4/4/2025 - A great trading psychology is a constructive mindset. We can be constructive whether we have been making or losing money; whether we have exploited the opportunity set or fallen short. We stay constructive when we constantly learn from experience. What did we do well? What could we have done better? How can we take these lessons to our trading going forward? Review, observe, plan, perform, and then review again. The best mindset is one of ongoing learning and improvement.
So ask yourself how you have performed in recent markets. There has been no lack of movement in March and thus far in April, but it's different movement than we saw earlier in the year and last year. It's more volatile and it's more thematic, with coordinated selling by large participants across asset classes. If you've underperformed, is it because you have missed the change in markets or because you've seen the change but have had difficulty finding good risk/reward trades amidst the volatility? Is the problem with your trading ideas, or is it with the execution of good ideas? That will tell you a lot about what to work on.
Great trading requires flexibility of focus. It's helpful to see the big picture of markets and the larger trends and patterns of what we're trading. Ideally we want to ride the patterns created by larger market participants. But to do that, we also need to see the micro picture of markets and what we're trading. We need to see what is setting up right here and now in order to turn a good idea into a superior risk/reward trade. Flexible focus is what gives us the ability to size into solid opportunities.
4/3/2025 - What if we need to do cognitive warmups before intensive activities like trading just as we need to do physical warmups before athletic contests? What if we rehearse our best trading practices and review our market performance during states of heightened concentration? How much more would we take in and make use of if we truly eliminated distractions during trading? What if the answer to trading psychology is not to eliminate emotion and impulsive behavior but to heighten concentration so that reactive trading becomes impossible?
4/3/2025 -
A positive trading psychology is not one of optimism. It is a focused, flexible, and open mindset. We want to absorb as much relevant information as we can from how our market is trading and how related markets are trading. At short time frames and within our market, we'll see patterns setting up. At longer time frames and across markets, we'll notice themes playing out. So often, the themes (or absence of dominant themes) tell us what to trade. The short-term price movement tells us how to trade it. All of this requires the ability to sustain intense focus--and the ability to switch our focus from time frame to time frame, market to market. Attentional focus, like muscle strength, is something that can be exercised and developed. When we build our focus, we improve our trading psychology--and our ability to recognize and capitalize upon opportunities. I believe this is the most promising and exciting frontier in trading psychology.
4/2/2025 -
Whatever we process most deeply, we are most likely to retain. Many times, we work on our trading by doing the right things but in a shallow and distracted state of consciousness. As a result, we don't make lasting changes and we wonder why we lack "discipline".
What if we can train ourselves to sustain a state of heightened attention and awareness? What if we specifically review our best trading practices and our most relevant lessons from our recent trading while we're completely focused?
Could it be the case that we know exactly what we need to do in order to improve our trading, but are in the wrong mind state for internalizing our lessons?
That's a potential game changer; more to come--
4/1/2025 -
We become what we repetitively do.We internalize our experience.
Insight and emotional experience catalyze change. Habits make our changes lasting parts of us.
What makes us fall in love is not what sustains loving relationships. The failure to make loving acts part of our daily experience explains why it's so common to fall in love and end in divorce.
Many traders fall in love with trading and markets. They fail to sustain their passion through small, daily acts of success and fulfillment.
Many careers begin in excitement and run aground in mind-numbing routine.
If our daily trading processes draw upon our greatest talents and interests, our experience will be fulfilling whether or not that day happens to be profitable.
What makes trading rewarding for you outside of P/L? Is it the intellectual curiosity of finding new ideas and opportunities? Is it teamwork and the opportunity to learn and teach? Is it mastering fresh skills and adapting to unique challenges?
Every trading day should tap into the passion that brought you to markets.
Mike Bellafiore of SMB Capital emphasized the importance of grounding our trading one trade at a time: by placing One Good Trade.
Success comes from grounding our trading careers one day at a time: starting with One Good Trading Day.
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