Subscribe to RSS feeds Bulkowski Blog via RSS

Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

Support this site! Clicking the links (below) takes you to Amazon.com. If you buy ANYTHING, they pay for the referral.

Picture of the head's law.
Kindle
Paperback
Nook
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Encyclopedia of Chart Patterns 2nd Edition book.

Bulkowski's Transforming Negative Thinking

Class Elliott Wave Fundamentals Psychology Quiz Research Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 02/27/2017
20,837 15.68 0.1%
9,474 52.57 0.6%
696 -3.49 -0.5%
5,862 16.59 0.3%
2,370 2.39 0.1%
YTD
5.4%
4.8%
5.5%
8.9%
5.8%
Tom's Targets    Overview: 02/14/2017
21,150 or 20,000 by 03/15/2017
8,800 or 9,700 by 03/01/2017
700 or 640 by 03/01/2017
5,950 or 5,650 by 03/01/2017
2,400 or 2,260 by 03/01/2017
Indus strength: None YTD
Mutt Losers: None YTD
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

  • Example
  • Fueling Negative Thinking
  • The Fix
  • See Also
  • A picture of a bee visiting a flower from my garden

    In the early days of Basket Case Bob's life, he was a positive individual, with a smile on his face and love in his heart. Brought up in an optimistic family with money, he always had a sunny disposition, facing each day with renewed optimism, a happy-go-lucky guy.

    In his adult years, he met Smooth Sally, and they got along famously. He had a son with her. Then one rainy afternoon, he asked his wife to go on an errand. During that errand, she got into a car accident which took both her life and that of their son. Since that time, he has been, well, a basket case.

    He blamed himself, thinking that if he hadn't asked her to go on the errand, they would still be alive. Such negative thoughts affected not only his behavior, but his trading results, too.

    Bob used to earn big bucks and was a skilled trader, but now he can't find a profitable trade. On one position, he cut his losses and sold. Three minutes later, the stock started the long uptrend that he had been waiting for all morning. Two losses later, he decided to hold on as a stock declined, believing that it was also going to turn up. The general market was moving higher, he reasoned, why not this stock? He held on longer than he should have and crashed along with the airline stock, selling near the low for the day.

    Negative thinking is a bad habit, like picking your nose in public. If you practice negative thinking long enough, it becomes familiar, comfortable, and costly. You listen to an inner voice that warns, "you are going to lose money on this trade," and you do. Or "the stock is going to turn higher one of these years." It will, the day after you sell it.

    Example

    One trader I know lost no more than $5,000 in a single trade during his life. Then he moved into the currencies markets and was doing well. That confidence along with increased leverage allowed him to place a $1.3 million bet on a currency play, one that went bad. He lost $31,000. The resulting depression caused by that losing trade lasted months, making life difficult for him and his family.

    Unfortunately, his story is not unique. People think they can handle leverage and wipe themselves out in one trade. How many times have you heard that from traders? And no, I haven't wiped myself out, but I have been stung many times by dead cat bounces. The stock in which I made the most money (almost 5,000%), dead cat bounced no less than 18 times while I owned it, taking me down at least 15% each time. Fortunately, I don't use leverage.

    Fueling Negative Thinking

    What powers negative thinking? Basket Base Bob holds up four fingers and says, "There are three things...."

    1. Coloring experiences black. During this year, I have had a fear of getting into a bicycle accident. I routinely hit 30 mph on my bicycle, but did the most damage at less than 10 mph. Imagine what I would look like hitting a parked car at 30 or licking the road with my face? Having three accidents since I have been riding hasn't helped, but the negative thinking has taken the joy out of exercising by riding a bicycle.

      Trading can be the same way, like my friend that lost $31 grand. Traumatic losses in the past color your perception of the future.

    2. Stress and poor habits. Trading for a living is stressful, so you need to find a way to release that stress. Some turn to pills. Some turn to alcohol. Others begin stuffing themselves with junk food or "comfort food." Are you feeling stressed? The answer may lie in the number of times you reach for a salty snack. The higher the number, the more stress you may be under. Think about it the next time you reach for those potato chips.

      Instead of exercising, do you form bad habits and don't exercise at all? How about meditation as a release for stress? Who wants to exercise and take care of themselves when they are depressed?

    3. Other Downers. If you live with pessimistic people or come in contact with them regularly, they can be an emotional drain. They suck away your vibrant energy, leaving you feeling as if no trade will be a winner.

      After losing his wife and son, Basket Case Bob sought out others that also experienced such loss. While sharing similar experiences might sound like a good idea, it was like being in the company of losers. No one was happy and they continued to be miserable, prolonging their suffering. Have you ever heard the phrase "misery loves company?"

    New that we know what negative thinking is, let's discuss how to correct it.

    The Fix

    Here are the steps to overcome negative thinking. I'm not trying to be negative, but you're not going to like some of these...

    1. Record your negative thinking by either writing them down. List your concerns, fears, excuses, bad decisions, anything that negatively colors your perception or limits your future.
    2. Read what you wrote.
    3. Consider your negative past experiences that you think about often. Notice how the same ones tend to repeat, how they appear unsurmountable.
    4. What fears of the future are preventing you from achieving your goals?
    5. Review your list from the viewpoint of a positive person. How would they interpret your fears? How would they scale the unsurmountable problems and achieve your goals?
    6. Write down your positive thoughts and become comfortable with positive thinking. How do you feel about it? Although it may seem silly at first, that is only because you are unaccustomed to positive thinking.
    7. Review your positive thinking on a daily basis and continue to review it until it become "you." This could take at least three weeks, so give it a chance.

    A picture of a praying mantis

    The fix is not complicated nor difficult. It just explores the nature of your fears, defines what is bothering you by confronting them (writing them down). Then it reshapes your thoughts by replacing fears with opportunity.

    If a bad thought comes along, such as "I'm going to lose money on this trade," replace it with, "This trade is going to be the start of a series of winning trades." Begin to view fear not as a problem but as an opportunity. "I'll bet I can make this trade a winning one." "I am going to push past my fear of a loss and make a lot of money. It will take time but I will succeed."

    What happened to Basket Case Bob? He followed the tips outlined in this article, but it was a difficult process until he met a girl. She helped him see how a positive attitude could build new opportunities for a future together. Recognizing that she was a key ingredient to his future success, he vowed to complete the steps necessary to change his negative thinking. His daily losses gave way to winning trades and his old confidence returned.

    If Basket Case Bob can do it, then so can you. Think positively.

    See Also

    -- Thomas Bulkowski

    Top

    Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Vacation: a 2-week binge of rest and relaxation so intense it takes another 50 weeks of work to recuperate.