In this post, we’re focusing on mindsets and in the inner game of trading.
We released great book Mindsets of a Master Stock Trader that can help you understand how the mind is working and how you can improve your game as a trader.
You will learn answers to questions like this:
- When to trade?
- How much to trade?
- When should you not trade?
It comes down to your inner balance, and we will cover two main things. The first one is how much to trade. And the second one: When not to trade.
How much the trade is figuring out what is your sweet spot. If you know what a tennis racket looks like that can help you to see the bigger picture.
We have a big circle, and you usually have a sweet spot, a nice area where you want the ball to hit and land.
For some people, it might be a little bit different. It depends on the way that you hit the ball. You might have your sweet spot higher, lower, left, or right. Everybody is a little different.
What sweet spot means?
There is always that sweet spot when everything is in sync, and it just makes the movement, and the motion goes smoothly.
In trading, you have the same thing or in anything in life that you do.
This is a graph from a book that I read many years ago. You have the skill and task difficulty on that graph.
If you just started to trade, your skills level. Well, if you have a tough task and you’re a brand-new trader who wants to trade $100,000: that’s probably not the wisest thing to do.
You have a difficult task, but you have a low skill set. This is not going to be incongruent with your flow. This is a flow diagram.
When you’re looking at the flow diagram, you want your skill to match with your task difficulty in the sweet spot. If you have a skill set that’s very low in a difficult task, you’re going to have probably anxiety. There will be some difficulty there.
On the other way, let’s say the task difficulty is very easy, and you have a ton of skills. In that case, you’re probably going to be bored. You can be bored out of your mind and be lazy about it. You have that boredom and laziness that kicks in.
What you want to do is find this flow. That’s the place where a skillset matches up with a very similar difficulty of the task that works for you.
That will look something like this.
And in between this level or range, this is your flow diagram. In other word, this is your sweet spot. This is what you want to stick into. If you have a very difficult task, you should have some excellent skills. That’s what you want.
If you have some low skills, you probably want to stick with lighter trading. If you have more skills, you can increase that capital amount and the types of trades that you’re doing.
It’s all about sticking in the flow diagram. This is the answer to how much the trade. That’s how we go about answering this question.
If you’re anxious about things, you’re probably doing something difficult for your skill or experience. In that case, you might need to learn a few things. Read a couple more books or take a look at courses or coaching sessions. It’s essential to build up those things or get a little more experience.
Maybe you’re bored. In that case, you probably are not focused or concentrating enough. In that case, you might need to bump up the difficulty of the task. That way, you’re back in the flow, and you become more efficient.
Finding the center balance is crucial.
First, you need to make sure you’re trading in the flow.
But you also have to know when not to trade. Trading all the time or every day is not always the wisest decision.
Your Big Life Moment:
Let’s say you are moving from one country to another. If you’re moving from one country to another, it is probably not the wisest idea to trade during that timeframe. If it’s creating a lot of stress, anxiety, and there are tax things that you have to account for both countries. For you, it might not be a big deal because you know how to do it. However, for most people, if they’re dealing with significant life decisions, that time is not perfect to trade.
If someone gets sick:
If all of a sudden, one of your parents becomes sick or ill. And now you have to take care of them. And you’re spending 6 to 10 hours a day. Maybe you’re becoming a primary caretaker. Your focus is probably a little off. Even though you might have the skills and you match task difficulty, but you have a lot less time. In that case, things are changing in your life.
An accident scenario:
When a car wreck or accident happens, people might spend 2-3 months in the hospital for recovery. That is a difficult time for every individual because it is a big life moment because of stress, paperwork, and other things. In that scenario, you might not have that focus muscle to and handle the trades.
Having kids:
Becoming a new parent is not easy. Also, if there is a second or third child on their way. This could be problematic because you try to adjust your day-to-day schedule. You try to adjust the flow in the household of who is going to take care of every task that is there. The dynamics will change, and this can be a problem when it comes to trading.
Your focus may not be there. Of course, the kids are a higher priority. If they become sick and ill and you have to take some time off from trading. This is one of the issues I’ve found myself dealing with in the last few years multiple times.
These significant life decisions are some things to think about. Think about your big moments in life. When these big moments happen, it’s always good to take a little step back. Or do something more passive. You can do some more passive investing (dividends, ETFs).
You can always do those types of investments. There is nothing wrong with that. You need a less hands-on approach. In other words, a little more hands-off approach.
However, it’s imperative to understand where you are so that you have a continuous flow to have that inner balance. I’m not talking only about your trading, but also in your personal life.
I hope you have got some insight to finding that inner balance and what to look for if you’re stressed out a bit.
A lot of these topics are covered in my book, so be free to check out my new book Mindsets of a Master Stock Trader and learn to deal with life and trading.
