Thursday, January 16, 2014

Sports Psychology Applied to Trading

"Like I said in the beginning of the interview, the team and the players that can slow down the game the quickest and be calm and make the plays and just execute one play at a time and stay focused on the fundamentals is the team that's going to win the football game." — Russell Wilson (talking about the upcoming NFC Championship Game)



So how does the above apply to trading? Let's take a closer look:

"Like I said in the beginning of the interview, the team and the players that can slow down the game the quickest and be calm and make the plays and just execute one play at a time and stay focused on the fundamentals is the team that's going to win the football game." — Russell Wilson (talking about the upcoming NFC Championship Game)

Slow down the game. 
Be calm.
Make the plays.
Execute one play at a time.
Stay focused on the fundamentals. 

Does this describe your approach to trading?

Some people approach trading as follows: 

Be distracted / Not in the zone.
Be emotional.
Make errors.
Attach "everything" to the outcome of their last trade or next trade. Focus on everything but just executing the next trade well.
Constantly search for the "Holy Grail".  Don't have a fundamental trading plan or don't follow it. 

Traders and athletes alike know that to be competitive we must get in the zone, remain calm, stick to the fundamentals and trust the trading plan (play book), then just focus on executing the next trade well (the next play well). 

Imagine if Russell threw an INT and immediately attached that outcome to the Seahawks chances of making the Super Bowl? How ridiculous would that be. However how many times as traders do we let the outcome of our last trade dictate our mentality...and thus affect our future trades? If you suffer from this – get it in check, now. 

The same would be true if Russell threw a game winning TD and attached that outcome to the Seahawks chances of winning the Super Bowl. Again ridiculous. A good quarterback knows that the last play and the next play alone won't make or break the season. 

Of course each play is one link in the long chain of a season as each  trade is one link in the long chain of a year. The point is to focus on executing each trade well (executing each play well) and not let the individual result of each trade / play dictate what happens next (inside you as a trader / athlete). 

This comes when you...

Slow down the game.
Be calm.
Make the plays.
Execute one play at a time.
Stay focused on the fundamentals. 

You can thank @DangerRussWilson for the inspiration for this blog post.

Trade smart and trade well!

More on sports and trading:
http://tradersmarts.blogspot.com/2011/07/sports-trading-and-psychology-of.html
http://tradersmarts.blogspot.com/2011/11/what-i-learned-from-2011-world-series.html
http://tradersmarts.blogspot.com/2012/10/how-to-deliver-when-it-counts-most.html
http://tradersmarts.blogspot.com/2012/12/never-give-up.html

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