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Sometimes I get some really strange questions in the mail. The one that follows is one of them. Although I try to be like “Rambo” when I trade, I haven’t in actuality fully achieved “Rambo’s” degree of “coolness.”

“Joe, is it really true that you are able to stay calm and relaxed when you trade? Are you saying you have never cracked under pressure?”

There have been times when I made mistakes under pressure, but I don’t recall ever cracking under pressure. By that I mean I didn’t panic, but I have come close. Being short soybeans when Chernobyl blew up was probably the closest. I’ve made huge errors in conduct - once I sat and lost $45,000 in a matter of minutes because I tried trading while teaching a student at the same time. Lesson learned: Never trade and teach at the same time. Stay focused on one or the other. I once woke up to a margin call of $21,000+, but it turned out in my favor. I had erroneously left a 5-lot in the market overnight - thinking I was flat - the result of sloppy housekeeping.

Nevertheless, I have learned how to make trades in a relaxed, but focused way. I don’t put unnecessary pressure on myself. I don’t let myself get stressed out - it’s simply too costly to do that.

I don’t believe that I have to be successful on any one trade; I keep my focus on the big picture. I don’t believe I need to be right. I don’t try to impose my will on the market. And I definitely don’t try to predict the future of price movement. The market is the market - it does what it wants to do.

What I do is to closely observe market conditions and movement, and make up a detailed plan of attack. I trade what I see, allowing the market to take me where it wants to go.
I make a serious effort to stay calm and relaxed, and ready to act on whatever happens next.

Once I have a trading plan, I follow it. I do not doubt or second-guess my plan. I meditate on my plan and picture myself carrying it out successfully, before I ever enter a trade. I really believe in mental imaging as being an important activity.

I enter and exit trades without worrying about the consequences. Worrying has never helped me to trade well. Worrying is wasted energy. By staying focused, I am able to see trading opportunities more easily, and that allows me to take advantage of the opportunities when they arise.

Trading is a lot like playing sports. Players must stay objective, calm, and not crack under the strain of wanting to be “the best” or “perfect.” I am definitely not a perfectionist.

I recall one year when college football fans observed what happens when a team seems to be playing “so perfectly” that some say they are “unbeatable.” All season long, the Oklahoma Sooners had been winning, and winning big. They were the only undefeated college football team, until the day they lost by over three touchdowns to the Kansas State Wildcats. What’s surprising about this loss is not that the Sooners lost, since even the best teams can lose occasionally. It was the way they lost and how they seemed to be defeated psychologically. After making their only touchdown in the early moments of the game, they seemed to be stunned and shaken for the rest of the game. They couldn’t make even a single touchdown. It was unexpected and hard to believe. One commentator said it was like the bully who had never been beaten down. They knew how to win, but when upset and knocked down, they didn’t know how to get back up. Sooners’ Quarterback Jason White said, “They put pressure on us and got to us a few times.” And as the clock ticked away, Kansas State made another touchdown, then another, and then another. During the final minutes of the game one announcer said of the Oklahoma team, “They just want to lick their wounds and go home.”

From a purely psychological perspective, one can wonder what would have happened had the Sooners lost one of their first few games. Maybe they would have learned how to recover from a setback, and when they were down by a couple of touchdowns, they could have easily come back to make the win. It’s like what some hedge fund managers say about good traders: “The best traders are those who have blown out their accounts a few times. They know what it feels like, know how to recover from it, and the possibility doesn’t haunt them anymore.”

Although it’s unpleasant to think about, it’s worth considering the worst-case scenario, and making a detailed plan to recover should it happen. It’s just one strategy for learning how to trade in a carefree manner so that should you face a severe financial setback, you can recover from it. So-called “trading in the zone” requires intense concentration and focus, and it’s difficult to maintain this stance when the pressure is on you to perform. Thus, you must do whatever you can to reduce the perceived psychological pressure. The most obvious way to relieve such pressure is to think in terms of probabilities and carefully manage risk. It’s useful to remember that you may not win on any single trade; but after a series of trades, you will have enough winners to make a profit in the long run. It’s also important to manage your risk. Determine your risk up-front and risk only a small amount of trading capital on a single trade. Doing so will ease a lot of the pressure, allowing you to be more open to see the opportunities that the market offers. Don’t crack under the pressure of a potentially mortal financial defeat. Consider the possibility, and be ready to recover from it.

Joe Ross
Trading Educators Inc

Joe Ross has been trading for more than 47 years, and is a well known Master Trader. He has survived all the up and downs of the markets because of his adaptable trading style, using a low-risk approach that produces consistent profits.

Joe is the creator of the Ross hook, and has set new standards for low-risk trading with his concept of “The Law of Charts

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Financial success isn’t a hard task to master. It simply takes dedication, hard work and a little old fashioned commitment.

But it also takes a little knowledge. Too many consumers are ignoring what are financial truths. They run up large amounts of debt just to appear successful to those around them. They surround themselves with things that only make them feel better for a minute.

They ignore the fact that a debt-free and well managed financial life is a wonderful way to eliminate stress, which is all too common in today’s world.

What do you need to do to become financially successful?

First, you need to spend less than you earn. Sounds easy, but it really isn’t. It is easier to spend less than it is to earn more. You simply have to cut your costs. You have to stop charging on your credit cards and you have to stop shopping. Look closely at where your money is going. Look at what you already have around you. Get all those projects completed before you buy things for a new project.

You have to have a budget and stick with it. Budgets don’t tell you how to spend your money, they tell you how to save your money. You can easily see where your money is going. You can identify areas that you can cut back on. Then, you can set spending goals. A budget is a great way to challenge yourself. There is nothing better than saving more money than you thought you could. Surprise yourself with a budget that works.

From your budget, you should be able to find the money to start paying off that credit card debt. If you are severely in debt, you may need to get a second job and sell some things to get a head start. Stop using those cards and start paying them off. They are draining the life out of your finances on a daily basis.

You should be contributing to a retirement plan. Research your options and take advantage of them. Don’t wait until tomorrow, it will be too late. Start now. When you pay off your debt, put that money to your retirement as well. Who knows — you may be able to retire early.

Once you have your debt paid off you should have a savings plan. There are goals that you can set for your savings. You may want new furniture or to go on a vacation. You should also save at least three to six months of money to cover your monthly expenses in the case of an emergency. This will cushion your budget from any repairs, emergencies, illnesses or job losses that may happen.

Financial success isn’t difficult. It is simply a habit that you have to nurture and maintain. Take the time to sit down and get started. Work on it until it becomes second nature. The more you work on it, the better you will become at it.

Martin Lukac represents www.RateEmpire.com, an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at www.1AmericanFinancial.com and San Diego loan portal www.LendingSanDiego.com

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In an age of mass differentiation and low cost chic, there has never being a worse time to be stuck in the middle. Consumers are abandoning mid-range products in their droves, often opting for cheaper alternatives and saving up to buy the occasional luxury. At one end of the scale thrifty customers are cutting costs by buying supermarket own brand goods, whilst at the other end easy access to credit makes it possible to trade up to a BMW rather than settle for a Ford Mondeo.

The Low Cost Revolution

Throughout numerous consumer sectors, there are companies specialising in low cost goods and services. Everything from food to flights and cars to clothes can be bought at very low prices. As cost-focussed companies get bigger, they continue to find ways to reduce overheads in their operations and squeeze suppliers for better deals. Consumers are also changing their attitudes to low cost goods. Film stars and fashion models are setting the trend of low-cost chic, happy to wear value clothes alongside their premium brands.

However the low-cost sector is largely driven by economics. Increases in living expenses, debt and taxation are stretching the purse strings of the middle classes and forcing them to abandon their loyalty to mid-range products in favour of low-cost bargains.

Luxury For All

In an increasingly globalised society, consumer aspirations for luxury goods and services have become much more demanding. The ’spend now, save later’ celebrity fuelled culture encourages us to treat ourselves to products that signify individuality, success and status. By becoming more affordable and easier to access, exclusive brands are cashing in on increased consumer demand, buoyed by changing lifestyles and easy credit.

How Should Mid-Range Brands Respond?

Businesses selling mid-range products and services should not be blamed for feeling the pressure — with low cost and luxury brands squeezing from both ends. In certain markets, this pressure will be less extreme, whilst in others it could mean being forced out of business. One option to counter the threat is to decide to trade up and become a premium brand or trade down to become low cost. How effective this strategy is will depend on the market and the company’s ability to change its business model and alter customer perceptions.

Another option is to launch completely new brands into the premium and low-cost sectors, a strategy frequently employed in the automotive and airline industries over recent years. Alternatively it may be more cost-effective to take-over competitors already operating in these sectors.

Whilst the writing is not on the wall for mid-range brands just yet, the outlook is becoming increasingly competitive and businesses will need to be much more innovative in finding ways to differentiate themselves.

Find the right business strategy to grow your company — BizHubz.com — Advice for Managing and Growing Your Business

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