Trading Mantras Taken “Techniques of Tape Reading“
~Vadym Graifer, Christopher Schumacher
1. General State of Mind
- Responsibility for your Own Trading. No one has control over me. I am controlling myself. I cause any changes in my account. I am looking into my actions to find the reasons for any changes that occur. I have the power to make positive changes in my account. No one can hurt me, since I am protected by my rules and discipline. The market is not a hostile environment; it’s just a sea of opportunities. I am giving myself money or taking it from myself. I am not hiding in the comfort of blaming someone else. I want the result-profit or loss-to come from my choices.
- Opinion less State of Mind. The market has no firm link between reason and outcome. I don’t have to figure out the future. I don’t need the weight of opinion on my shoulders. I am free to react to what happens by relying on my reading of stock action. I keep a flexible state of mind. Nothing prevents me from changing my tactic if the market doesn’t act as I expect it to.
- Confidence. I don’t know what the market will do next. I don’t have to know how I will react to anything the market does. I am confident in my ability to react correctly. I have a strategy that works and the discipline to carry it out. I am independent-minded. I don’t trade to please others. I am self-reliant. I question any trade I take, but I don’t question my ability to make the right decisions. I trade effortlessly and automatically. I manage risk and assume losses. I trust myself.
- Living in Reality. I do not convince myself that I am right. I just watch stock movement and make my conclusions. When market behavior changes, so does my strategy. Market movement is the ultimate truth. I am not trying to outsmart or outguess it. I live in the here and now. My mind is open to possibilities.
- Motionlessness. I am objective and calm. I am a detached observer. I don’t get angry about stocks not doing what I expected. I know they do what they do and that the market is what it is. I don’t get frustrated with stop losses; they are part of the game. I don’t get overexcited with winning trades; they are just one more confirmation of my correct approach. I feel good about my trading and about myself. My performance as a trader doesn’t reflect on my self-worth.
2. Morning Tune-up after a Wining Day
- I am relaxed and confident. I have an optimistic, winning attitude from yesterday. I remember the feeling of doing the right things, and I am going to repeat those things today. I am focused. I can see everything that happens. I evaluate events quickly and precisely. I see myself in control.
3. Morning Tune-up after a Losing Day
- Today is a separate day, which has nothing in common with yesterday. Today’s performance is fresh. It is I who has the power to do the right things. The stock market has no power over me. It’s not after me. It has no memory of yesterday, and neither do I. I remember how I feel when I win. I am going to remember this feeling of victory. I can identify and execute winning trades.
4. Recovery after a Losing Streak or a Heavy Loss
- I am starting fresh. I know what to do to win. I am doing the right things right now, and not trying to get back my money. I am not taking revenge; there is no one to fight with. I am taking it slowly until I get a good feeling. I am not complaining about my loss. I paid money for the lesson. Now I am applying my new knowledge to my trading. I am taking only trades that match my set of rules. There is no memory of money lost; my trading account is not money. It’s a tool for making money. I am rebuilding my confidence with many small wins. They let me feel the taste of winning. I don’t let events control me. I am in control of myself. I am going to remember the feeling of every win.
5. Stop Loss
- Stopping out prevents losses. It’s not losing; it’s preventing a loss. Ia m not trying to control the market. I admit to its independence. I am willing to act in tune with it. If I find myself in the wrong place at the wrong time, it’s in m power to get out. I have the responsibility to keep my trading account in good shape, and stop loss is my way to achieve this. There is a nothing wrong in being stopped out. A stop does not make me a loser. It makes me a winner, serving as a line of defense for my account. This is my way to control events. This is my salvation. I want to be in control and be happy. A stop is not a loss. A stop prevents a loss from growing. The market is in endless motion. No trade is so significant that it’s worth holding onto if it doesn’t’ work. The next opportunity comes right away. I switch easily from the trade that doesn’t work to another that will. I enter any trade accepting in advance that it can stop me out. If the trade doesn’t work out, it won’t come as a surprise to me. My trading strategy has the inevitability of losses built into it. But no single loss can get out of my hand.
6. Fear of Trading, Hesitation to Pull the Trigger.
- Trading is a game of probabilities. I don’t have to be right every time. I just have to follow my rules. I know my system works. Every trade is either a profit or a stop. Any given trade is not of significance. The results over a certain time period are what matter. Trading within my proven system puts the odds on my side. I have to play to allow opportunities to materialize. I know I can trade by my rules. All I do is react to signals, a signal to enter and signal to exit, that are generated by my system. They take me in and out with no hesitation. I can observe the market and emotionally detach from it. Any stock movement is simply numbers that change following certain patterns. I know how to read those patters. I am totally focused on what the market is telling me. I can hear it and react to it.
7. Letting Winners Run.
- I don’t have to be right all the time. I don’t have to take a profit as soon as my position shows one. I have to sell when my system generates a sell signal, not when I have a profit. My goal is to play within a set of rules, not to make money. Things once set in motion tend to remain in motion. I want to ride them while they move. I just trail my stop until the stock proves that it has reversed or until a sell signal is generated. My system is profit-oriented. I am going to let it generate profits.
- I have only one reason to put on a trade. This reason is a valid setup in terms of my system. There are no external influences that can make me trade. Boredom is not a reason to trade. Being down for the day is not a reason to trade. The market doesn’t care about my being up or down. It generates profitable opportunities regardless of what I want. I wait for the market to create a situation I can recognize. I am not eager to find the trade. I will know when it comes along. I don’t have to be in the market all the time. I sit and wait for the right opportunity. My money works when it’s in a trade that exploits a profitable opportunity. My money works when it’s sitting on the sidelines being ready for the right moment.
There is a time and a place that every single one of these mantras are relevant in one’s trading. Whether you’ve had a rough day and you’re nervous about the upcoming trading session, or you’re on a roll and you feel like money is pouring into your account at light-speed, always be aware of how emotions can effect your trading. A great defense always trumps a great offense.
How I personally use these mantras is I take a few minutes before the market opens to read it to myself a few times. Allow the words to sink in, almost at a subconscious level, so when you’re presented with an opportunity, you’re able to take it without thinking. That’s where you’re best trading will be done.
Additional Personal Mantras
“I always focus on the strongest stocks and buy them without hesitation”
“Stocks that are behaving properly are the only ones I focus my attention on”
“Overbought is a relative term used to keep the masses out of the trade”
“I’ll stay in the trade long enough to allow it to work or fail”
“Volatility is a necessity to shake out the weak hands”
I’m going to expand this page into sections of various books that I reference often and include some of the various concepts, thoughts, and quotes that resonate with me. These may be trading books but they are not limited to that genre, and some are for the mindset and psychological aspects of trading.
Trading in the Zone
These Beliefs are the Seven Principles of Consistency from Mark Douglas’s “Trading in the Zone” I highly recommend picking this book up to add to your collection, because it has benefited me tremendously in understand how beliefs and values play a vital role in one’s trading and ultimate success.
I remember the first time I picked this book up I didn’t “get” it and put it away. About a year later I read it again and it just clicked. I now reference it on a weekly schedule just so the principles in the book stay fresh in my mind and to reinforce what I had learned.
I am a Consistent Winner Because:
1. I objectively identify my edges.
2. I predefine the risk in every trade.
3. I completely accept the risk or I am willing to let go of the trade.
4. I act on my edges without reservation or hesitation.
5. I pay myself as the market makes money available to me.
6. I continually monitor my susceptibility for making errors.
7. I understand the absolute necessity of these principles of consistent success and , therefore, I never violate them.
Five Fundamental Truths:
1. Anything can happen.
2. You don’t need to know what is going to happen next.
3. There is a random distribution between wins and losses for any given set of variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
5. Every moment in the market is unique.
Addional Mark Douglas Material in PDF form.
“Consistency is the result of a carefree, objective state of mind, where we are making ourselves available to perceive — and act upon- when the market is offering us in any given moment.”
If anybody out there is having difficulty perceiving opportunity in today’s markets then they need to read this book. I know this environment is unprecedented and extremely challenging, but in every market there is opportunity. I just read a great quote very relevant to today’s market, but I’m not sure where it came from.
“Fear blinds us to opportunity: greed blinds us to danger.”
Turtle Trading +
I have read Michael Covel’s book the Turtle Traders twice and the 2nd time I enjoyed it so much more and ended up highlighting more in the book this time around than I did the first time. I’ll be including some of my favorite quotes from within the book, as well as many from Curtis Faith, who perhaps is one of the most famous turtles and has gone on to write a few books of his own. I’ve enjoyed some of what he has written and disliked some. That is why I’ve decided to include a section that is all things turtles here.
“Winning traders make money by consistently exploiting irrational behavior patterns of other traders” ~Curtis Faith