy” of doing it well.

Now, let’s look at five ways to deal with setbacks:

1) Don’t aim to avoid a handicap such as starting your trading business without capital or wanting understand a new market despite time constraints. If you have a challenge study it from all angles and seek to identify a creative solution; otherwise a tiny toy wrench can grow into a huge iron monkey wrench stopping your progress cold.

2) Don’t blame others for your problems. Successful trading requires personal accountability and self-limits. Be honest with yourself. Use your mentors and as well you can be your own mentor by pretending that someone has come to you for advice on that very trading issue. How would you answer them?

3) Continue to strive and strengthen your qualities of self-discipline. You will not make it as a trader if you can’t keep your commitments. Setbacks that are caused by commitment implosion often can cause weaknesses in special areas, turn the weakness into strength. Be your own heaviest critic but don’t beat yourself up – in other words, you are not a failure, you had a learning experience.

4) Every setback or loss has a silver lining or seed of opportunity. Find it and use it. It may involve a new strategy, but you are getting there anyway.

5) Take the attitude that every issue has a solution. A problem is only a problem if you think you can’t and therefore you won’t solve it. As Henry Ford once said, “Whether you think you can or you think you can’t, either way you’re right.”

The items above are some of the ways to strengthen your persistence and perseverance. In order to achieve anything that is important and valuable it takes time, energy and dogged determination. Keep in mind that the drive to persist and persevere is fueled by the initial vision. The closer you get to process mastery, the stronger the belief and clearer the vision – the more real it becomes. As you continue to achieve, the vision fuels the goal of process mastery and the goal of process mastery fuels the vision. With each victory, you are developing more capacity. Perseverance, like training for a marathon, is consistently building endurance and strength to go to the next level. Between the vision and the goal, persistence and perseverance act like a nuclear reactor and put into motion a self-perpetuating spiral of vision, belief, emotion and reality. This self-perpetuating spiral will change your trading and your life from the inside out. Trading success is where opportunity meets preparation

I read with intense interest in the Power Trader Nation Forum a thread that included this question; “Are you caught up in trading and not caught up in making money?” This is a very legitimate question in light of the fact that there are myriad traders around the planet who trade, and trade, and trade.   They may have daily or trade session targets, but rather than discontinue trading when they hit those daily targets they continue to trade and more times than not end up giving back those gains and as well taking a loss for the day. Now, the logical inference is that if they had a target amount of profit and hit that profit target they should stop trading. So, what compels them to continue…the answer is greed. Actually, greed is another aspect of fear. Greed is simply the fear of not having enough.

Trading is ultimately about money. The trader wants to expand his capital. But, here is the paradox…trading is difficult and arguably the most challenging business venture on the planet because of the psychological turmoil that is activated in the trader when he enters the trade. So, consistently successful trading is “not” about making money in any one trade. It is a process; a process that requires a devotion to preparation, analysis, planning, implementation and execution. Because trading is so difficult, like any similarly arduous endeavor, it requires an activation of all of your resources (internal and external) to bear on the process. You only have a total of 100% of attention to focus on what-matters-most. If you are overly invested in P&L then you are diminishing that valuable percentage of attention in direct proportion to the amount of distortion and distraction caused by the intensity of fear and greed. By “overly invested” I mean that when you are in the trenches of a trade it is not the time to be focused on money. One of the more important points is to be dispassionate about the outcome while you are in the throes of the effort; that is to do and be the best that you can during the trade and to resonate with the reality of what your focused efforts will attract. In other words, when that final outcome of the trade has transpired this reflects reality…it is what it is. If you are so intently focused on the result of your process during the process, you are necessarily diminishing your attention and your ability to maintain activation of all of your resources.

I have often talked about having a sensory rich vision of what you want to achieve. This is a very powerful tool to connect with the passionate white-hot energy of why you want to be successful as a trader. It is your trading purpose, which ties the what-matters-most in your life to the what-matters-most in the trade. During the civil rights era, there was a saying “keep your eyes on the prize.” This may seem contradictory; to say on the one hand you must be dispassionate about the ultimate outcome and have a sensory rich vision of the outcome. Actually, the sensory rich vision is a tool to “refuel” at the beginning of your trading session and during those times when your energy and your ability to sustain emotional strength and endurance in the trade are waning. This is when you want to deliver that shot of epinephrine to the system. However, when you are in the game and on the court, this is not the time to stop and drink Gatorade or get a breather or fixate on whether or not you are winning or losing. When you are in the heat of battle, this is the time to engender a fierce focus on what you are thinking, feeling and doing as it relates to the process of trading; which is to continuously be in a position of “skill building.”

Skill building is one of the only things that you should “always” be focused upon in your trading process. The skill building formula is P + ER + FL + H where P = protocols (strategies, procedures, set-ups and rules); ER = effective routines (making your behavior consistent – erratic behavior diminishes to the point of destruction consistent follow-though); FL = feedback loop (where you measure, verify and document whether or not your protocols and routines are providing the expected hit rate); and H = habituation (taking the entire process and repeating it religiously until it has become unconscious competence – this is where you have developed capacity for emotional strength and endurance to do what is in the interest of your highest and best trader). Employing the skill building formula is where you have taken the process of trading and mastered it. This is what consistently successful trading is about; that is, process mastery. Trading moment to moment is not about P&L even though it is true that you trade to increase your capital. Process mastery cannot be achieved without the accompanying supportive mindset. Your mindset is the sum total of your thinking (beliefs, values, and internal conversations), your emotions, and your behavior. All three of these variables (T+E+B) are intimately involved in your mindset and your results are direct reflections of your mindset.

So, if you are committed to doing your best in order to make money in your trading process, you must de-focus your attention from the money as you trade and intentionally master your trading process. This necessarily means that you must develop your mindset. You must become and remain self-aware so that you are able to increase your mindfulness of your thoughts, emotions and behaviors. You must create consistency in your mechanical data (everything that relates to the mechanics of the trade – your preparation, planning and execution); and in your internal data (learning mental and emotional tools to manage your thoughts, emotions and behavior) in order to develop capacity for emotional strength and endurance during the trade. This process is no small order and it takes a willingness to be uncomfortable in order to grow and develop the necessary capacity for emotional and strength and endurance. But, if you believe in yourself and take it one step at a time, you’ll get that prize…the ability to trust in your plan, trade your plan, and move on when the trade is over.

There are far too many traders that are losing large percentages of their trading portfolio in the markets. They know that they are in trouble; they know that they need to change, and they find themselves doing the same thing over and over and experiencing the same exasperation and pain. Furthermore, many don’t have a clue as to what is driving the behavior that is producing the unwanted results. Also, a significant number of those that are losing in this way are in denial; in other words they know that they are in trouble but aren’t willing to dig deep to find out the problem. They hope and wish for a magic bullet or Holy Grail in the form of an indicator that will change “everything.” Well, there is no tooth fairy, and there is no “outside” force that is going to make it all better. It is all “inside” you.   You see, you must first be aware of your issues, improvable and weaknesses before you can effectively address them. Hence, you can’t change what you can’t face, and you can’t face what you don’t know.

In order to seize the results and outcomes you want, you must have clarity of thought, clarity of vision and consistent effective behavior. And, of course, your prior programming has enormous importance to the rubric of daily activity you wade through to achieve those results. But, before you can think, see and do with effectiveness, you must be aware of your underlying self-sabotaging rules. One of the ways to become better acquainted with yourself, especially some of those deeply held myths and unconscious beliefs that drive your thinking, perception and behavior, is to write about your experiences using a thought journal. A thought journal is designed to identify your internal trade date (thoughts, emotions and beliefs), this is different from a trade journal, which is designed to identify the mechanical data of your trade (charts, technical analysis, news, etc.). Through the thought journal, you gain insight into “why” you have not developed a coherent trading business plan or haven’t followed the plan that you’ve created. The thought journal reveals why you violated your rules or why you haven’t established any. You’ll have a better understanding of “why” you haven’t established a money management strategy or aren’t following it when oversized positions are entered leading to the mother-of-all-draw downs. Once you learn the why, you will be in a better position to change your behavior. That doesn’t mean that you can’t change faulty behavior unless it is completely analyzed and laid out; yes, there are those who only need an example of effective behavior, and they are off and running. However, many if not most, traders are plagued with errant emotions; that is, the abject fear and rampant greed that hogties so many traders that know what to do but can’t do it because of those same emotions and faulty thinking.

Once you have identified and recognized a faulty mental model or MAP (the underlying beliefs and values driving the emotions), it’s time to evaluate the extent to which it disrupts your perception of reality. Next, you must restructure or modify the mental model or mythology in order to “see” clearly. Results on any one trade must be evaluated from a new point of view. Otherwise, you can’t know with certainty that you properly executed the trade based upon the chart. If you don’t know what went wrong, you can’t change it, and therefore you can’t duplicate positive action or prevent negative action. Of course, you want to accumulate profit, and that is best done over time by skill building and learning to do more right things than wrong things, as well as possessing the knowledge to know the difference. It’s important to redefine how you measure results. It’s not about making money in any one trade; it’s about remaining consistent with what matters most and that is your rules and your trade plan and consistently following them … religiously. If money is made by accident, it’s nearly like taking a loss, because you didn’t learn from the trade and therefore you can’t duplicate the behavior.

If evaluation of the trade is based solely P & L then the value has been placed on a transient result and not a principle. In and of itself, money is only a medium. It is not grounded in a consistent truth or foundation. It is dependent upon consensus for its value. Conversely, processes based on principles, that is, a guiding fundamental truth, promote a deep common denominator forging a pathway for creating consistent results. And what are principles? They are market knowledge, a trading business plan, a plan for each entry, money and risk management, appropriate position sizing, and of course discipline. Processes based on principles produce the kind of results that stem from accurately identifying the reality of the chart or price action in order to be on the right side of the order flow. For instance, the principle of self-disciplined learning and awareness of how closely you accurately perceive the reality of the trade (a market principle) as opposed to the inconsistent distortion based upon seeing what you want to see (an ineffective behavior based upon internal mythology).