Society teaches us always to want more money, power, and a faster, crazier way to live. Don't slow down, and for God's sake, don't stop and think. Don't give up or you'll fall behind.
Schedule too much, think too much, and work too much the that's the mantra. This is what progress should be, right? This is what success should look like, right? Early on, we learn that this is perfectly normal; over time, it becomes a habit.
We can't stop moving for even a second. We feel like we aren't doing anything when we don't move or do anything. We feel like we're wasting time, so we get upset.
In trading, being patient and able to sit still is not only a good thing, it's worth a lot of money. One of the most useful things you can do is to do nothing.
But, since we are addicts, it makes sense that as soon as the trading session starts, we feel a sudden urge to get more done. Our minds don't seem to let us enjoy doing nothing.
We have to think, plan, worry, stress, and change, even when we're not supposed to. You must have ideas, right. Have you ever noticed how often those thoughts come to mind?
You have memories (from the past), plans (for the future), and ideas (from your imagination) that just pop up in that space you call your mind.
Have you ever noticed that you can feel things inside and on your body, some of which are good and some of which are bad?
You are always being pulled to different mental and physical states, and most of the time you don't even realize it. You find yourself in the stories, you believe them, and they make you want to do something, which you do.
Then, the next thing you know, you're entering trades at the wrong time, getting out of trades at the wrong time, removing your stop-loss, increasing or decreasing the size of your position... You're breaking your trading rules.
This is a problem because you are losing money because you don't pay attention to your urges. Trading is mostly about waiting for the right time to act.
You're in the wrong field if you want to make things happen on your own terms. You can't be a good trader if you don't know yourself.
The market moves at its own pace, on its own time. And knowing yourself helps you learn to be patient and "do nothing" while this happens.
You save time and energy by letting the market do its thing. It makes it so that trades come to you. It stops them from running. It accepts that things happen in a natural way and change over time.
But the best part is that you can learn to do this. Absolutely!
Let's try a little exercise…
How you stand: Just where you are.
When: When you're waiting for your entry signal or your exit signal.
Just let your mind do what it wants to do. It will make you think of stories and make you feel like you need to act in a certain way.
Your goal is to be able to stand being there by yourself without trying to change or take charge of anything. Just show up.
Let your mind wander wherever it wants. You can think about nothing or everything. You can daydream about the perfect trade that gives you a 1000% return. You can worry about missing out on an amazing chance.
But pay attention. Watch where your thoughts take you. Tune in to the part of you that just notices what you're thinking and feeling instead of being taken over by it.
Your mind's ability to observe lets you see things without bias. Notice how it doesn't get caught up in the different stories and states of mind and body. It doesn't do anything. Pure, neutral, unencumbered…
So, that's all. That's all there is to it!
Now, the do-nothing strategy works better for day traders, who must be in front of their screens during the process, from choosing trades to getting out of them.
But it can also be used by swing traders and position traders. In fact, you can use it anywhere, anytime, in or out of the market.
This technique helps you accept what your body and mind are doing, which makes it easier to wait. When you are impatient, you try to make things happen by thinking about them more strongly or often, but you don't pay much attention to how things are going.
On the other hand, if you're patient, you can watch what's going on with a keen eye. You can tell when something could happen and when it hasn't happened yet.
You can see that things change in cycles, and different things happen at different points in those cycles. In other words, you don't try to make things happen on your own. Instead, you just respond to things that happen in a set way.
It's okay if the do-nothing technique is hard for you at first, but this is where you start. By the way, Tom Basso, a hedge fund manager interviewed in The New Market Wizards, uses a very similar method.
You don't even have to use this as a way to meditate, though you can if you want to. Pay attention to how you feel, and don't try to defend yourself against anything.
No matter how bored, happy, tired, excited, scared, hungry, or restless you are, you welcome all of it. Your goal is just to watch yourself as you go through these states. You can't mess this up.
If there's a lot going on in your head, you might feel like you need to do something, like enter (or leave) the market before you even get a trade signal.
As was already said, all that "noise" or mental rehearsal is not a problem and shouldn't be fought against. If you try to ignore the noise, it gets louder.
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But just being aware of the noise is a very powerful thing, because it lets you see what's going on in your mind and body as if you were looking at it from the outside.
This makes you more objective, and then you can say, "Okay, this thought, feeling, or urge goes against my trading rules, so I won't act on it."