Have you ever found yourself feeling like you needed to be right; especially in a trade? Well, you’re not alone. You may have been in a long futures trade where the price action pulled back and you found yourself with a knot in the pit of your stomach thinking that if you lose and you are “wrong” then that means that you’re a poor trader. This issue has to be among those that affect the widest swath of folks and among the highest frequency of occurrence as it rears its ugly head. Yes, it is ugly because the need to be right throws monkey wrenches into the results that traders want. The need to be right becomes noise and it distracts the trader from what matters most and it distorts judgment while in the trade as well. The need to be right is the flip side of the fear of being wrong. Fritz Kunkel, author and philosopher wrote that the fear of being wrong is one of the “Four Fatal Fears” that plagues people in all walks of life and surrounding all types of endeavors. The other three fatal fears are: The fear of rejection and the need associated with this fear is the need to be liked. Moving on there is the fear of emotional discomfort which would include the fear of vulnerability, intimacy, and embarrassment. The need associated with emotional discomfort is, you guessed it, the need to be emotionally comfortable. Lastly, there is the need to win which is driven by the fear of failure. All of these fears have a number of things in common and among them is that they are all derivatives of ego. In other words, when you have a fear of failure which is connected to the need to be seen as a winner you are in the throes of the ego’s desire for self-promotion and self-protection which on the face of it doesn’t seem to be so bad. But, here’s the rub; self-promotion as an ego function is about hubris, an inflated sense of self and the desire to have something that you have not earned. Self-protection as an ego function is the desire to avoid all pain, especially the pain that comes from the challenge of putting in the effort, determination and sweat of learning and building the skills associated with being a consistently successful trader.

So, we are talking about the big ego. You may know someone who fits this moniker. Generally speaking when someone is saddled with this label it means that the individual is perceived as conceited, self-centered, perfectionistic, having to always be right, having difficulty accepting criticism, self-absorbed or arrogant. Of course they may exhibit all or none of these negative traits, but more than likely they may have an inflated opinion of themselves that gets between them and healthy relationships; one of which being their relationship with the market as they trade. The person in question may be a good guy overall, it’s just that they may be so caught up in the aforementioned self-protection (defense mechanisms that thwart an honest interaction with the environment) or self-promotion (inflated notions of one’s importance over others) that they become distracted and begin to distort data. Often, the individual that suffers from ego inflation issues also has a part of themselves that is not only aware that there are issues, but actually attempts to override the self-sabotaging behavior that develops as an outcome of self-defeating emotions like anger, fear, anxiety, stubbornness and impatience. These emotions make mindful execution of the trade all but impossible causing impulsive entries, chasing trades, moving stops and other unwanted rule violations.

The financial markets are neutral representations of an all the hopes, fears, and decisions of everyone executing a trade. When you trade you slip metaphorically into the skin of the market and see yourself in its reflection. And, of course every blemish, character flaw and weakness that you have is in that reflection, because you “express yourself” while in the markets. The successful trader can “feel the markets” through insight and intuition that has been developed through countless hours of observing market charts; but she does not get lost in those feelings. The successful trader has an intimate understanding of the delicate balance between emotional intelligence, i.e., managing emotional volatility through protocols, routines and habits and tracking the mechanical data of the markets. They focus on doing the “right” things habitually (following trading plans, rules, money management and position sizing) as if their life depended upon it…and their trading life does depend upon it. In this way they set themselves up to get the right results habitually. They know that consistent successful execution is intimately related to mastering this process of focusing on what matters most. It becomes a Zen of trading by losing the ego attachment and using mind management tools that engage the subconscious to work “for” them rather than against them. This is accomplished by redefining the relationship to the trade. Your relationship to the trade becomes accentuated as in a business transaction with another human being; the objective is to be in the flow. Being in the flow means that you develop a detached interaction where you are not attempting to get each and every tick of a move, but on the contrary aiming to come away having executed well with a good return. To be and stay in the flow you must be self-aware and “watch” what you are doing. You want to activate your “internal observer” and this is accomplished by relaxing at every opportunity and creating the habit of “being in the moment; fully present and in the Now of the trade.” In this way you can maintain a fierce focus on what matters most and promote a shift from fear, frustration, irritation, and stressful tension to relaxation, mental clarity, and self-confidence. Doing this you will be better positioned to do the “right” thing in the trade.

Trading is simple, but not easy. The difficulty, as trader upon trader has shared over the years, has to do with errant emotions like fear and greed that often stop the well-meaning trader in her tracks and drive rule violations. Negative default patterns that get triggered are like computer viruses in your body. They take over your system and end up causing results that you don’t want. Negative default patterns are programs that are connected to beliefs, biases and values and they are often not in your best interests. Programming is created from your earliest days of being with family, teachers, counselors, coaches, clergy etc. These programs represent all that you have learned and or experienced from zero years up to and including the present moment. It is for these reasons that when they are triggered default programs keep rolling until the situation is over or until interrupted. Of course, all programming is not negative or bad…thank goodness. It is important to identify and modify negative default patterns that are contrary to getting the results that you want with your trades. Trading is counter-intuitive which greatly adds to the challenges. For example, humans are loss averse. We are much more opposed to giving up something than we are drawn to acquiring it. Losses tend to be twice as powerful as suggested by research, as gains. This bias can cause you to move a stop when it is threatened by the price action or to be immobile in the face of pulling the trigger to enter a trade.

It is very difficult to modify a negative default pattern if you are not aware of the thoughts, emotions and behaviors that comprise it… especially if it’s deeply entrenched. In most cases you’ve got to become aware of them first. Default patterns are inertial, meaning that whatever your baseline behavior there is a great internal pressure to maintain that baseline behavior.   You can’t change what you can’t face, and you can’t face what you don’t know. Like an iceberg, a greater part of everything that goes on in your brain and mind is out of your awareness. This is especially true when core beliefs, biases and values are involved; and this is where the motivation for the conscious thoughts is generated. Consequently, you must be willing to use introspection and self-reflection by keeping a trade log and thought journal in order to measure, verify and document internal data (thoughts, emotions and behaviors) that greatly impact upon your ability to plan your trade, trade your plan and keep your trading commitments. You must become self-aware; that is, you want to monitor your thinking, feeling and doing. Notice that self-awareness is far from being self-absorbed. To be self-absorbed is an ego function, which is driven by defensiveness, insecurity and fear-based behavior. Self-awareness will increase self-knowledge and understanding by finding out those limiting beliefs, biases and values so that you can work on changing them.

One of the ways to increase self-awareness is to take your emotional temperature from time to time; especially when you are in a trade. Feelings, either in your body (as butterflies in your stomach) or emotions like fear are often the first indications that something is not going well. For example, if you are in a trade and notice those butterflies or a mounting fear and a few moments later get the urge to move a stop, the first noticeable signal that something’s amiss would be the feeling/emotion. Simply put, it means that you are checking in with yourself to see whether you are too hot emotionally (angry, excited, greedy or anxious to name a few), which can lead to impulsive behavior; or too emotionally cold (boredom, fear, worry, doubt, etc.) that can prompt you to freeze in a trading situation or act out of exasperation.

When you notice the uncomfortable feeling/emotion there is an opportunity to “interrupt the emerging negative default pattern” that has been initiated by what got your attention; such as the price action drifting toward your stop. When this happens take a deep breath and count to 10 while simultaneously changing your physical position. Then ask yourself this question: What am I telling myself or believing to feel this (fluttering stomach, tension, anxiety, fear, etc.). Once you identify your internal dialogue, you can begin to deal with it by challenging the negative thought or limiting belief. Ask yourself: Is that true, is that absolutely true? Interrupting a negative default pattern as it is being triggered is an enormously effective way to start taking back control. Self-awareness is one of the first steps to self-management and self-discipline. Become deliberate in what you do by becoming aware of and deliberate about what you think. Then you can design your responses rather than operating by default.

Trading is psychological warfare. The difficulty stems from the myriad ways that the trading process challenges your weaknesses, character flaws and blemishes. Trading requires self-limits and personal accountability. Your best trader, your A-Game is the only acceptable position to trade from. Otherwise you are placing yourself under impractical, unacceptable and unsustainable risk. Don’t allow yourself to continue to trade under the influence of negative default patterns. Identify, root-out, neutralize and replace negative default. Protect your capital.

What happens when you get the urge to do something in your trading that could otherwise be termed “bone-headed?” You may have done something like that as recent as your last trade. It’s when you know that the urge to “move that stop” or to “chase that trade” is a violation of your rules; but you do it anyway. Have you ever noticed that there was a small voice, maybe even a whispered voice, deep down in your head that said, “Pssst, yeah, go ahead and do it, you don’t want to miss out … do you?” That voice is coming from your ego and your ego can get you in a world of trouble with your trading.

Have you ever heard someone comment on another person’s behavior by saying that they have a big ego? What does it mean? Generally speaking when someone is saddled with this label it means that the individual is perceived as conceited, self-centered, perfectionistic, having to always be right, having difficulty accepting criticism, self-absorbed or arrogant. Of course they may exhibit all or none of these negative traits, but more than likely they may have an inflated opinion of themselves that gets between them and healthy relationships; one of which being their relationship with the market as they trade. The person in question may be a good guy overall, it’s just that they may be so caught up in self-protection (defense mechanisms that thwart an honest interaction with the environment) or self-promotion (inflated notions of one’s importance over others) that they become distracted and begin to distort data. Often, the individual that suffers from ego inflation issues also has a part of themselves that is not only aware that there are issues, but actually attempts to override the self-sabotaging behavior that develops as an outcome of self-defeating emotions like anger, fear, anxiety, stubbornness and impatience. It’s tantamount to having different parts of yourself show up in challenging situations that make mindful execution of the trade all but impossible causing impulsive entries, chasing trades, moving stops and other unwanted rule violations.

You don’t have to be mentally ill to have different personalities reside in your body. Actually, it is quite normal to have various “parts” of yourself emerge at different times depending on what is going on at the moment. If fact, these parts of the self speak different languages and see different things as well; which is why you may wonder how you made a glaring mistake after becoming seduced by illusions of what the charts were really showing in the wake of a loss. This kind of personal and emotional volatility can wreck your trading account. Similar to the market, personal volatility is a direct reflection of the emerging emotions of the masses as they trade furiously, impulsively, compulsively and at times capriciously. The market is continually sending messages; messages about volume, momentum, and volatility. But, those messages are best captured by first attending to your own volatility so that you can see the charts as they are.

The financial markets are neutral representations of an all the hopes, fears, and decisions of everyone executing a trade. When you trade you slip metaphorically into the skin of the market and see yourself in its reflection. And, of course every blemish, character flaw and weakness that you have is in that reflection, because you “express yourself” while in the markets. The successful trader can “feel the markets” through insight and intuition that has been developed through countless hours of observing market charts; but she does not get lost in those feelings. The successful trader has an intimate understanding of the delicate balance between emotional intelligence, i.e., managing emotional volatility through protocols, routines and habits and tracking the mechanical data of the markets. They focus on doing the “right” things habitually (following trading plans, rules, money management and position sizing) as if their life depended upon it…and their trading life does depend upon it. In this way they set themselves up to get the right results habitually. They know that consistent successful execution is intimately related to mastering this process of focusing on what matters most. It becomes a Zen of trading by losing the ego attachment and using mind management tools that engage the subconscious to work “for” them rather than against them. This is accomplished by redefining the relationship to the trade. Your relationship to the trade becomes accentuated as in a business transaction with another human being; the objective is to be in the flow. Being in the flow means that you develop a detached interaction where you are not attempting to get each and every tick of a move, but on the contrary aiming to come away having executed well with a good return. To be and stay in the flow you must be self-aware and “watch” what you are doing. You want to activate your “internal observer” and this is accomplished by relaxing at every opportunity and creating the habit of “being in the moment; fully present and in the Now of the trade.” In this way you can maintain a fierce focus on what matters most and promote a shift from fear, frustration, irritation, and stressful tension to relaxation, mental clarity, and self-confidence. Doing this you will be better positioned to do the “right” thing in the trade. There are many, many internal resources that you have, some of which, you may not even be aware. Internal resources like for instance, the ability to discern chart details, see the big picture of the trade, initiate a mindfulness regarding supportive beliefs and others. But, it is very difficult to access and activate internal resources without first ensuring that your internal observer is online.

Activating the internal observer can be accomplished by doing the following:

• Get up out of your chair and do something different; you might drop down and give yourself twenty push-ups
• When you stand up again straighten your body
• Take a good stretch
• Take a few deep breaths, in this way you are dilating your arteries and increasing blood flow to your brain causing you to be more alert
• By increasing oxygen to the brain and muscles you are slowing things down and initiating a “Relaxation Response.”

When ego investment and emotion rise, trading becomes a reflection of the ego, in other words defensive reactions to neutral events and inflated self-seducing illusions that really distort reality. Overly invested egos create a sort of delusion, and consequently, what you thought was a great trade was in reality a “fake out” or something that came from internal bias not the objective reality of the charts. For example, Jack, a novice trader, while in a position on the YM E-mini futures, violated his rules and failed to maintain a hard stop. It was on a day when the YM lost over 300 points. The second rule that he violated was to “think” that the ATR (Average True Range) had been breached and that since its average daily range was violated, it would “come back.” The third rule he broke, after finally closing out of the trade for a significant loss, was to believe that increasing his position size and essentially “doubling down” would bring him back to break-even in another trade attempt. Now this is a prime example of delusional, ego fueled thinking. The analysis was distorted by the emotional upheaval taking place after incurring the original loss.

So, your ego can really get you into hot water. You’ll want to get the internal observer involved early and often by being self-aware and wary of ego driven tendencies that come from unsupportive thoughts and emotions. Trading with your highest and best interests in mind is critical to your success. This hinges on promoting a mindset that uses mental and emotional tools and techniques that are designed to shake you out of that self-sabotaging delusion. Remember; as you trade it is important to identify what part of you is showing up to trade your account. Is it the strong, healthy, grounded, centered and focused part; or is it the fearful, frazzled, and fragmented part that is torn by ego driven thoughts and emotions? Monitoring your ego can keep you from getting into trade trouble.

Trading psychology is in part designed to support you to trade in a highly disciplined fashion; that is, to be aligned in body, mind and emotions, fiercely focused with a laser precision on what matters most and to be centered, grounded and dedicated to the trade. This has a lot to do with being in the now. One of the ways that being in the moment supports your trading is that it refines what you are paying attention to. You are more likely to catch issues that may be brewing with the indicators, the price action, or the time frame. Additionally, your plan has a better chance of being strategic. You are more likely to have used information like trend and price patterns that are relevant. Furthermore, that plan is more likely to be implemented once you have finished writing it. Also, it is probable that you have anticipated potential obstacles and red flags, when you are in the now of the trade that may take you out of the trade or cause you to manage it differently. You are always responsible and accountable for your results…whether you liked them or not. So, it is incumbent on you to begin to track potential weak spots and issues, to document the trade experience and begin to address them one issue and one trade at a time. Again this is facilitated by being in the now of the trade.

Being in the moment is an exceptional position to take and although most people would agree with the underlying premise, if you observed them trade, they would not be resonating with the moment, they would be ruminating about the last trade, a rule violation, or some other concern, or they are fixated on a trade they have yet to implement with revenge in their eyes while stewing in the anger that is fueling the desire to put on that revenge trade. Being in the moment requires you to pay attention to the task at hand and to remain on purpose. The beauty of this position lies in the fact that you will likely optimize your internal and external resources; that is, your critical thinking skills and your ability to develop capacity for strength and endurance in the trade.   Let’s face it, your facility for managing your emotions is critical to staying on the right side of the order flow. It can’t be over-stated that mental and emotional distractions are the most destructive of the internal concerns that impact upon your process.

To be in the now of the trade you must first be self-aware. This is a function of being rooted, grounded and centered in this moment. Self-awareness is not to be confused with being self-absorbed. Self-abortion is an ego function where you are in self-promotion (conceit and hubris driven) and/or self-protection (fear and greed driven). Self-absorbed means that you are more focused on how you are perceived by others, you are so afraid of being judged that it distracts you from the important matters. You are not willing to be vulnerable. Vulnerability is important for the development of curiosity because being curious opens you up to accepting appropriate calculated risk which is an investment in you and your outcomes. This is the ability to risk failure to test what will happen in a given situation. It is trial and error. Great achievers are prepared to fail because they know that the return on investment is more information and data. Information and data are crucial to increasing your knowledge, if you increase your knowledge you will learn more, and if you learn more you will do more and if you do more then you will be more. This is a prescription for growth and development which inevitably leads to becoming consistently successful; that is, getting the results that you want. So, when you are self-aware you are becoming more aware of what is going on in your system. Again, you are gaining valuable data. By monitoring your thoughts and your emotional state you can position yourself to shift from being frustrated, frazzled and fragmented into being centered grounded and focused. This shift is the secret sauce of being in the now of the trade. You are not only able to tolerate errant emotions like fear, greed, anger, anxiety, doubt and worry by being deliberate in going forward in a step-by-step fashion; you are also “designing” the state that you want to be in. This is a REALLY big point. When you are designing your mental states you are choosing how you want to feel. Yes, this is not only possible but it is a powerful skill that is a lynchpin for effective trading. Armed with this capability you can potentially overcome “any” obstacle that presents itself in your path. Why? Because rather than becoming overwhelmed by “doom and gloom” thinking you can bring your absolute best to bear on the situation; your calm resolute nature, your clear thinking, your empowering beliefs, your fierce focus, your decisive demeanor, and your passion. When you are measured in your movements and firmly embedded in the now you are ready to make it happen. Your alignment is predicated upon being in the now. When you are in the now, you are more likely to be congruent in thoughts, beliefs, identity, emotions, attitudes, values and behavior. Of course, you must continually monitor your thoughts, emotions, feelings and behavior to first instill and secondly take advantage of this position.

To be in the now is not easy, it takes diligence, vigilance and a willingness to train your mind. One of the ways to cultivate the capacity to be in the now of the trade is to develop an appreciation for and respect of this moment.

So many traders get caught in a spiral of issues that are driven by a bad pattern of thinking, believing, negative emotions and inconsistency. You can’t change what you can’t face and you can’t face what you don’t know. You must gain awareness of your unconscious limiting beliefs that drive unconscious conversations, which motivate behavior that is not in your best interest. The fact of the matter is that you are only aware of a small part of what is going on in your brain/mind. The largest part of your thinking is out of your awareness, or unconscious. See, the mind is like an iceberg; the tip is the only part that can be seen above the water line and comparatively speaking it is a very small part of the whole. The rest of the iceberg is huge and it is below the water line. Your consciousness is very similar. Your conscious thoughts are but a small portion of the mind, the overarching part of you that controls all of your involuntary behavior like breathing, heartbeats, cell function, growth, immune system, etc., is the sub-conscious, totally out of your awareness and so holds much of your thinking and beliefs. That is how it’s possible to have unconscious conversations with yourself that are driven by unconscious limiting beliefs. These limiting beliefs, for example, I’m not good enough or I don’t deserve to win; drive unconscious conversations like “… I shouldn’t enter this trade – but I want to because it might go in my direction – and I’ll be right– and I’ll make money– and I’ll feel good.” You’ve got to root out the limiting beliefs that drive the unconscious conversations by becoming aware of them through self-reflective journaling and introspection, uncovering level by level to find what’s lurking under there.

One of the practices that can help is called the Three “D” Process. The first D is for Discovery. After you have identified an issue, like chasing trades; you can ask yourself: a) what emotion am I feeling? b) When this happens what am I telling myself? c) What belief is causing this emotion and/or feeling? After you have identified an answer, don’t stop there, keep inquiring and pulling back layers by posing additional relevant questions. Asking good questions is a valuable routine and use of your time as it uses journaling, appreciative inquiry and good personal research.

The next D is for Decide. Once you have the information about your internal thoughts, emotions and beliefs that are driving behaviors and in turn creating results that you don’t want, it’s time to analyze and decide on tools that could be instrumental in helping you to overcome and resolve these issues. For instance, there are many reprogramming tools available to you like hypnosis, changing beliefs tool (a Neuro-Linguistic-Programming method), emotional Freedom Technique ( a tool derived from acupuncture that can help you lower and in most cases neutralize emotional tension), and anchoring (another Neuro-Linguistic Programming tool that uses your own powerful experiences to handle errant emotions in the moment). All of these tools and the people who teach them can be found on the internet or in your bookstore. Also, we can teach these and other tools, techniques and concepts designed to support you in successfully addressing your issues once you have identified them.

The last D is for Design. Most people live by default; that is, they just allow their thinking and therefore their doing to just happen. Also, when negative things happen, many people react automatically, which usually means that their behavior is driven by negative thoughts and limiting beliefs. When you do things automatically from negative thoughts and limiting beliefs, rarely do you get positive results. It is much more powerful to live and trade by deliberate design. Trading deliberately means that you identify what you want to accomplish; which in this instance involves personal change and addressing issues, then design your response by considering the tools you have available to you. Next, make sure that you know how to use the tool. Then devise a strategy for both the tools and when you will apply them.

Measuring your trading process as with anything where you want to excel, is a requirement; and it can’t be overstated. There are measurements of Mechanical Data (indicators, price action, time frames, money management and risk management, news, etc.) and as well, you must measure your Internal Data (your thoughts, emotions, limiting beliefs, biases, values and behaviors) both of which must be tracked and managed. All too often, traders focus most if not all of their efforts on mechanical data and miss the fact that whatever you do begins with what and how you think. Negative thinking and uncomfortable emotions have a way of throwing monkey wrenches into your trading works. So, the Three D process is a very important way to keep your trading on target.