Trading using the training or trusting mindset?

Whenever I have been in the zone and on a winning run, if I think back, it always felt very natural and was about acting and reacting without analysing and thinking. On the contary, when I've been doing badly, the opposite seems to hold, I am always over analysing, thinking and hesitating and then finally acting just as the price changed.

Performance consultant, author and speaker, John Eliot, talks about high performers using a "trusting mindset" whereas everyone else uses a "training mindset". The trusting mindset is what I would call the unconscious mind and the training mind set is the conscious mind.

When a skill is initially being learnt, it is done very deliberately and every action is scrutinised and practiced. This is all a very conscious activity. If you think to when you learnt to drive. Changing gear was a bitch! It was a long and complicated operation requiring full concentration (at least it was for me). A very conscious activity (training midset).

After you have been driving a while, changing gear is easy and you can do it whilst talking to your mate in the passenger seat without thinking about it. This is an unconscious operation (trusting midset).

Any skill is trained consciously and then becomes almost a habit as it is transferred to the unconscious. The thing is, if you start to think too much about something when you are doing it, it ends up working through the conscious (training mindset) route which is slower and more deliberate. The same holds with trading. When you are trading 10 minutes before the off, you need to be ready to act quickly and confidently otherwise you miss the boat. This is an environment where the unconscious shines. If you have ever had a winning run, where you have been in the zone, you will know what it is like. It is all about trusting your unconscious to know what to do and not trying to second guess yourself.

Having a plan

Did you ever play table tennis, or ping pong as we called it, when you were little? Can you remember the feeling of pure satisfaction when the ball would float up to just the right spot and you smashed it back, bouncing it off your unprepared opponents head? It felt pretty good.

Now, the ping pong table is about 9ft long and good players can get that ball moving at around 100 miles per hour. To hit that little ball, taking spin, bounce and a whole load of other variables into account seems like an impossible task. How to do you calculate the trajectory, taking air resistance into account, adjusting for spin, assuming a return velocity of 80 miles per hour plus or minus 20? The answer is you don't. You don't have time to calculate, to cogitate and plan at the time, you just act and react.

Now, what makes a good player and what makes a bad player? Well, the good player has learnt to play the game, either by playing lots of different people, taking the lessons when they lost and any coaching that they could get. The first time they played, the ball probably bounced off their heads a few times or they just missed the table completely. With some determination, a willingness to make mistakes and learn from them and lots of practice they managed to learn to play the game. If you asked any of them to describe their best ever game, chances are it would be a time when they just "got into the zone", they didn't think about it, they just played. Can you remember a time, when you were "in the zone"? May be during a sporting event or at work or something, where you just acted without thinking about it and everything just flowed?

When you're "in the zone" your conscious mind steps out the way and your non-conscious mind does what it does best, react. When we are trading a fast moving market, e.g. a horse race getting close to the off, if we want to get in quickly on a trend we don't have time to think every move through, we have to act. This means trusting our experience, that is, trusting our non-conscious mind, or gut feel. This can be hard and by second guessing ourselves and overly thinking, we can stay out of the zone and miss the majority of a price move or not get out in time. So, how do we get into the zone? Well, first you need to have done the ground work and took the knocks, learning how to trade and follow the market. Next you need to be able to let go and trust what you've learnt. The final and most important step is that you have to go in with a plan. You don't have time to plan during the session, as things can happen too fast, all your planning needs to be done up-front first, so you can just act. You need to know your rules. When do you get into a trade, when do you get out, what do you do if the market moves against you and when. The more specific the better, the faster you can act and the less you have to think and pull yourself out of the zone.

"How to Stop Losing" - FREE Report

A while ago I spoke about putting together a special report, about some of the psychological factors that can cause an otherwise skilled trader to end up on a losing. Well, I've done a first cut of it and it can be downloaded here:

Special Report

"How to Stop Losing and Start Profiting"

Losing unconsciously

The more trading I do, the more I appreciate the advice about having a system, framework or set of trading rules to stick to. Successful trading is more than just being clever and knowing how to use your trading software, it is mainly psychology. By psychology, I mean it is about knowing your mind and taking control/managing your in-built natural reactions that, if followed, spell trading disaster. What in-built reactions?

We are wired to respond to the fear of loss and the threat of pain in a much more profound way than the potential for gain.

The mind is like an ice berg. Above the surface is the conscious mind. It’s the conscious mind we use every day for planning, analysis and making logical choices. The unconscious mind is like the larger part of the ice berg that lurks below the surface. Some people use the term subconscious mind or autonomic nervous system to refer to the unconscious mind. The unconscious handles a multitude of jobs which keep us alive and generally out of danger.

Have you ever been driving along at night? You’re zooming along, your mind mulling over the thoughts of the day, when WHOAH! Another car has pulled out in front of you. You don’t think, plan or analyse, you just turn the wheel and swerve. You come to a stop, safe, your heart is beating like a drum in your chest and your breathing is short and sharp. All those reactions were handled by your unconscious mind. If you had to think about it consciously, you’d be busy flying through the windscreen before you had decided to turn the wheel. The conscious mind is slow and deals with only one thing at a time, taking up to a half second to react. The unconscious mind handles a plethora of information simultaneously and instantaneously. The only problem is that this rapid response comes at a price.

Sometimes the automatic unconscious response is the wrong one in certain situations. In days gone by, feeling under threat and having adrenaline kick into your system and your body prepare for flight or fight would have saved your life. Nowadays, having to make a presentation in front of people can trigger the same response, leaving you feeling on edge, sweating and ready for combat! The same thing happens when trading, not that you necessary feel ready for combat but, our pre-disposed aversion to loss can make us let loses run.
The first step in getting around this is knowing why it happens. Using automated stop-losses can help, as it removes you from the equation (although I've not yet found any easy to set up and use stop-loss solutions in the software I have used). Other solutions involve tweaking the unconscious response in the context of trading, this would involve using an unconscious based technology, such as NLP or hypnosis. Another way would be to frame the trading situation in such a way that every trade is about protecting your bank (rather than making a profit), so the aim is always to focus on cutting losses. Working on the assumption that if the price swings away from you, it will keep moving away. Once you have closed the trade, then putting the last loss out of mind (so if the price suddenly bounces back, you don't start regretting following the system). The price will occasionally bounce back but in the long run, relying on that to happen is gambling of the worst kind and will lead to an empty bank.

Some great books on how the unconcious mind works are:

A book that goes into detail about how the unconscious mind has its beliefs installed and how to change them is (it can be pretty heavy going, so be prepared. It is very interesting and worth the read though):


The classic book on how our unconscious processes are used aginst us by marketers and advertisers and how to protect yourself: