Emotional pivots are those times before, during and after the trade, when an event (anything that gets your attention) like either something that you see in the chart or the market volatility, triggers a thought that is often unconscious (out of your awareness) prompting an emotional response, like severe anxiety. Just as chart pivot points tell a story about the previous days mechanical data, which can be helpful in your analysis of the current price action and subsequent support and resistance; so having an understanding of your emotional pivots can tell a story about your internal data and patterns of thinking, feeling and doing related to a market event that is reflected in the charts.

Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. This was a nice simple way for floor traders to have some idea of where the market was heading during the course of the day with only a few simple calculations. The pivot point is the level at which the market direction changes for the day. Using some simple arithmetic and the previous day’s high, low and close, a series of points are derived. These points can be critical support and resistance levels. The pivot level, support and resistance levels calculated from that are collectively known as pivot levels.

When you become aware and gain knowledge (internal data) about your emotional pivots associated with market and chart fluctuations, you will be in a better position to be proactive in addressing these spikes. Intense anxiety propels you outside of your comfort zone. Being outside of your comfort zone means that you are prone to a behavior that is instigated to get you back inside your comfort zone; for example, an inability to pull the trigger and enter the trade. When this happens, it is important to your game to use a mental/emotional tool to turn down that emotional intensity. By turning down the emotional intensity, you are also reversing what could, if left unregulated, transition into an emotional trend, which quite often will spiral out of control as the trading session progresses. Additionally, when you turn down the emotional intensity, you are better able to focus without the emotional and thought noise that is so distracting, which often leads to distorted judgment; taking you further off course.

How, you might ask, can you increase your awareness of emotional pivots? Well, one way is through writing down all the thoughts and emotions associated with those times when you did something that you said you wouldn’t do, or didn’t do something that you said you would. In other words you didn’t follow your trading rules and you got results that you didn’t want. This type of internal data documentation focuses on the past. For example, what did you just do, and it is usually behavior based. Documenting what you did, or did not do, will over time produce the patterns of thinking and emotions that drove that unwanted behavior. You must change your thoughts to change your behavior. As time goes on you’ll want to identify the emotional pivot as it happens. You’ll want to be not only proactive in what you are doing about the pattern; you’ll also want to be “preemptive.” Preemptive means that through documenting the internal data you not only have increased your self-awareness enough to be in the moment and sensitive to the fact that you are feeling negative emotional intensity; but you’ll be poised to use a mental/emotional tool (like guided imagery, affirmations or relaxation technique) to preempt and take-out or neutralize the emotions as they happen. It will no longer be acceptable to allow this pattern to continue; and you’ll be willing to be uncomfortable in the service of your highest and best goals; that is, your A-Game.

Know your emotional pivots. You can’t change what you can’t face; and you can’t face what you don’t know. Awareness is crucial to changing your thoughts and emotions in order to change your behavior, which will in turn bring on different results. Let’s face it, results is the name of the game and if you’re not getting the results in your trading that you want, then you must begin to change something in your behavior. Learn to be proactive and preemptive as you identify your emotional pivots. Use your journal to document the internal data and change your negative patterns of thinking, feeling and doing one issue at a time.

Before you can actually change, you must first take stock of what is going on in your process and begin to identify what about your trading is not working. In other words, what are you doing that is not getting you the results that you want. This necessarily means that you must increase your awareness of those things that you’re doing that are getting in the way of the desired results; and the emotions that are driving those behaviors. Additionally, you must identify the thoughts, or more specifically the “limiting and irrational beliefs” behind the thoughts that are causing the errant emotions like fear, anger, worry, doubt and greed that are literally driving the things like “rule violations” that you are doing. Now, one of the keys to all of this is to “journalize” a verbalization of the documentation process. I just know that all of you reading this missive are documenting your trades…right?…rrriiiiggghhht. Unfortunately, the opposite is true. There are droves of you out there that do not memorialize your trading process at all. Sure, some of you will document your mechanical data (everything that has to do with the mechanics of the trade like planning, news, charting, entries, targets, stops and exits). That is a good start, but as so many of you know by now you must “journalize” your internal data as well (the thoughts about what is happening inside of your head and your heart”). Your internal data is no more and certainly no less important than your mechanical data; but, so many of you don’t trade like internal thoughts and emotions are as critical to your trading success. You must track and document each of the data that are expressed in your trades as you become aware of them. Then write down a synopsis in bullet form of what you were thinking when you moved that stop or chased that trade and the emotions that were prompted and the behavior that ensued. Each time that you do this you add to the data and with time you are able to identify the negative and discipline destroying patterns you will come closer to interrupting them as soon as they raise their ugly head in the trade. When that happens you are on your way to developing the capacity for emotional strength and endurance while in the trader trenches.

Becoming more aware of what gets between you and the results you want also means that you become more sensitive to the signals (internal thoughts, emotions, feelings,) that prompt rule violations. Becoming more sensitive to the signals means that you must stop and “listen” to your body. It means that you must be willing to invest the time and energy to get to know you. It means that you must be willing to get outside of your comfort zone and be uncomfortable in the service of your highest and best goals. I remember one of my students decided not to involve themselves in an exercise in one of my classes. When I asked him why he had not done the exercise he said that he didn’t want to “remember” the trade and go there. I told him; “…but, that is exactly the point!” You must be willing to confront the unpleasant thoughts, emotions and memories to find out what is at the core of your conflicts, bad patterns and limiting beliefs. What you resist persists. Using mindful practices like self-reflection, introspection, meditation, and just asking the question “why” after each answer to the question “what is going on with me right now?” will help you immensely in your quest to connect with your highest and best trader.

I often write about change and that’s because if you are getting results that you don’t want you “must” change something. However, if you don’t have a clue as to what to change then it’s an uphill battle and potentially “hit-and-miss” to find out what is actually causing the problems. So, get yourself out of that vicious cycle where your money is circling down the drain. You have felt the pain of being out-of-control and getting results that you don’t want. It’s time to take a deep breath and do what you must do by having and using a documentation process to journalize your internal data and to log your mechanical data in order to find out where they are congruent and where they are at cross purposes.

When you place unnecessary pressures on your trading process, it causes confusion, distorted judgment and jumbled thinking; not to mention the added negative emotions of anxiety, fear and worry. The pressures of “needing” to make a big profit, or having to be right, or telling yourself that you simply “can’t” lose, are prescriptions for high stress levels; and they often destroy your ability to trade with your highest and best trader … your A-Game.

Usually the first thing that you’ll notice when in the midst of self-induced pressure is the feelings/emotions that it generates. You might notice that your stomach has butterflies, or your neck is stiff, or you’re feeling anxious and fearful as you dread what might happen in the trade. One thing to be aware of is that just because you’ve noticed this first that doesn’t mean that the feelings came first. Actually, the pressure began with a bias, belief or statement such as; “I’ve got to make up for that last loss and since this looks like a good trade I’m going to put on more size.” This statement in many cases is out of your awareness…it is unconscious to you; but it will prompt you to “feel” those butterflies or that anxiety because part of you knows that you are violating your commitments and placing yourself at greater risk. So, when you notice this feeling or emotion, stop what you are doing. This is a “signal” that a “pattern” of thinking, feeling and doing is emerging. In other words, you have done this before. So you must “interrupt” the pattern by stopping. You might take some deep breaths, count to 10, leave the room momentarily, change your posture or do something to shake you out of that bad habit. Now, it doesn’t end there. Once you have removed yourself from this “automatic” way of reacting in this situation; the next thing is to begin to identify what bias, belief, or statements are prompting these feelings/emotions.   Ask yourself what are you telling yourself or believing to feel that way? This gives you more of the information that you need to address this pattern so that you eventually resolve it. You can begin to discover the motivation…the bias or belief…and challenge/neutralize/change it. Also, you’ll want to identify the facts of the situation. In other words, what is really going on? In the case of thinking that you need to double your size in order to make up for the last loss, the reality is that you have rules about risk that are there to protect you…that’s why they are there.   There’s more. After you have determined fact from fiction, then you’ll want to challenge the conclusion about violating that rule and pressuring yourself. If before you concluded that it was OK to double your size because you “might” win; you can come up with an alternative interpretation; for instance, the new interpretation might be “when I violate those rules I am undermining my ability to become successful.” Now, after you are more stable, have interrupted and challenged the pattern that was at the core of the pressure then you can choose a response that is in keeping with your A-Game, your highest and best trader.

Pressure and stress are a part of living. You are not going to do away with them, but you can manage the pressure that you level on yourself and maintain a focus on thoughts and behaviors that will take you to the results that you want. It all begins with becoming self-aware and monitoring what’s going on in your head and in your heart. In other words you must be deliberate in how you approach your trading. If you are operating in a fog and if you are doing things by default; that is, not thinking about what you are doing and barreling forward throwing caution to the wind, then you are destined for lots of results that you don’t want. Make sure that you are giving yourself the edge that you deserve and that you are creating the success that you want.

It’s common to be conflicted, whether buying a burger, deciding on a movie, or trying to get up in the morning. While trading it happens all too often as well, for instance, when getting caught in the middle of one of your parts saying go on move that stop before you get stopped out for a loss; while another internal voice is desperately attempting to keep you from violating one of your rules…again. Consider the number of times you have promised that you would develop a Business Trade Plan, or that you would use your Thought Journal and Trade Log with greater frequency only to fail to follow-through over and over. It’s very difficult to remain focused on what matters most when you are being pulled in opposite directions.

It’s helpful to know why conflict is so prevalent in your system and why it’s so difficult to stay on purpose and on target when the chaos presents itself. Parts are simply programmed patterns of thinking, feeling and doing that encompass a section of your life. These programmed patterns are downloaded from your parents and other influential people in your life from the earliest ages when significant events, positive or negative, pleasurable or painful, happened to you.   For example, a child who is told that he is dumb, and who later becomes embarrassed in the classroom by the teacher, and later still is laughed at by his peers upon making a mistake in a recital might develop a programmed pattern about his abilities. This programmed pattern of thinking (I am not smart), feeling (anxiety associated with leaning) and doing (making frequent mistakes due to the distractions driven by the emotions) can become a blueprint of how to respond. In other words, as you grew these downloaded programs became reinforced when similar events happened. Actually, your personality is a mixture of different sub-personalities or parts that have “fired” together and therefore they have “wired” together thereby forming the programmed patterns.

So, veering off the planned course can become pretty easy when your parts begin to argue very different points of view. What is important first is to identify where you want to go. As Stephen Covey says, “Begin with the end in mind.” What are the results you want to have created with your trading?   After you have identified the aim then monitor your thinking, feeling and doing. However, you can’t monitor your thinking, emotions and behavior unless you are self-aware. You must be sensitive to what is taking you out of your comfort zone because this is normally the first discernable signal that you are in conflict. This signal is usually a feeling (like butterflies in the stomach) or emotional anxiety when you are about to violate a rule like moving a stop. When you “feel” the signal ask yourself: What must I be telling myself to feel this way? Then wait for your subconscious to answer. Often, you’ll be able to identify the faulty thought(s) behind the feeling or emotion, as in, “… I don’t want the price action to take me out and then go in my direction.” At this point you can document the thought, and then design a response that is in keeping with your highest and best goals. You are now more likely to be in alignment rather than in conflict. After documenting this process over time, programmed patterns will emerge. As they appear you can confront the thinking, feeling and doing one issue at a time.

Most people live life by default, from unconscious incompetence (you don’t know what you don’t know). The successful trader is prepared to design his or her responses and avoid the knee-jerk reaction by documenting the responses that are rendering unwanted results. It takes diligence to stay on track, but the more you document the conflicted thinking the less intensity and power it has to bring up negative feelings and emotions. You’ll begin to decrease the chatter from the ego-driven parts that are causing the veering and you will concurrently increase your supportive internal dialogue. Once you start doing that you’ll be closer to alignment; that is, having your parts go in the same direction and for the same goals.

Your A-Game is dependent on your congruency. To have your best available in the trader trenches is required for consistent success. Half-hearted attempts at remaining focused will only leave you vulnerable to chaotic unconscious conversations that will lead eventually to bad decisions.

Has this ever happened to you?  You’ve just ended your trading session by closing your last trade.  You then look over your 6 or 7 trades to determine how well you did; but what you see sends shivers down your spine.  There in front of you is trade after trade where you have violated rule after rule with loss after loss and the carnage is stunning.  As you think about how this happened it is as though a fog had settled around you and a phantom hand had reached down and taken control of your mouse.  That phantom hand belongs to your rep.  If you ever become aware that he/she is trading your account, then fire him/her right away.  You do not want this guy anywhere near your account.  He is the ego driven part of you.  The part that has no issues, never is out of line, knows everything all the time and is … a “sham.” 

Actually, the rep is a very fearful, distracted and hubris laden part of you that is easily activated when you become caught up in emerging bad patterns of thinking, feeling and doing that take you further and further outside of your comfort zone.  Now, the comfort zone is where many traders live.  They are easily knocked out of the comfort zone and the further they are from it the greater the negative emotions and the more likely they are to be taken hostage by the rep.  You see, the rep is an outgrowth of your ego created defense mechanisms.  These mechanisms are designed to protect you from the pain of humiliation, shame and emotionally difficult states.  States that are often tied to events and limiting/irrational beliefs/biases that act like an over-zealous security guard making sure that you are not put in a painful position again; which of course highly unlikely.  The thing is that being uncomfortable is so often directly related to an event or situation which by definition is challenging to your sense of self, your equilibrium, your self-esteem and your confidence.  This is what causes otherwise very knowledgeable and capable traders to abandon rules and breech commitments which in turn completely unravels the ability to maintain focus on what matters most.  Self-discipline becomes a thing of the past given this scenario; and when that happens the system implodes careening the trader into an abyss of impulsive moves, erratic entries and misguided analysis. 

So, what to do when you find yourself being taken over by your negative and irrational thinking, feeling and doing (otherwise known as the rep)?  There are a number of ways to arm yourself against such an onslaught; here are a few.  Monitor your thinking in order to identify destructive and debilitating thoughts that severely distract you from the appointed objectives.  When you have discovered that your thinking is moving down that damaging path, stop moving and change your thought direction by changing the negative thought into a positive one.  For example, if you become aware of the thought, “I should move my stop because I don’t want to lose…that would mean that I am a bad trader”; change it to something like “…loses are a cost of trading and my trading skill is a reflection of my ability to trade my plan, follow my rules and keep my commitments.”   Secondly, manage your emotional state by using very simple deep breathing tools which engage the parasympathetic nervous system and induce greater relaxation and calm in order to refocus on what matters most.  Thirdly, use appreciative inquiry to gently question yourself with regard to any inaccurate assumptions or faulty conclusions surrounding the trade.  Finally, document your self-reflection questions in order to over time begin to identify issues and bad patterns that are getting between you and the results that you want.  What gets measured gets improved.  

 The above are just a few of a long list of tools and techniques to keep your “rep” confined and from wreaking havoc in your trading process.  It is imperative to bring and keep your highest and best trader to the platform in order to trade in the interests of your highest and best self.