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TRADING NAKED

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the interpretation and application of price action concepts

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We all share a similar path in Trading. Even though you may not be a consistently profitable trader now, you can chose to enjoy the path. This alone may make the difference in your success.


 
 Mind Over Markets TM - March 11, 2005
Prosperity is a great teacher; adversity a greater.    
- - William Hazlitt - ;    
Feature Article

Your Mood Matters: Stay Positive

Are you in a bad mood? You might want to stand aside until it improves. Your mood has a powerful impact on your trading outcomes. That's why many seasoned traders take the day off when they feel out of sorts. Trading profitably is often a matter of accurately perceiving the markets, but our moods frequently color our perceptions. If you're tired or worn out, for example, you may not read signals easily, or you may fail to see a pattern form. If you are frustrated while monitoring a trade, you may act on impulse, instinctively thinking that if you close out the trade, you'll feel better. If you believe that all is hopeless and that no matter what you do, you'll never make enough trades to get out of a rut, you'll remain stuck and paralyzed. If, on the other hand, you believe that with hard work and persistence, you can turn it all around, you'll have a better chance of actually doing it. Our emotional states play an important role in what we do. That's why it's vital to be aware of them, and when we are in a bad mood, it's essential that we take some sort of action to change matters.
People differ in terms of emotionality. Some people are easily agitated, while others can stay calm even when their life is in danger. The perpetual optimist, for example, always sees the positive, even if it means living life in a delusion. At the other extreme, pessimists put up so many psychological roadblocks that they never set ambitious goals. They must be content sitting on the sidelines and dreaming of what could have been. Even though some people are more logical and unemotional than others, at some time or another, everyone gets up on the wrong side of the bed. And when your mood isn't up to par, you'll make trading errors. It's essential to continually monitor your mood, and when you find that you are feeling down, pick yourself up, and make yourself feel better.
When it comes to moods, your mind and body are closely linked. When you are tired and worn out, you are more prone to feeling down and out of sorts. Even a minor setback can put you on a downward spiral in which your mood gradually worsens, until you are in such a poor mood that all seems hopeless. As a general rule, the more rest and sleep you have, the better. Background stressors can also increase your vulnerability to an ever-increasing unpleasant mood. The best preventative steps to combating a negative mood are to identify stressful background events and do whatever you can to alleviate them. Many times, these stressful events create anxiety that builds up. If left to fester, the anxiety may express itself at critical moments of investing, where ideally, you want to stay as calm as possible. Exercise is the best remedy for pent up stress. It relieves negative energy and helps you calm down. When you are feeling down, exercise can also work to pick you up. It gets your nervous system moving. Soon, you find you have more psychological energy to actively find solutions to problems. Along with exercise, it's important to cultivate balance between work and leisure. Make sure you spend quality time with friends and loved ones. Pursue pleasurable hobbies. Similarly, making sure that you don't overwork will help ensure that you stay calm during the trading day and don't give into your impulses.
Don't underestimate the powerful impact your moods can have on your trading outcomes. Winning traders cultivate a peak performance mindset in which they are calm, focused, and ready for decisive action. It's difficult to trade with a peak performance mindset when you're in a bad mood. The more you can control your emotions, the more likely you'll maintain a winning edge.

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