As of 11/13/2019
  Indus: 27,784 +92.10 +0.3%  
  Trans: 10,843 -116.63 -1.1%  
  Utils: 844 +12.11 +1.5%  
  Nasdaq: 8,482 -3.99 0.0%  
  S&P 500: 3,094 +2.20 +0.1%  
YTD
 +19.1%  
 +18.2%  
 +18.4%  
 +27.8%  
 +23.4%  
  Targets    Overview: 10/31/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,150 or 2,950 by 11/15/2019
As of 11/13/2019
  Indus: 27,784 +92.10 +0.3%  
  Trans: 10,843 -116.63 -1.1%  
  Utils: 844 +12.11 +1.5%  
  Nasdaq: 8,482 -3.99 0.0%  
  S&P 500: 3,094 +2.20 +0.1%  
YTD
 +19.1%  
 +18.2%  
 +18.4%  
 +27.8%  
 +23.4%  
  Targets    Overview: 10/31/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,150 or 2,950 by 11/15/2019

Bulkowski's The Centered Trader

 

Are You a Centered Trader?

Are you a centered trader, one that lets emotions flow by without reacting, focused only on the trade? Let’s find out by taking this quiz.

  1. Do you feel your trading lacks discipline (do you consistently follow your rules)?
  2. Have you developed a reluctance to trade the market, perhaps because of recent losses?
  3. Do you set specific goals for each trade which you fail to meet?
  4. Does the fear of loss sway your trading decisions in any way?
  5. Have you increased your position size to recoup money from a failed trade?
  6. Are you overly eager to make a trade, perhaps because of a big win, because you need the money, or for the adrenaline boost?
  7. Do distractions interfere with your trading?
  8. Do you look for excuses or try to rationalize a failed trade?

Count the number of "No" answers and "Yes" answers.

Answering "No" to all of these questions means you should check yourself for a pulse. You may be dead. Look for a defibrillator.

Answering "Yes" to all of these questions means you are really screwed up, and this article is for you.

If you answered "Yes" to some, but not all, of the questions, then that means you are a member of the human race. Congratulation! However, you still have issues. Let's deal with those now.

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What is a Centered Trader?"

A centered trader is someone who has learned to recognize and deal with the sequence of emotional events caused by stressful trades, losing trades, or even winning ones. Typical emotional responses by an uncentered trader are:

A centered trader focuses on the trade and lets thoughts about self-doubt or self-criticism pass without interaction. They have learned to turn down the volume on such thoughts and just watch the chart to see how the trade unfolds. They don’t ask, "Do you think I can make it as a trader? Can people really make a steady income doing this?" They understand that trading is a business and losses are the cost of doing business. A centered trader has learned to take emotions out of trading. How? Experience has taught them how to react calmly to every situation. Another word for experience is practice.

When Captain Sully lost thrust from both engines after a bird strike, his airplane turned into a rock with wings, but as a certified glider pilot (according one source that consulted FAA records), his training allowed him to pilot the craft to a safe landing on the Hudson river. Your trading should be as professional and as calm as Sully was when flying the Airbus.

How do you become a centered trader?

  • Plan the trade. Outline how you expect the trade to proceed, what the objectives are, and map all contingency plans. There should be no surprises during the trade because you have already thought of everything and made plans to deal with surprises.
  • Practice. Captain Sully’s voice remained calm during the flight and that came with practice and training. Trading should be rote, an automatic response so that you are not making things up as you go along.
  • Trade the plan. Once you have a plan in place, follow it. Ignore any thoughts that will cause you to deviate from the plan. If you take an unexpected detour, then your trading plan needs work. You should have expected and planned for the unexpected.
  • Do deep breathing exercises, meditation, visualizing a successful trade, and relaxation exercises will help before and between trades. During a trade, try breathing from the abdomen and not the chest. Take a deep breath of air and let it out slowly. Let the calming effect soothe and relax you.

This article was based on an idea from Technical Analysis of Stocks & Commodities magazine, February 1995 issue by Ari Kiev, titled, "Centered Trading."

-- Thomas Bulkowski

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See Also

  • Trader qualities. Do you have what it takes to become a successful trader? Take this quiz to find out.
  • The centered trader. Take the quiz to test how centered you are and how to fix any problems you discover.
  • Trading like a Samurai. Learn how to trade like a Samurai, including six tips to help your trade better.

 

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My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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In prison, there are wardens who are sadistic. At work, we have managers.Smiley