Remove the Negative Self-Talk

REMOVE THE NEGATIVE SELF-TALK

Hey family and fellow traders/investors. Regardless of where you are in life and your trading journey I know you have had to overcome some challenges. A like that could have knocked you out of the game in the past, but you are a whole different person right now compared to two, three, or five years ago. Nonetheless, we still have negative thoughts or self-talk that seeps in our mind and tries to take up space in our subconscious. Which makes it difficult to see the full picture of what we are experiencing in our trades therefore becoming unable to adapt. So I want to share a few of my negative self-talks that take over. If we can get these on paper by acknowledging that they exist, then when they peak their ugly head we can consciously see them and ignore their negative impacts. 

1.   I WILL TAKE A EXPENSE ON THIS TRADE LIKE THE LAST ONE

This one is huge! I think of Erika Badu’s song “Bag Lady” back in the 90s…I’m an 80’s baby so bear with me. Bag lady was gonna miss her bus cuz she had too much stuff. Look you can’t bring past issues into a new relationship or it will ruin the new relationship. That’s how you have to look at your stock/option trades. The last trade has nothing to do with your selection of this trade. 

Now, I understand the conditions of the last trade could have made you trigger this trade because you saw a reversal in direction, but I am referring to your mental aptitude. You had a premise for doing the last trade solely based on the information that was presented to you. Therefore in this trade you have to develop a new premise solely based on the information that was presented to you and not think of the last loser. Or, for that matter the last winner…because you can be on such a high that you didn’t do the sufficient home work on the new trade because you’ve been killing it on the last few. 

2.   I CAN NEVER STOP OUT WHEN I’M SUPPOSED TO

Okay…well…the answer to this one is simple: STOP DOING THAT!

Easier said than done. I have done many trades where the place in which I set my stop out and eventually stopped out was the pivot that was needed for the stock. Now this is a two edged sword because in one instance you can say “whew, glad I didn’t stop out because its going my direction.” Thus you have a profitable trade. But in second instance you can feel “well the ‘last one’ (see above) pivoted at my stop out so this one will too” and that bad boy runs against you making your expense larger than expected. 

I can say I have done both an here is the fact of the matter…I am not following the predetermined plan. This is the real problem. If you are not following your trading plan then what’s the use of creating one and calling yourself a trader. Ouch! You have to follow the plan you set and if it says stop then do so. There are some good stop out strategies that exist and we can talk about those in a future post. 

 

3.   MY PROFITABLE TRADE ALWAYS TURNS INTO A EXPENSE

This one right here…I mean this one right here hits HARD! Now I have had some expenses in my trading days, but the worst ones are when I was profitable for majority of the trade and then all hell breaks loose. My friend let me tell you a little secret…you are most likely committing the sin of greed. You want to bleed the orange that already gave you all its juice for a little more? A good coach thru the trading educational company TRADEway said in a live training, “why are you sacrificing pennies for dollars.” In other words the option already gave you a $1 profit per contract (if this was your goal) so why are you trying to get another 20 or 30 cents. Take the money to the bank and exit. 

Even though this hit me like a ton of bricks I committed the sin anyways. What can I say it’s our sin nature to prove that we are right. You feel like the stock can run up (or down) some more and you neglect to see the market conditions that can lead to a turn in direction. You neglect to see that you are already up 30-40-50%...heck I have been up 100% in a trade before and still took a loss (I got counseling for that one). One of the solutions (depending on your plan) is take the meat of the move…you know it may have some more room but you get out net positive while you have momentum. Or you can set a trailing stop loss based on percentage of your profit. If you are up 30% you can set a trailing stop that says if it drops 5% let the system trigger your exit.  

4.   I AM NOT GOOD AT THIS…I QUIT!

So the truth of the matter is that we are not good until we BECOME good. If you qui, then you will never become. For those who are sports enthusiast or athletes you know what’s up.  Before I starting playing baseball I knew nothing and in those few practices I was trash, but overtime as I practiced and practiced and practiced I became good baseball player. I wish I could say the same thing for basketball, but I can say that when I was playing basketball more frequently than once a week my skills were improving. I was playing baseball everyday so the skill became second nature, but I never gave that much attention to basketball. 

You will never be good at something you don’t practice to become good at. Some people naturally pick things up faster and accelerate quicker out of the gate, but that’s their journey not yours. Even when we have been trading for years and you feel like you should be on another stratosphere we subject ourselves to this negativity. So take inventory of your conditions and what’s been going on around you and notice you may just be letting some outside condition effect your mental game. Depending on your experience level is what you feel you are not good at is relative to your skillset. Just BECOME good at it. 

 

In conclusion, I pray this has helped bring to the forefront some of common negative self-talk that can happen throughout the course of your trading journey. I know there are plenty more that exist and I am sure we can cover them another time in the future. So what can you do about this…acknowledge it. Know that these thoughts can and do exist, overcome them. Set a plan in place of what you will do when these negative thoughts seep in your mind and try to take space. Revisit your plan, let the market tell you what it is willing to give you and if it still aligns with your plan stick to it. If the game has changed make adjustments. Lastly, when you make the decision to take action…own it.