Key Points:
- Understand the psychological factors behind choosing your trading instruments.
- Manage emotional reactions to losses by analyzing what drives them.
- Pay attention to how your trading choices align with your needs and values.
This session is from 8/14/24 and was lost in the mix for a while. In this open Q&A session, Sean discusses an insightful conversation with an experienced trader about the psychological aspects of choosing the right instrument to trade. The trader had to balance personal circumstances like age, mental fatigue, and lifestyle with his trading choices. Sean emphasized that trading should not be dictated solely by external influences, such as what others are trading or what seems more volatile, but by understanding what truly fits one’s needs—both psychologically and financially.
The session delved into how many traders get caught up in the allure of fast, volatile instruments like NQ (Nasdaq futures). Still, it may need to recognize the emotional toll and cognitive load of scalping these instruments. Sean linked this to deeper psychological motivations: Are you trying to prove something to yourself, or is trading becoming a distraction? He reflected on his shift toward swing trading when his health required it, highlighting how traders must adjust their instruments and styles based on personal circumstances.
A pivotal moment came when Shane opened up about feeling a persistent need to recover losses, which led to an exploration of self-worth and identity. Sean explained that such reactions often stem from the more profound meaning we attach to money and success, especially for those providing roles like being a father or mentor. By defusing the emotional weight attached to each trade, traders can stay grounded in their long-term goals.
“Your appraisal becomes way too acute at the moment. You define yourself by this one trade instead of seeing the bigger picture.” – Sean Sawyer
C.L.E.A.R. Mindset Connections:
Connect to the present moment and enhance your self-awareness with practical techniques.
- Reflect: Sean encouraged traders to stop and reflect on their emotional reactions to losses, helping them gain more self-awareness.
Loosen your attachment to thoughts and emotions, and cultivate mental clarity and resilience.
- Detach: Using cognitive defusion techniques, Sean suggested that traders detach themselves from the intense emotional pressure surrounding each trade.
Embody your core values and align them with your actions to foster authenticity and purpose.
- Align: The session highlighted the importance of choosing a trading strategy that reflects personal values rather than external pressures.
Accept all the present moment offers, whether wanted or not, and find peace and strength.
- Acceptance: Sean discussed the necessity of accepting losses as part of the process rather than letting them erode confidence.
Respond with decisive, informed action, transforming challenges into opportunities for growth.
- Adjust: He emphasized adjusting trading strategies to align with one’s current physical and mental state, such as shifting from scalping to swing trading when needed.
Actionable Strategies:
- Regularly assess whether your trading instruments suit your current lifestyle and mental capacity.
- Use cognitive defusion techniques to observe and detach from unhelpful thoughts about your worth or performance.
- Reflect on whether your trading decisions align with your core values and long-term goals.
- Reframe losses as part of the cost of doing business, not reflections of your worth.
- Stay grounded in the bigger picture, especially when facing setbacks, to avoid overemphasizing short-term results.
Act Accordingly:
The session reinforced that the psychological aspect of trading is as important as technical skill. By aligning your instruments and strategies with your personal needs and values, you can create a more sustainable and fulfilling trading experience.