Self Talk - method for changing habits

Q

qwiktrade

I am starting this thread in hopes that we might have a discussion about using the "Self Talk" method to change bad habits and acquire the proper thinking of a trader..

"Self Talk" is taught by Dr. Shad Helmstetter in his book "What to say when you talk to yourself".. He defines Self Talk as "a way to override our past negative programming by erasing or replacing it with conscious, positive new directions".. basically the idea is to start with an area where your behavior needs to be improved and then identify the negative thoughts that are producing that behavior/habit.. then when you catch yourself in the negative thinking/behavior, you repeat the positive new directions to yourself.. also, you repeat the new directions to yourself several times a day until the old habit is gone and the new habit is established..

some areas where traders struggle:
  • -inability to pull the trigger
  • -overtrading
  • -loss of discipline
  • -inability to increase size
  • -blowing stops
  • -taking profits too soon
  • -negative attitude
  • -not following system rules
  • -taking trades not part of the system
  • -becoming frustrated at a series of losses
  • -lack of confidence
  • -becoming overconfident
and im sure there are many more..

the rules for creating positive self talk are pretty simple.. basically the idea is to keep it specific, positive and in the present tense.. for example.. (from the book)

-Becoming organized..
I am organized and in control of my life. I am in control of myself, my thoughts, my time, my actions, and my future.

I know what to do and when to do it, and I do everything I need to do, when I need to do it.

I never waste time- I always "plan" time. And because I plan my time I always have time to do the things I choose to do.

I have used this method with some success in other areas and its my goal to apply this to my trading.. my primary struggles deal with increasing my position size and losing discipline after a series of losses.. i cant tell you how many times ive had 80% winning days for three weeks only to lose it all in one or two days of stupidity.. then i regain my composure and go for another couple weeks.. i am still writing the Self Talk to correct these issues and ill post it here when i finish.. any thoughts, opinions or comments are appreciated..

-qwik
 
GREAT QWIK!

inability to pull the trigger

-overtrading

-loss of discipline

-taking profits too soon

-negative attitude

-not following system rules

-taking trades not part of the system

-becoming frustrated at a series of losses

-lack of confidence


Theese are "mine".... guess I gotta work on 'em A LOT!

Hope for some great discussion
 
quicktrade-- extremely beneficial area of trading to be working on for most I'm sure.
I'll address some of the points you mentioned and give my 2 cents.
taking trades not part of the system:

I keep a diary and at the end of the day write what the strategy was for each trade.When I am about to trade and it does not fall into one of my strategys I realize some hypothetical person will review my diary and reprimand me.Sounds assine but it works for me.

overtrading:
I set a maximum of 2 losing trades {not neccesarily consecutive} if that happens in the am I will wait till pm to resume trading if that happens in the pm I'm leaving for the day.

negative attitude:
I keep a positive attitude by saying with the present 4:1 margin and intraday volatility I need very few days of catching decent trends to increase my account size dramatically.So it is prudent to wait for low risk high probability trades only.Also found that speaking to an aqaintance of mine who has lost his shirt in the mkt and was constantly telling me to swing trade because "you don't want to miss the bottom" had a very negative affect on my discipline.{No longer speak to him}

taking profits too soon
This area I still have major problems in..
have an exit strategy but frequently violate it and take 1/2 point out of a $1.5 + point move.

Inability to increase size
When I enter the trade there is a maximum $ loss thats acceptable and the occasional larger positions have tighter stops which that setup /mkt allow.

loss of discipline:
Have identified what conditions exist when I break the rules being tired is #1.If thats the case I'll trade the open and go out for the day.

increasing position size and
even when I see a perfect setup I often dont take the trade.

sounds like your nervous about money because the position size is too big or you have not set a definate exit to tell you you were wrong.Mark Douglas mentions something like if you have your stop loss planned you are taking a business man's risk otherwise its a gamblers trade. With the business mans risk there is no nervousness because the outcome will either be your stop or a profit not an unknown.
Overall trying to stay calm and realize protecting capital is #1 because if you break your rules and lose your capital you will be out of the game and of course thats when major trends are going to be there.Also always on my mind is breaking the rules will force me to live a life of financial mediocrity.. not the most exciting thought.
Great topic you brought up, talk to you soon.
 
I love the mental attitude side of the business & in life, doesn't matter the type of business your in, its your attitude that will determine your success & failure.......recently I posted the message below on another site & I feel it applies to this one also.........Self Talk & Technical Knowledge are equal partners in my trading, I am not suggesting you walk around like the joker from batman with a big smile & everything is GREAT & WONDERFUL, the key is to continue to speak success to yourself, tell yourself your a winner & a success & you will make X points or $..........any successful person has a confidence about himself , they walk around with a strut in their step, myself, I always speak about success & my goals are in front of me at all times, I talk it & walk it & walk the talk..........personally to me, the person that started this thread started the most important thread, get yourself right, get your thinking right, work on that & the techicals will handle themselves, its not hard to trade a bull or bear flag, right ? the highest probability pattern that has been around 100 yrs, edwards & magee have it in their book, Charles Dow, the DOW theory was based upon not only 2 phases, bull & bear markets but 3 trends, primary, secondary & minor...secondary being your bull & bear flags & the minor trend being your shorter term entry setup, SO what I am getting at, if the pattern hits 70-80% success ratio, then why don't we have more successful traders ??? all comes down to your mindset & until that is right, success will avoid you.............below is my letter i posted on another site & I have a link to my site on a seminar I did over a yr ago based on mindset goals & a business plan. I hope it helps....chris



It’s All about Attitude,
Most traders think that SUCCESS comes from being able to read a chart pattern or understand a stochastic, yes its part of the process but its not what makes you successful & the bottom line is a staggering number from what I understand that 80-90% of traders FAIL or lose money.

Why? We all see the same things, we all see those bullflags bear flags, divergences, ticks, trin, & the countless patterns, indicators, internals, chartpatterns, there is 500 books on the SAME information, FIB levels or how to see a continuation or reversal pattern & so on, so WHY is it we cannot have a higher degree of success from our fellow traders?

It's understandable that a high percentage of the ones that lose lack the technical knowledge & experience, BUT for those that trade day in & day out with the experience & talent & knowledge to succeed & make profits on a day to day basis, there is no excuse to not have consistent success, but maybe the fact is they have not focused on the attitude side & the discipline side of the business that is required to make a trader a overall success both mentally as well as financially.

As a trader myself that executes sometimes 200-300k + shares a day working in a office with a trading partner & a assistant, a chatroom moderator, mentor to traders, speaker at seminars, I have been fortunate to stay in close contact with many many traders both novice trading 100 share lots to those trading 15-25k share lots, & listen & learn from what they do & do not do & the most common thread is the mental & discipline side of the game that sets apart the consistent winners from those that have wild swings in their bottom line.

I asked myself, what does it take, what do I do? What have I done to stay consistent in markets that trend up/down sit in a narrow range, wild swinging markets, trading around holidays, price shocks like the WTC events, bull & bear markets when others are not? What could I do to help others get on track or get back in their game OR just tweak it a bit to help them increase their success ratios.

Something recently happened to me in October & thank God it all resolved itself to the positive at the end, a negative situation happened to me personally & my trading was knocked out of line for about 2 weeks & I was NOT able to focus or trade profitably at all for almost 7 days, I lost money consistently & as they say "momentum precedes price" in the markets, it does in your trading acct both positive & negative & I seen it in my own accounts, it happens to everybody, why do I share this? Because NOBODY is immune to LIFE, & the point is we have to recognize when things happen to us that are potentially hurtful to our trading accounts & our bottom line.

We have to stay alert to stop the negative or stop trading until our situations are corrected
I was fortunate to have the ability to recognize the situation & correct it & step away from the markets until I corrected my personal situation. So I stayed out of the markets for another week BUT prevented further losses to occur & was able to recover from the losses over those 7 days, BUT, what if I was not able to recognize this? I could have gone into a tailspin in my accounts.

So taking this experience I had to sit & think, Why not share with you some ideas that have helped my stay consistently profitable over the long term. Do I have losses on a day-to-day basis? Do I have losses intraday, yes, again I am human, you cannot win everyday, but when you increase your odds for success & have the right mindset & goals & a plan to win, net net you will be a success.

What I feel to be a good start to creating an overall success game plan is a few things.

1. Personal growth
2. Reading books (personal attitude books)
3.business plan, goals & criteria for trading, ect….

Below is an outline for a seminar I did last year & would like to share with you my work
& I hope it helps your trading.

Its called Success & The Markets

http://www.stocktrendwizard.com/succss.htm

ENJOY!

Christopher Terry
Stocktrendwizard.com
 
Bull & bear flags, continuation patterns have a very high win ratio......sorry they eluded you but if you learn them maybe it will help....I dont know what you do or how you trade & you maybe just teasing me but they are high win ratio patterns & nothing more to say.....they stood the test of time for almost 100 yrs...so that says something yes ? Chris
 
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