Let’s learn about the Psychology of a day trader with an example- more than 20 years ago when I first started golfing, there was always an older gentleman at the driving range. He could barely walk, yet he could hit a golf ball consistently. Instead of giving random pieces of advice like so many others trying to help my young game, this gentleman would tell me the same thing over and over again, every time we swung. A mantra of sorts. After a few swings, I would start hitting the ball better. But he would continue saying the exact same phrase for another few shots. It was soothing. It relaxed my mind. Instead of trying to think about a hundred different things like my stance, grip, wind, and so on, I could simply focus on the single phrase in my head.
One day I might be hitting shots a little “fat,” and other days pushing it out of the right. But no matter the particular problem, this gentleman would repeat a phrase that helped me address it. These, I later learned, are called “swing thoughts.” But what if I told you that I could help you turn these “swing thoughts” into “trading thoughts” to help improve your trading as well?
We’re all aware of at least a few of the problems we have in our game – whether it be golfing or trading. The psychology of a day trader can help you develop your own mantras that will help keep you consistent both on the golf course and off, especially when trading.
How do you create your own “trading thoughts”? Start by creating a short phrase that addresses your particular problems or trading strategies and keeps you focused on just one overarching goal instead of hundreds of little ones. Golfers know that a cluttered mind just before a swing is a death blow to their score. Day trading is no different. Ten years into my golf game, I had started trading as my sole profession, and this thought exercise has become an important, game-saving part of my everyday life.
Key “Trading Thoughts”
Like golfers, traders tend to face the same few recurring issues or compulsions that are often rooted in their emotions. We’re human after all. Since every day is different, some may stir a certain issue or insecurity more than another might.
A volatile day in the market can easily induce a fear response, which makes traders less risk-tolerant in their day trading strategies and more likely to ignore valid trade setups when available (see Overcoming Trading Anxiety). On the other side of the coin, a dull, flat market can promote a false sense of confidence which can often lead to over-trading.
These are just examples but take a moment to assess your own trading habits and think about what you typically struggle with from day to day. “Trading thoughts” can help. As soon as you see what sort of day it is in the market, or have the sense that you’re about to do something which goes against your trading plan, recall your personal “trading thoughts” for that specific problem and make sure to keep a few of these relevant mantras and phrases in your head or written down somewhere visible throughout the day.
Trading Thought Examples
Trading thoughts aren’t magic, but they should be personal. My trading thoughts may not work for you because you may have different tendencies in your day trading strategies, but your trading thoughts should be short, concise and let you know exactly what you need to do (or not do) to succeed.
One key phrase that I constantly use is: “Keeping talking.” A bit strange, but while day trading, I want to keep a constant dialogue going in my head about what the market is doing, and how that might affect my trading decisions. As soon as that dialogue stops, I find my thoughts are more erratic, making me prone to impulsive trades. But just like my golf game, these trading thoughts keep me constantly planning and in control.
If the market is unfavourable for trading, I will remind myself of the phrases “unfavourable” or “step aside.” This keeps me out of the market when it isn’t moving well for my strategies. If the market is moving well, I’ll say “favourable,” and often attach this to the strategy I want to trade during these favourable conditions. When a trade setup develops, there is zero hesitation. I know the market is moving well and that I’m mentally prepared to implement my trading strategy the second an opportunity arises.
The trading day is filled with volatility, yet all those upticks and downticks don’t always equate to a good trading opportunity. So, I often remind myself to “stick to the plan” and only trade valid setups based on proven strategies in my trading plan.
Final Word
By using the psychology of a day trader, your key “trading thoughts” will not only help you manage specific trading related issues from day to day but long-term as well. But what good is a tool if you never use it? For your “trading thoughts” to keep you focused, make sure to bring these phrases and mantras to mind whenever issues come to mind.
Better yet, constantly and regularly repeating your key trading thoughts throughout the day can help keep any bad trading habits from ever arising in the first place.
By using the psychology of a day trader, your key “trading thoughts” will not only help you manage specific trading related issues from day to day but long-term as well. But what good is a tool if you never use it? For your “trading thoughts” to keep you focused, make sure to bring these phrases and mantras to mind whenever issues come to mind.
Better yet, constantly and regularly repeating your key trading thoughts throughout the day can help keep any bad trading habits from ever arising in the first place.
