I’ve decided to share with you one of the biggest “secrets” to my success in trading…

ONLY TWO THINGS

I’ve spoken before about how you need two things to be a profitable trader:

1. A clearly defined strategy to trade.
2. The discipline to trade it properly.

The first thing, the strategy, always gets all the attention. I’ve covered it at length in both my “How to make more…” report, where I talk about the trading triangle of stock selection, entry, and exit. And of course, my Day Trading Freedom books and videos go into even more detail.

But that’s not what I want to talk about here.

Instead, I want to talk about number 2. The discipline to trade properly. The ability to control your emotions, to be able to pull the trigger when the strategy tells you to - even when that means taking a loss. What I call “the head stuff” - because it’s all about controlling what goes on in your head.

HEAD STUFF

This is the bit that hardly ever gets talked about in trading books. Perhaps that’s because it’s not as sexy or exciting as looking at lots of profitable charts.

Perhaps it’s because it’s something that’s little understood by most traders. Those who get it, usually do so naturally, and those that don’t are left to fend for themselves.

Whatever the reason, the point is this: Getting your head in the right place is absolutely essential to success in any form of trading.

As Charles Ellis puts it, “If you can’t control your emotions, being in the market is like walking into a heated area wearing a backpack full of explosives.”

WHO’S IN CONTROL?

Have you ever sat in front of a chart, and known that you should hit the buy or sell button, but for whatever reason, you couldn’t do it? Maybe because it meant taking a loss, and even though you knew that the loss might get bigger, you hung on anyway “just in case” it came back to you?

Or maybe because it meant taking a risk on a trade, and you were afraid of losing the profit you had already made on a previous trade?

There’s no shame in this “trigger trouble”. It happens to us all, and the thing is, it’s not our fault!

You see, it’s the way our brains are physically wired up that causes us this kind of problem. Our brains are basically split into two parts - logical and emotional. Those two parts are constantly doing battle, each one vying for control of our actions.

Back when we were all living in caves, hunting, and being hunted, our emotional responses were essential to survival. Basic fear and greed are what got us out of the caves each morning to go hunting, and got us back in there when we were under threat.

But although we’ve evolved into sophisticated creatures, with the capacity for logical and structured thought, those old base emotional responses are still there, hard-wired into our brains.

So you cannot help but have this battle in your head every time you’re about to pull the trigger on your trading screen. Logic says “Do it!”, but emotion says “Are you sure about this?”

The trick is to get logic to win each time, and to win quickly. Only when trading decisions are based on logic and clear strategy, instead of fear and greed, can you hope to be consistently profitable.

CONTROL YOURSELF!

Of course, controlling your emotions and letting logic win is one of those things that’s a lot easier said than done! If it was that easy, we’d all do it and there wouldn’t be a problem. Yet clearly there is.

Fortunately, there is a solution. You can train yourself to control your mind. I first learnt how to do this about seven years ago, and the effect on my trading was profound.

This post has already got longer than I intended, so I’ll stop here, and continue tomorrow, when I’ll tell you how you can take control of your mind, your emotions, and your trading.