If you’re a typical trader who trades with the trend, looking for higher reward vs. risk ratios, one of the hardest things you’ll ever need to learn to do is to stay in a trade and let your profits run.
For some, this is even harder than learning to cut losses.
You see this often: you solemnly promise to yourself that you’ll stay in a trade, but next thing you know:
- You’re closing that trade for break-even.
- You’re closing that trade for peanuts.
And often, in both cases, often, you try to convince yourself that this was the right thing to do, even though somewhere deep inside you know it wasn’t!
And sure enough, sometimes, the market goes down from where you’ve exited your trade (or up, if you’re short) and you’re like “See! I was right!”
That’s you rationalizing your move.
But often, price skyrockets right after you’re out and you feel stupid.
And even then, some rationalization still happens.
So, it’s not easy to stay in a trade for maximum gains.
As someone who’s been trading for 13+ years and who’s seen it all, I still struggle with this sometimes.
Staying in a trade so hard because our mind never stops telling us stories –it is constantly judging, evaluating, fantasizing, doubting…
And many of these stories are real attention grabbers.
Time and time again, we get lost in those mental stories, we automatically think they are urgent and valid, and we feel they need to be acted upon.
Which Thought To Believe
If thoughts are really just stories (as I’ve talked about many times on this blog), then how do we know which ones to believe?
There are two parts to this answer.
#1. – Don’t Hold On To Any Mental Construct Too Tightly
Mental constructs are thoughts, beliefs, emotions (intricately linked to sensations in the body) and everything else appearing in that space we call mind.
We all have those mental constructs, but the more we feel engulfed by them (the less space we create between mental constructs and our actions), the more inflexible we become in our attitudes and behaviors.
So, first, learn to hold your thoughts and emotions lightly.
#2. – Whether a Story Is True Is Not That Important
Far more important is whether the story is helpful.
Suppose I am about to make a serious mistake by closing a trade (because this action goes against my plan) and, in the moment, my mind tells me, ‘Great, you are doing the right thing.’
This is not a helpful thought.
No matter how I came to that conclusion, it doesn’t help me achieve my long-term objectives because it goes against my plan.
That thought (story) is more concerned with avoiding pain in the short-term; it doesn’t inspire me to improve; it merely wants me to not feel uncomfortable.
So, second, your trading plan is ultimately what’s true; it’s all that matters! And this should guide you when determining which thought is relevant or not.
Staying In a Trade Equals Sitting on Your Hands
That said, you can waste a lot of time debating whether to stay in a trade or close it; again and again, your mind will always try to suck you into that debate.
That’s why you should train yourself to become more resistant to your mind’s alluring propositions.
You can train yourself to sit on your hands, so to speak.
It’s all about patience and discipline, which ‘full-circles’ us back to mental stories.
A Harvard study revealed that a wandering mind is less productive, resilient, disciplined, and by extension less likely to be happy than those able to focus on the tasks at hand.
The most startling part of the discovery is that unhappiness doesn’t just come from the mind wandering to unpleasant things.
That same study shows that people with minds that wander to neutral or even pleasant thoughts are still less happy than if the mind wandered very little.
That’s because an unruly, wandering mind will find problems where there aren’t.
It will create excuses, find reasons for this or that… and when you have a goal you’re trying to achieve and a plan you’ve established and need to follow, it’s not ideal.
So, the way to a more balanced approach to your life – the keys to happiness, if you will — lies in mastering the mind, teaching it to remain still in face of external factors that might otherwise cause it to react and meander.
And that’s exactly what you need if you want to be better able to stay in your trades longer for maximum gains.
You have to work on mastering your mind, thus placing your attention where it needs to be – your trading plan.
Thankfully, meditation helps you train your mind purposefully, with intention.
And it’s a habit that every trader should develop.
You see, everything about our lives is a matter of habit.
In everything you do, you are always reinforcing good or bad behaviors.
- You want to be more patient? Practice it while waiting in line at the Grocery store.
- You want to be more flexible? Don’t hold on to your beliefs too tightly.
- Want to stop overthinking? Cut out as much as possible the distractions in your life. Focus on what’s essential and useful.
A formal meditation practice helps you become more in tune with that process so that your whole life can become a practice of nursing wholesome habits of mind.
And when you start doing that, you slowly untie the mental knots that are preventing you from excelling in a field like trading.
As you see, trading is not just about financial independence; it’s a journey of personal growth.
If you think you could use some help on that journey, maybe consider taking the Trading Psychology Mastery Course.
In there, I help you become a more thoughtful, reflective trader. You’ll get to develop a mindset that works for you, not against you.
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