Psychology

To be a professional stock trader, you will need to approach it much like any other serious profession. There tends to be a growth pattern that many traders experience when they embark on this journey. As long as you have enough support along the way, and have the determination to get there, you will get there. Lets see if you can relate to what other traders have experienced.

Most people have little experience in the stock market until we are in a strong bull market. Co-workers start to talk about all the money they are making and there tends to be euphoria in the office. Day after day, the environment in the office changes. People who have never previously talked about stocks are now talking about the "fortunes" they are making. You start to feel a sense that you are being left behind, so you ask one of them what stockbroker they use. They give you the name of a full commission broker, and you run to the broker's office to open an account.

When you arrive, everyone is really nice, well dressed and happy to take your money. The office is furnished with expensive furniture and art work, and you say to yourself that these people are making a ton of money and are going do the same for you.

After a short time, you realize that this particular broker is not making you the money you hoped for (you are losing money), so you ask around and you get the name of a new full commissioned broker. This process of switching brokers who lose you money happens several times. The good thing is, while this jumping form broker to broker is occurring, you are gaining knowledge. In fact, you are now looking at books on stock trading at the local bookstore, and starting to buy them.

Armed with this new knowledge, and the realization that you are paying someone else to lose money for you, you feel that you might as well do it yourself. Who knows, you are not going to do any worse then the broker.and you might do a lot better. You realize that not everyone in your office is using a full commission broker, so you switch to a discount broker, and get your recommendations on what to trade from your friends, relatives, web sites, etc. Despite your best efforts, you still, on average, lose money..or at best, don't make the returns you were hoping for. So, knowing that knowledge is the key to success, you run out and buy more books. Many of them you never read, but you have them. You subscribe to expensive newsletters, market tip hot lines, and start to buy expensive courses offered over the internet. You are now fully armed and dangerous.

You try the ideas outlined in the course, but they don't work for you., so you run out and buy a second course. Well, you are in the same boat as before.what you need is a seminar. So you attend the high priced seminar, you possibly had to fly there, and you sat through their infomercial for two days. You purchased their software before you left, coming home only to realize that you need a bigger and more powerful computer. "If you want to play with the big boys, you will need the tools they have." You keep grinding away, with less then desirable results. You sit in your front room watching television and there is a host of infomercials selling systems that light up like Christmas trees, promising you instant profits.Don't do it! Could all their testimonials be wrong. Well, the answer is no. Some people are making money with their systems...but not many.

If you have come full circle, then you are the bad horse (see home page).you will be a valuable asset to your colleagues on this site. Thank you for joining us. For those who haven't experienced any of this growth curve, your journey may be a little more difficult, but we will get through it together.

So, were is the truth in all this..here it comes.

To be a profitable trader, you will need to address three areas. First, you will need a proven system. For us, that will be the Wyckoff Method. Second, you will need a money management approach that will keep you from losing your money before you can start to make it. We will go over several methods under the Money Management section of the Home page. And finally, you will need to address the psychological aspects of trading, which is what we will do in this section.

So which of the three is the most important: the market approach, your money management, or the psychological aspects of trading?

Well, a good trader is said to be able to throw darts at the financial section of the newspaper, and make money. If that is true, it would imply that money management and psychology are the most important. Taking it a step further, you don't need money management to apply proper psychology, but you do need proper psychology to apply money management. This would strongly suggest that the psychology of trading is the most important, followed by money management, followed by the system you are using.

Now, what takes the longest to learn?..you guessed it, the psychology of trading. We can learn money management in 20 minutes. It will take substantially longer for the market approach. You will however, be working on the psychological aspects of stock trading for as long as you are doing it. In this section we will be addressing a number of techniques that will help you do this.

Most athletes will mentally rehearse their event before the actual event. For example, an archer will mentally see the arrow release from his bow and strike the bulls-eye. Olympic divers do the same thing, visually going over every aspect of their dive. Some divers say that this visualization is so powerful that then can actually feel when they hit the water.

So, we too will need to perform some type of mental rehearsal before we make a trade. Ideally, we should be sitting in a quiet place, and mentally visualize all of the procedures that would be required to initiate the perfect trade. If we use a checklist, and I encourage everyone to develop a checklist, visualize yourself moving through the checklist, carefully examining each point. The more modalities you use during this process the better. Visualize yourself doing it, hear yourself, feel the sensations, if you can add a sense of smell and taste, all the better. This process will pull you towards acting in a proper manner rather than acting on impulse and emotions.

To examine how powerful this exercise can be, stand with your back to a wall, about one-foot away from the wall. Now, close your eyes and visualize yourself falling back to the wall. If you visualize this hard enough, you will fall back against the wall. Visualization is a powerful technique that can help us control our impulses and emotions.

As you go through this site, starting developing your own action checklist. It will be much more powerful if you develop it uniquely for yourself.it is what you do before, and leading up to making a trade. You will be refining your checklist as time goes on, and this is what you want. The checklist should be simple so you will use it. If it is too complicated, you will never use it.

We have already learned Wyckoff's 5 Step Method, so your checklist should be designed around five steps. I good idea is to include seven steps: visualization for step one, followed by Wyckoff's 5 Step Method, and then some type of after-action review. You can have some sub-categories within these steps, but again, don't make it too complicated.

I would like to talk about the power of hypnosis for a moment. Whether you realized it or not, visualization, if performed as stated above, is a form of hypnosis. Contrary to popular belief, all hypnosis is self-hypnosis. In addition to pre-trade visualization, we can do other forms of hypnosis that will help us with our trading.

First, write down on a piece of paper positive affirmations about the trader you want to become. For example, if you have a problem with discipline, created a statement in the present tense stating that you are a disciplined trader. Your subconscious mind does not know fact from fiction, so basically, if you lie to it enough, it will believe what you tell it, and over time, you will act accordingly.

The best times for reading these affirmations are first thing in the morning when you just wake up, and just before you fall asleep at night. Read them aloud, with a convincing tone of voice. Read them several times in one sitting.

I have attached a link with a very very long example of this idea. I developed this idea to be used with subliminal tapes where the student could read the suggestions into a tape and play them while sleeping.for some people this is just to uncomfortable. Cut and paste what you want., but you will need to change the "you are" to "I am" if you are reading it to yourself rather than listening to it via a tape recorder. Keep it about one paragraph in length. You will need to do this for at least 21 days. Most importantly, modify this to address your unique needs.

See the Library for the Hypnotic suggestions document.