Become a Successful Trader

September 20, 2011

5 Exercises to Help Control Your Emotions During a Trade

Each trading day is a New Day! Fresh Start! As Ben Lichtenstein of Traders Audio likes to say.

The emotions we face once in a trade can override all the preparation and planning that took place leading up to the trade. No matter how well we plan as traders, knowing how to control your emotions can be the difference between a 2 tick profit and a 200 tick profit.

Here are some exercises to help keep you objective during a trade.

1. Set Your P/L to Ticks, Not $

Infinity Futures Show P/L in TicksSetting your profit loss to ticks and not dollars allows you to focus on the trade and not what the trade could buy. It may seem as though +30, -10, +20 would not make much of a difference, but mentally it is more abstract and thus easier to manage mentally than +$375, -$125, +$250.

Placing the focus on the net sum of ticks/pips as apposed to assigning a dollar amount to every trade reduces the hesitation factor when entering. This also can improve your patience while in the trade. While on some level the concept of being, up a ‘Ferrari’ and taking a ‘Honda’ loss serves the same purpose, it’s the mental trick that helps develop consistency.

2. Manage the Stop, Not the TargetTrail Stop Infinity

When in a trade, the goal is to allow it to develop and move to it’s predetermined target. What happens though, is we become anxious or nervous and will end up dragging that predetermined target in, taking a smaller profit. The trade then continues to our original price target and we kick ourselves for breaking our rules.

Rather than dragging your limit in and exiting early, leave it where it is and simply focus on the stop. It is better to tighten the stop as the trade begins to work in your favor, giving the trade an opportunity to work and move closer to your target.

If you trade on an intraday time frame like a lot of the EminiMind readers, chances are your mouse is hovering over your price DOM (depth of market) while in your trades. By simply placing your focus and your mouse on managing the stop, your price target will be hit much more often and your winners will become larger.

3. Use a Running Total

I like to use a running list to keep track of my trades instead of breaking them down by day. Since I use the StockTickr Trading Journal I have the ability to sort my trades easily.

Running Trade Total

Keeping a running total allows you to identify your winners and losers in a more visual way.

When you track your trades by day, the frequency of winners and losers can become lost. With a running total the patterns becomes more apparent.

It all comes back to building confidence.

Being able to look at your list of trades and see that roughly every 7 in 10 are winners for example, you won’t be as hesitant to pull the trigger after you’ve had a couple of losers in a row. Statistically a winner is close.

4. Speak Your Setups Aloud

Speaking your setups aloud forces you to get to the core and define exactly what it is you are looking for in your setup. I used to say “15 minute entry’s result net positive.” That conscious effort to speak my entry setup aloud gave me the confidence to take every 15 minute setup on the ES whenever presented because I knew they would result in a net positive outcome.

Know your setups down to every last detail. Two good post-it notes to tape up and repeat are:

  • “Patience pays” and
  • “Breaking my rules will cause me to fail”

5. Minimize Your DOM

Clean ChartI am a big advocate of keeping your charting package separate form your order execution platform.

Aside form the obvious reason of having a backup in case one crashes, you now have the ability to minimize your trade ladder after you enter. Once in the trade, minimize the DOM and focus on the chart. Unless your strategy is based upon the DOM exclusively, this is another very effective way to remain objective.

Keep a clean screen, free of clutter and useless tools that do not have anything to do with your trading strategy. If it’s not a part of your trading system, get it off your screen.

Perfect practice makes perfect. It is your job as a trader to master your setups and be the best at executing them.

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About Tim Racette
Tim Racette is a day trader of 15+ years in the E-mini futures and swing trader of stocks. Mountain biker, lover of the outdoors, and explorer. Tim is an ASU Sun Devil and a Chicagoland Native now living in sunny Scottsdale, AZ.
  1. omg..
    this is exactly what I needed.
    I didn’t know there was option to change the dollar term to tick value p/l.

    I initially got rid of the p/l window on DOM. It helped me a lot to focus on trade.

    Thanks Tim

  2. Great article Tim. I use exercises #1 and #4 in my own trading. Another strategy I like to use is to focus on my breathing by taking deep, controlled breaths. This helps me keep my heart rate down and my attention solely focused on processing market information. Whenever I feel my emotions bubbling to the surface, a few deep breaths is all it takes to calm me down.

    • Great tip Matt. I myself have used a 7x7x7 method of 7 count breath in, hold my breath for 7 seconds, then 7 seconds exhaling. I learned this as a way to calm myself and get into a state of mental clarity before giving a talk, or speaking in front of a group. Another thing I’ve done in years past is is put on a heart rate monitor and track my heart rate throughout the trade and took note of my response for different setups. Turns out, my impulse trades and setups that I was not 100% clear about sent my heart rate pumping fast, the setups that I detailed thoroughly and knew my entry and exit strategy I remained calm. Thanks for the comment!

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