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Trading: 99% Mental, 1% Technique

Continued from Intangibles of Trading

Trading futures and options on futures is inherently risky and you should carefully consider whether such an investment is right for you in light of your financial position. There is signficant risk of loss in trading futures and options on futures.

I have thought about questions like these for years, and the answer that keeps coming to mind isn't new. It actually is a spin-off from a Thomas Edison quote, which he states, "Genius is 1 percent Inspiration and 99 percent perspiration." My spin on this quote also plays into one of my biggest beliefs and that is, “you don’t have to reinvent the wheel.” So what is my answer? Trading is 99 percent mental and 1 percent technique.

Everything starts with a thought. If we harness the Energy created from our thoughts it takes shape and becomes our experience. Therefore, the strength (or weakness) of our thoughts become the strength (or weakness) of our experience. As the saying goes, we are what we think and believe.

How does all this relate to trading? Think about it for a moment. If in the back of your mind you think you’re not really smart enough, or don’t have enough money to trade, then do you really believe you will be successful? Or how about if you think that the markets are just a gamble, aren’t you really just letting yourself off the hook or sabotaging your success? If in your quiet moments you think and believe you just don’t have whatever successful traders have, then won’t your actions mirror those beliefs?

Now imagine, thinking the opposite, that you can trade successfully. What would you do differently? Take a moment and vision yourself as a successful trader. What kind of thoughts are created from your visioning? Can these creative thoughts manifest into the habits of a successful trader?

I guess it depends on what you believe.

Richard A. Estrada
Senior Trader

April 1, 2009