Positive thinking is all the rage these days in trading psychology, everyone goes on about it like it's some magic formula to success but when it comes to trading I find it does more harm than good and here's why...
In trading, failures, setbacks and mistakes are all part of the process and will inevitably happen.
The problem is if you go in to trading expecting perfection, your gonna be in for a rude awakening when something inevitably goes wrong
You're gonna be shocked, which means your going to be more emotional which leads to not being able to think clearly and respond rationally.
What's A Better Way to go about it?
A more realistic and pragmatic ways of going about it is using something I call an ''IF then Plan''
This is where you prepare yourself for the worst case scenarios beforehand. It's a far more practical and powerful psychological technique.
For example,
''If A happens I will do B.''
e.g. ''If I lose this trade then I will accept it and move on and refocus.''
Now most people say,
''Isn't that all a bit negative Alan?''
Isn't psychology all about positive thinking? And your thoughts become your reality blah blah blah.'''
But this isn't how it works in trading...
When you anticipate something going wrong or an emotion coming up, you are in turn going to be less shocked when it inevitably does which then means you will me be more likely to be able to stay calm, think clearer and be more likely able to stick to your processes when you need to the most.
''I can handle this.''
Is a much better statement for your confidence and performance than
''I expect perfection.''
So to sum it all up, remember preparation always trumps optimism when it comes to trading. Positive thinking simply will not cut it!
Instead prepare beforehand by creating an "IF then Plan" so you can actually handle those worst case scenario's when they do happen,
Not just hope for the best...
Thanks for reading!
P.S f you haven't heard, I've just created my new ''Mental Edge Trading Course''
This was created to help you master your trading psychology effectively so you can trade with confidence and start trading at your peak state
You can get it by Clicking Here
About Alan
Alan Edward (aka The Divergent Trader) is an impactful speaker, author and high performance expert. A Full Time Trader by profession. Alan is the founder and CEO of Divergent Trader a private financial firm that educates, coaches and supports traders.
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