I want you to:
- Have an exciting, compelling trading purpose that drives you to do the hard yards with your learning
- Be motivated to do your due diligence and make sure you have ticked all of the boxes before you press any trading buttons and take action
- Celebrate when you do the right thing (remember: this includes keeping that loss small when you should)
- And feel PAIN when you donate to the market needlessly (providing of course you take the lesson AND take more appropriate action next time while placing the blame where it should be)
So YES, let’s get aroused! If we hit the right level of trading arousal EVERY TIME and it’s driven by channelled, enabling emotion, this creates a likelihood that when we get to the press-the-button stage we do it with a calm confidence and will successfully arrive in that Profit Potential Place. Either extreme is not likely to produce the results we desire, either through not taking our trading seriously enough to do the things we must (due diligence; careful consideration of strategy selection; making sure it REALLY fits you plan) or though making decisions that are most certainly NOT from the right place.
Take a look at the diagram below that aims to illustrate this:
This middle zone is where we need to be sufficiently stimulated to do the right things consistently (even though these may appear to be a chore and some until they become habits). If you don’t apply this level of emotion to your trading it is UNLIKELY you will be sufficiently stimulated to spot an opportunity and then trade it without lengthy procrastination. You need to operate with the decisive action of a trading Casanova. This will ensure you give yourself the best chance of potential profit – let’s call it a “Potential Profit Zone”.
Neither do we want to be in a state of being over-stimulated to the point where you become a trading fruit-loop and perilously exposed to some of the more “dangerous” emotions. To make trading decisions when anxious, angry (that revenge trading thing!), or trading out of fear rarely produces good results and can mutilate a portfolio value quicker than saying “averaging down your loss is completely bonkers”.
So, it’s a balance of the two extremes – surely it is logical that some emotion is good as it motivates you to do the right thing (when backed up by compelling purpose) and there are some emotional states that are hugely damaging.
So, your mission after reading this post (as it’s always best to take some action, hey!) is to start to make a ten-second assessment of your ‘state of arousal’ before you press an entry or exit button for every trade this coming week. Where are you trading from?
One final word: if you want evidence of whether the right state of arousal is likely to produce peak performance, then look at other situations where that might also be the case….just a different context, that’s all.