How to Stop Ignoring the Perfect Trade Setups

As mentioned in a few of my recent articles on Fear, the bottom line is:

It’s your PERCEPTION and how close it’s ACCURACY to reality is that will ultimately lead you to taking actions that are in your best interest….or not. So fear is simply a link in the chain, if you will. Perception leads to fear leads to action or inaction.

So the start of the chain is of utmost importance – and that is PERCEPTION, or lack thereof.

In one of the seminars I went to many years ago the speaker told us to look around the room and find everything we could see that was BROWN. He gave us about 10 seconds to make a mental note of all the brown stuff we saw, then asked us to close our eyes. Shortly after closing our eyes he paused and then asked us to keep our eyes closed and tell him everything that we saw that was RED.

Laughter ensued. Hardly anyone could remember anything they saw that was Red. Why? Because we were NOT looking for it!

And so it is with our day to day lives. If you BELIEVE and look for REASONS why your mother-in-law is a pain in the rump, then you will not be short in finding them. She may even bake some banana bread and bring it over to the house and hand it to you and you will think, “What’s she got up her sleeve? What’s her angle here?”

However, if you BELIEVE your mother-in-law is the sweetest, most thoughtful woman in the world then after she comes over you will think, “Man, I was right…..what a woman!” In fact, when you BELIEVE she is the sweetest woman in the world, she could come over and kick you in the shins and you may think “Gee, what has got this sweet, amazing and wonderful mother-in-law of mine all worked up?”

Be aware of this. Your beliefs and expectations will find a way to ‘come true’ for you. And your mind will HELP you be RIGHT by deleting all of the evidence to the contrary – and even if you perceive the evidence, it will get twisted so that it supports your MENTAL FRAMEWORK!!! This ties into a human need to be RIGHT – or more specifically, to see things consistent to their beliefs.

If you have negative beliefs, positive ‘stuff’ could be smacking you in the face but you won’t be able to see it because you are focused on the other side of things…your mind will not perceive anything but what you are looking for. Even if it does, most often it will be dismissed as an anomaly or freak thing, or somehow twisted in a way to support your belief systems.

In trading, this has HUGE implications. If you go into a trade/investment thinking you are RIGHT – then all the things that tell you that you are wrong you will ignore or twist in your favor. You must stay objective and have objective reasons to enter, stay in, or exit an investment. Yes, it’s good to have a plan and you need to have some level of belief or assertiveness about your opinion on a stock or investment to even PULL the trigger to get in on it.

However, that’s where you should stop being married to your bias/beliefs.

Ask yourself a question like, “If my hypothesis about this investment is incorrect, what would be proof of it?” Make sure it’s objective, because if you ask too many questions or doubt too much, then that swings the pendulum completely to the other side of things where you are a ‘nervous nelly’ and liquidate your positions way too early or can’t even pull the trigger.

When you do this, it will help you stay objective and keep you from deleting from your field of vision things that will help you manage trades you are in and enter trades as they set up.

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Tom Willard has over 15 years of trading and investing experience and he trains and teaches others to make money consistently in the markets through simple and powerful techniques.

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