Preparation and Forex Trading
Before anything else, preparation is the key to success.
-Alexander Graham Bell
Many times I talk to my private course students and ask them what they do to prepare for the day’s trading. These are the general responses I get;
-Drink a cup of coffee, maybe two
-Check out what announcements are coming out
-Look at the markets and then get ready to trade
And it ends about there. To me, this is somewhat shocking. Perhaps because I trained in martial arts, played semi-professional futbol or compete in archery, I have a habit of preparing for anything I am doing seriously, including forex trading. This is the same for trading – preparation is key. Why?
Think about what you are doing when you are going to trade for the day. You are going to do all of the following;
-Make critical decisions
-Access long-term memory and use your pattern recognition to find trades
-Come up against your psychological issues around money and Equity Threshold
-Sit down for hours meaning your bodies energy will be less active and more stagnant
-Use the reptilian part of your brain which thinks more of near term rewards instead of long term benefits
Anyone notice a pattern here?
Other than the fourth one on the list, all the others have to do specifically with your mind. The most important tool you are going to be using while trading is your mind so preparing this is the most critical thing you could do before trading.
Ask yourself the following questions;
-Would a professional futbol player not warm up their muscles before a game?
-Would a football coach not watch video of their team or the opposing team before a game?
-Would a professional archer not take a few shots with the bow before starting a competition?
No – and there is a reason for this. All professionals know one thing for sure and have one thing in common – they all prepare for whatever their task, skill or thing they have to execute. And why shouldn’t you? Why shouldn’t you be preparing your mind before you start your day of trading.
Do you really think drinking a cup of coffee will do the trick? Are you really going to take an artificial stimulant to get yourself prepared to have a calm mind through chemical means which stimulates your adrenal systems? How is drinking caffeine going to help you access your pattern recognition skills in your brain, help you keep a calm cool mind when making critical decisions, or keep your emotions in check when things are not going your way?
It is not, and you have to prepare for your day.
1) They have excellent pattern recognition skills
2) They have tremendous discipline
3) They have the right mentality
If you do not have all of them now, do not worry, these are things you can all develop through the right training. Since we have been talking about preparation, I’m going to give you a list of things you can do to prepare yourself mentally for every trading day. Remember, you are not catching a football, pulling a bow or striking some opponent…you are using your mind which is your primary tool and the sharper, more prepared this is, the better your trading experience will be. On top of this, the more you will get out of your trading and accelerate your learning curve.
3 Things to do to Prepare for the Trading Day
Get up early and shower before you start your day
-Your central nervous system actually needs certain things to get in sync with your body biologically. Getting up around the time the sun does activates a protein sequence in your brain which helps it get chemically prepared to for an intense day of critical thinking. Showering helps to stimulate your nervous system and wake up your body and mind so you are more fresh for the day. Showering also helps to increase your windhorse which we talked about in my Laws and Mindset of Abundance video.
Do some exercise, whether it be physically or mentally, ideally both
-Each day, before I do anything, before I make any critical decisions or start work, I practice yoga and meditation every day. Yoga helps calm my breathing which allows me to control my emotions and thoughts while having a body physically healthy to sit for long hours in the day. Meditation sharpens my mind to help develop awareness of my thoughts and emotions which could influence my trading. It also helps me think clearly while making critical decisions. I then spend the last 10-20mins visualizing what I am going to accomplish for the day, how I am going to trade, and what I will do successfully.
At a minimum, do a few stretches since you are sitting all day and at least do some visualizations to program your mind for success.
Review your work for the day
-Did you know professional football coaches after each game will spend anywhere from 20-40hrs a week reviewing tape of their last game, how things went, and then look at tape of their upcoming opponents? Sometimes they are spending as many hours as people work in a week, just preparing for the next game. They will make notes, look at several different angles of the games, then prepare some tapes for their players to review to see what mistakes they did and learn from their mistakes. There are actual poker players who have rooms full of journals with notes they took on players, how they played, what decisions they made, and how the hand played out.
What do you do to review your trading and correct your mistakes? Do you have a trading journal which you actually fill out religiously? Do you screen record your trading and make comments of what you were seeing so you can see your mistakes and what you did correctly? Do you review your systems performance monthly, quarterly or yearly?
Trading is not just sitting in front of the computer when the markets are open, pushing a few buttons on the mouse, buying, selling and putting in stops or limits. Trading, like all professional endeavors, is about preparing yourself for the immense challenge trading is. Trading is having a rule-based system so there is no confusion about executing your trades while following proper money management.
Trading is simple, but is often not easy. It is an uphill climb against your psychologically tendencies to take the easy way out, to gloss over the details, to take short cuts instead of being disciplined. Trading is about working overtime before and after you are done with your trading day. Trading is about preparation, preparing the most critical tool – your mind, so it is sharp as a samurai sword to cut through emotions and confusion, find the direction of the market, and make money.
Ask yourself what you are currently doing to prepare yourself for trading, and then see what more you can do.
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Also, make sure to check out another great article on the topic called Trading Lessons from the Archery Range pt. 2.