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Last week New York Times ran an interesting article on Olympic athletes. It turns out that in a business where one second can mean the difference between first place and 100th, mental preparedness is as critical as physical ability.
The Times wrote,
“Visualization has long been a part of elite sports. Al Oerter, a four-time Olympic discus champion, and the tennis star Billie Jean King were among those using it in the 1960s.
But the practice of mentally simulating competition has become increasingly sophisticated, essential and elaborate, spilling over into realms like imagining the content of news conferences or the view from the bus window on the way to the downhill.
“The more an athlete can image the entire package, the better it’s going to be,” said Nicole Detling, a sports psychologist with the United States Olympic team.
Imagery has seldom been more in evidence than in Sochi, where the starting areas have been full of Olympians going through the motions, figuratively or literally.
While none of us poor slobs will ever come close to Olympic glory, as retail traders we can still learn a lot from these champion athletes.
My greatest weakness – and I am sure it is yours also – is impatience. Once I am in a trade I expect it to move right away and more importantly to start hitting my profit target within an hour or two at most. Many a time I have bailed out of a trade in frustration at a scratch only to see it take off and move well past my initial profit targets.
Ever have that happen to you? That’s because most of us only have one “trade movie” that we play in our minds and that movie is composed of a perfect entry and an immediate payoff to our speculation. You would think that after thousands of trades we would know better. But hope springs eternal and we always visualize a fantasy that almost never matches reality.
In contrast to champion athletes who visualize a perfect run with flawless execution, we as retail traders actually have to learn how to visualize reality.
Next time you consider putting on a trade, imagine that your entry is poor. That the market quickly slips against you and then remains moribund for hours as the trade simply sits there floating a loss. Imagine also holding that position, through the boredom, the frustration and seesaw action of the market until either the stop or the target are hit.
It is amazing how helpful this could be. Instead living through these emotions in real time, you will experience them virtually and that surprisingly enough will help you to be calm and professional during the actual trade. No more furious temper tantrums. No more impulsive “adjustments” taken in the heat of the moment. No more “thrill of victory” and “agony of defeat” moments.
To be a better trader visualize your trades as they occur in reality and just like the great Olympians you will be better prepared for your task.