Trader Mindset

We traders are people who have to live with uncertainty and make decisions with imperfect information. No way around it. We willingly decide to take this lifestyle on.

Most people can't live with the uncertainly. John Q. Public and Public Pensions will pay you handsomely to make the decisions under the conditions that we must make and as long as you are consistent, they will continue to do so.

You can't do this from the beach or it flip-flops. That's Tim Ferriss stuff. If you want to be a beach bum, go for it. This is not for you.

You have to be dressed as if your best client can walk through the front door at any time. Looking like a frat boy is not how you install confidence and you're not going to trade $2,000 into millions. 

Tiger Woods played his best golf while his personal life was a big lie. Think about the emotional system he needed to play his "game."

When his personal life blew up, so did his game. It's as if he needed the secrecy and his clandestine behavior to play at a high level consistently. Maybe that's how he got "in the zone."

That's how his emotional model served him. How is yours serving you?

Nothing should get in the way of you feeling happy and trading. If trading is making you feel bad, you can quit trading.

Go for a quality, happy life first. Put a protective stop on your trading career to preserve your happiness. Driving yourself nuts is not worth it. 

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Inner Voice of Trading

Managing Expectations

Setting Price Targets is fear-based behavior and you don't want to let fear dominate your trading.

Setting price targets is about your fear, not greed. You set a price target so that you seem "reasonable" with yourself in terms of what you want from the trade.

Why set your sights so low...?

You need to start thinking bigger to allow your trades go to 20-1 in a reward to risk ratio. Let the market tell you where the bigger move is over.

If you can't imagining it happening, it won't happen for you.

You may have been coached wrong or have been instructed in a small-minded fashion in setting your sights to low.

It's your fear that gets you out of the trade too early. Only small traders are looking short-term. Let the HFT guys chop them up, not you.

Join the big boys and let the institutions push your trades further into profitability. Use the market forces against competition for your greater profits, like in judo.

Whatever trading edge you think you have, you cut it at the knees by taking profits too early.

Free Offers

Inner Voice of Trading

Managing Expectations

Setting Price Targets is fear-based behavior and you don't want to let fear dominate your trading.

Setting price targets is about your fear, not greed. You set a price target so that you seem "reasonable" with yourself in terms of what you want from the trade.

Why set your sights so low...?

You need to start thinking bigger to allow your trades go to 20-1 in a reward to risk ratio. Let the market tell you where the bigger move is over. 

If you can't imagining it happening, it won't happen for you. 

You may have been coached wrong or have been instructed in a small-minded fashion in setting your sights to low.

It's your fear that gets you out of the trade too early. Only small traders are looking short-term. Let the HFT guys chop them up, not you. 

Join the big boys and let the institutions push your trades further into profitability. Use the market forces against competition for your greater profits, like in judo.

Whatever trading edge you think you have, you cut it at the knees by taking profits too early.

Free Offers

Inner Voice of Trading

Managing Expectations

Price targets hurt your performance.

Human beings are "bad" at prediction. There is not much science in guessing where a bull or bear run will end. Previous highs don't necessarily infer a price point where a rally will stall.

Fundamentals matter.

Institutions - the biggest traders in the crowd - place their wagers based upon fundamentals and their overall business. If you don't have a simulator, you can trail the trade structure with a protective stop.

Place your protective stop on your unrealized gains where you'll be financially and psychologically ok if you stay in the trade and eventually get stopped out.

You can ask yourself "How much of my unrealized gains am I willing to risk in order to stay in the trade longer?" The recent bull move in the S&P is a good example of how you can (and should) let your winners run.

Once you do it a few times, you'll become very comfortable with this strategy. You'll come to find that "you didn't have to do anything" to make the extra gains.

Sit on your hands and forget price targets. Let the market tell you when the move is over.

Free Books

Inner Voice of Trading

Managing Expectations

Price targets hurt your performance.

Human beings are "bad" at prediction. There is not much science in guessing where a bull or bear run will end. Previous highs don't necessarily infer a price point where a rally will stall.

Fundamentals matter.

Institutions - the biggest traders in the crowd - place their wagers based upon fundamentals and their overall business. If you don't have a simulator, you can trail the trade structure with a protective stop.

Place your protective stop on your unrealized gains where you'll be financially and psychologically ok if you stay in the trade and eventually get stopped out.

You can ask yourself "How much of my unrealized gains am I willing to risk in order to stay in the trade longer?" The recent bull move in the S&P is a good example of how you can (and should) let your winners run.

Once you do it a few times, you'll become very comfortable with this strategy. You'll come to find that "you didn't have to do anything" to make the extra gains.

Sit on your hands and forget price targets. Let the market tell you when the move is over.

Free Books

Inner Voice of Trading

Managing Expectations

Take a mental health day whenever you feel you need it.

No one is going to be there to give you permission to do so. Trading is a grind and a marathon.

Doing the same thing day in and day out can become monotonous. You're not loser nor are you losing focus by taking care of yourself.

If you're taking 3 day weekends ever few months/weeks, you might not feel the burn that others feel.

I think it's very healthy to put some distance between yourself and the market for no particular reason.

You don't have to be in a massive drawdown to do this. Shake it up a bit and get back to center.

As you might have heard me say, "there are no external solutions to your internal problems," changing your routine can be refreshing when you're in a lull.

Free Offers

Tony Saliba's Options Playbook

Audiobook version of The Inner Voice of Trading

Take a mental health day whenever you feel you need it.

No one is going to be there to give you permission to do so. Trading is a grind and a marathon.

Doing the same thing day in and day out can become monotonous. You're not loser nor are you losing focus by taking care of yourself.

If you're taking 3 day weekends ever few months/weeks, you might not feel the burn that others feel.

I think it's very healthy to put some distance between yourself and the market for no particular reason.

You don't have to be in a massive drawdown to do this. Shake it up a bit and get back to center.

As you might have heard me say, "there are no external solutions to your internal problems," changing your routine can be refreshing when you're in a lull.

Free Offers

Tony Saliba's Options Playbook

Audiobook version of The Inner Voice of Trading

Preserve your sanity by implementing maximum levels of allowable losses per day, week, and month.

When they are hit, you stop trading for that period of time.

For example, if you set a daily loss on your equity of 1% and you lose that much on your overall positions, you go flat.

If you have a 8% rule on your overall equity for the month, you quit for the month even if it's only the 21st of the month.

As you approach 8% for the month, you'll want to haircut your overall trading equity (what you base your positions on) by 20 or 30% so that your losses will be even smaller.

If you trade with protective stops in place (and you should), you can calculate how much of your equity you will lose if they all get hit.

You can do this with open trade equity and trailing stops also. It's a very helpful process.

Free Offers

Get the audiobook version of The Inner Voice of Trading.

Tony Saliba's Options Trading Playbook

Preserve your sanity by implementing maximum levels of allowable losses per day, week, and month.

When they are hit, you stop trading for that period of time.

For example, if you set a daily loss on your equity of 1% and you lose that much on your overall positions, you go flat.

If you have a 8% rule on your overall equity for the month, you quit for the month even if it's only the 21st of the month.

As you approach 8% for the month, you'll want to haircut your overall trading equity (what you base your positions on) by 20 or 30% so that your losses will be even smaller.

If you trade with protective stops in place (and you should), you can calculate how much of your equity you will lose if they all get hit.

You can do this with open trade equity and trailing stops also. It's a very helpful process.

Free Offers

Get the audiobook version of The Inner Voice of Trading. 

Tony Saliba's Options Trading Playbook

Chartists are discretionary traders. This is true for those who have a CMT designation.

How can you define your edge if you are looking at the same charts everyone else is looking at?

Charts need to be interpreted. That's discretionary.

You don't have the same emotional makeup that your chart-teaching coaches have.

You don't have the same life experiences that they do.

If you haven't backtested your rules, you don't know your numbers. What is the expected value of a trade that you put on in a head and shoulders formation?

It's integral to know if you are trading too big or too small for the risk that you are willing to take.

What is your optimal bet size for any trade that you put on?

What is your risk of ruin?

Don't optimize for share size or contracts...that's amateurish.

Forget tiers...

Most indicators are lagging indicators, they don't give you trade signals for entries or exits.

Indicators are emotional band-aids and won't relieve you of having to live with the uncertainty that we are traders must live with. We must make decisions with imperfect and incomplete information. That's the world we choose to live in.

Learn to develop your inner voice - for free.