In the first part of this series, I walked through a simple visualization exercise designed to help your trading—especially, by emphasizing the fundamentals of good trading performance, such as having a plan; being able to execute it; staying calm and focused during the day; and being able to evaluate your results in those terms.

While that exercise is very useful, it is also very basic. This basic model, without any bells and whistles, certainly has its use. But what you really want to is to get the most out of it by having the fancy additional stuff. Now, we are going to learn how to take your visualizations to the next level, by borrowing in a bunch of tools used widely in other fields, like sports psychology and therapy, to improve it.

Taking What Works And Amplifying It

As we discussed last time, the reason that visualization works is because your brain activates the same neural pathways as when you actually perform an action. By doing a visualization, you are firing the same neural circuits and thus reinforcing the action in your mind. The representation of the event is what initiates the whole process.

There is one component of this that we didn’t touch on before, but which is key for improving the results of your visualization exercises: emotional impact. The way that you represent events in your head conveys varying levels of emotional intensity. Representations, and thus visualizations, that are coded to be more impactful will be more effective.

We already know this from normal life. Think about watching a movie on a 13” black-and-white screen with tinny sound. Now, watch the same movie on a huuuuuge IMAX screen with surround sound. The movie may be the same, but I can guarantee that the IMAX has exponentially more emotional impact. The difference is not the content—it’s how it was represented. Because the IMAX experience is bigger, louder, seems closer and more immersive, it ends up carrying that much more emotional impact. Thus, by changing properties of our visual representations like size, distance, brightness, etc., we can take the emotional impact and dial it up or down as we choose.

The other way to change the impact is through adding in different senses. While the exercise is called “visualization”, what we are actually doing is creating a total experience—and by adding in different senses and feelings, we get a much more realistic representation of the experience. By including sounds, feelings, even smells, we can enrich dramatically our representation of an experience.

Again, we know this from our everyday experience. Think of a vacation that you went on that you reallllly enjoyed. For instance, a trip to a nice, warm Caribbean island. Of course you can remember what the beach and the sea looked like.  That’s just the visual part of the experience. But you can also probably remember the feelings of the sun overhead; of the breeze coming off the sea; of the sand under your feet. You can recall the sound of waves lapping against the shore; the sounds made by wildlife; music playing around you. You could even recall the salty smell of the air; the refreshing scent of morning coffee,  etc.

The web of rich sensory information really brings this experience back to life. Imagine if you had  received a postcard, i.e. just a picture, from the people on the vacation- it wouldn’t have nearly the same impact as that whole experience. This reinforces the point that we can increase the emotional impact of an experience by engaging all of our senses, not just our visual faculties.

One thing to consider is that most people are much more comfortable in their non-visual senses. For instance, a really good athlete is probably much more comfortable using his physical sensations, like the feeling of sand under his toes, to make sense of events. In that case, it is important to work first from the sensory system that they are most comfortable with, and then use that to form pictures. Continuing with this example, the athlete could re-immerse himself in the beach experience with non-visual senses and then gradually start to let the pictures come back. This is called overlapping—you’re taking your best recall of the scene and then gradually working in the other senses. Keep this in mind if you have trouble making pictures—you don’t need to start with a pure “visualization”, but rather can start with your strong suit.

Moreover, just like with pictures, we can make changes in our representation of other senses to enhance their emotional impact. A concert with loud thumping loudspeakers has much more resonance with us than a little tinny radio in a far-off corner. With sounds, we can make them louder or dimmer; closer or further away; higher- or lower-pitched. We could use voices—in a trading exercise, you could imagine yourself saying supportive comments to yourself while trading. And you could change the voice itself to be whomever’s—to keep yourself relaxed while working, you might imagine a masseuse’s soothing voice instead of yours. Hard not to calm down, huh?

How to Incorporate This Into A Visualization

In Part 1, I discussed having a visualization of the whole trading session, segmenting by the various parts of the day. For each segment, we are going to take the same thing that we had imagined before and enrich it. While this is not an exhaustive list, it should catalyze some ideas of your own.

1. Preparation and market open

The most important is to feel relaxed, calm, confident and ready to take on the day. You want to be in the right state at the beginning and stay that way. In addition, you want to reinforce the very work that you are doing as being necessary and useful to successful trading.

Thus, add the following to your representation

• A clear, bright, up-close picture of yourself doing your market prep, like you’re watching yourself from only a little bit away
• The appropriate sounds, phrases and voices for you to be relaxed. One could be a soothing voice that says “You are relaxed and calm”, or your own voice saying “Take it easy”.  Find what works best for you.
• You can add a more professorial voice that reminds you “good preparation is absolutely necessary for trading success” or “Your preparatory routine is like stretching—you need it to be prepared for what comes next”
• A relaxed, calm, peaceful yet prepared feeling. Feel where that relaxation would be in your body. How relaxed would your muscles be? How would you carry yourself if you were really relaxed and prepared for the day?
• We often stare at the screen with a lot of tension in the area around our eyes, which strains the muscles and fatigues us unnecessarily. Instead, practice feeling relaxation around your eyes and on having a “softer” field of vision, where things seem “fuzzier” around the edges.

2. Walk through a sample position entry

Here, your goal is two-fold: to have a set of well-established criteria for getting into a trade and also making sure that a position actually conforms to those criteria. You will want to emphasize the confidence you have in your previous testing and homework for your entry criteria. You will also want to make sure that you use images, sounds and feelings that correspond to the discipline of actually going through the criteria. Make it like a similar experience involving a list—a shopping list at the store, a packing list before a trip, or just your usual morning routine.

• Visualize yourself brightly, up close and in vivid detail, reviewing over your entry criteria as you look through the markets. Visualize your “rules of trading” or “rules for entry”—even if they are not written down as such, imagine a sheet of paper with those words written at the top in big, bright, bold letters. This drives home to your brain that there are rules governing your trading and not just random punting.
• Hear your own voice saying confidently and firmly some encouraging words like “Stick to your setups and stick to your rules”; “Trust your homework and testing”. You can also use a derivative of this like, “One step at a time” or the Russian saying, “Measure seven times, cut once”.
• Use creative metaphors that provide a set of images, feelings, and sounds. You could envision yourself as a hunter on the plain, waiting for the perfect animal to slay. Thus, you would adopt the same feelings of slight anticipation and awareness; you would be on the lookout for potential opportunities all the time. Watch yourself prepping for the right kill. You only take the opportunities that you know are likely to work—just like a good trader.
• For putting on a trade, visualize a checklist of your various entry criteria. See the various criteria and then putting a big, bright, red checkmark in a box next to each one. Once all of the criteria are met, then imagine another big box entitled “Put on The Trade”. Then see that box being ticked. You now have the signal to trade.
• Use sounds to do the same thing. Imagine yourself asking a question in your own voice for item on your list—and then responding “Yes” as you go down the list. Or the voice asking the questions could sound like a mentor figure that you greatly admire and respect.

3. Putting on a trade

Once you have decided to put on a trade, the key is to approach it calmly, without panic. The worst thing that you can do is to force the execution too quickly or sloppily. As such, you need to feel relaxed. You need to imagine yourself picking your spot and patiently executing the trade.

• While imagining yourself trading, practice the feeling of relaxation. Feel the calm all over your body- you need to make sure that you are not panicking when you put on the trade.
• Watch yourself looking at the screen closely, picking the level or levels for trade entry. In your mind, you will want to take extra effort to make the picture bright, up close, and in superb detail—so that when the time comes, you can get that level exactly right.
• Hear the voice of a mentor saying something basic like “Patience…patience”. Or hear your voice saying “Remember, every penny counts—after all, it’s my money”. You will use this verbal reinforcement to stay mindful of the right entry strategy.
• Visualize your fill—the point at which your order is filled and a price and quantity come back to you. Use bright, vivid imagery of what a great fill would look like, up close to you to make it really compelling. Then add in other sense to reinforce it, like the voice of your colleague saying “Hey, that’s a great fill” or a little tingling of excitement in your stomach that denotes your being happy with the fill.

4. Taking off a winning position.

This is going to be very similar to the visualization for putting on a trade. Just like in that case, you are following a pre-determined set of criteria and then making the right decision. With closing a position, there are only a couple of things to add

• Definitely include in your visualization a sound that connotes making money. It could be the “ka-ching” sound of a cash register ringing, the clicking and clacking of poker chips, the sound of an ATM dispensing cash or whatever you associate with being paid money. The basic thing is to reinforce the  idea that closing winning trades means profits, and profits means cash in your pocket. We are not going to overdo this point (I will explain why later), but just give ourselves a subtle reminder.
• You will absolutely want to include a representation of yourself feeling good when closing out the trade. As you are sticking to your criteria on both entry and exit, I will assume that you are trading well, defined as sticking to your pre-defined rules. The idea is to feel good about having done everything right by having followed your rules from start to finish. That can be you congratulating yourself or you getting a kind of rush that you can get when you really did something well. As we have seen before, trading is about making the right decisions, and thus, you want to reinforce the fact that you traded well.

5. Taking off a losing position

There will not be much different here than from taking off a winning position. You will want to walk through the same checklist for taking off any trade, only this time it will be at a loss. This could be because it hit a pre-determined stop-loss, or because it’s been a loser for a time and you just decided to cut it. The point here, as with before is to reinforce the fact that you traded well, from start to finish

• Include yourself feeling good after closing the position. You want to feel good because you did well—you stuck to your rules when you put on the position and when you took it off. It happened to be a loser, but that doesn’t mean that your trading is losing. While this may seem counterintuitive, remember—you are in the game to keep making “One Good Trade”, not expecting to make money on every individual position. Being mopey and depressed doesn’t help anyone to keep their head in the game. Keep your head up, feel good about making the proper decisions, and move on to the next trade.

6. End of the day and wrapping up

Ideally, you will review the day and find that you traded well all throughout the day—researching potential trades well, putting them on and off. The end-of-day wrap up is the chance to evaluate that—to see if we were sticking to our rules in the heat of the moment, or were we straying into gambling? Did we miss some big moves or news items in the market that we should have caught?

• For the recap, you want to sharpen up your visualization of all the news, end-of-day prices, etc. Make them really bright, close, vivid. Imagine that something deserving of your attention will literally jump off the screen at you—even bigger and brighter than other things on the screen. Imagine that anything else in your own trade blotter, notes, etc will also jump out at you if it deserves attention. The important thing is make sure that you do not overlook anything important. Spend time on this aspect of the visualization
• Just like with putting on and taking off positions, imagine that you go through an end-of-day winddown checklist to close it out. See or hear yourself going through the checklist and mark off each individual item until finished.
• With trading, it is important to realize that coming to the office and being prepared and following the markets and trading well is a good day. This is the case even if we do not always put on trades or even if we lost money. Thus, make sure to give yourself a bit of congratulatory words in a supportive, encouraging voice. Say something like “Good job today, you worked hard”. This voice either be yours, or that of a mentor-type figure; it should be close to you so as to increase the emotional impact.
• Imagine yourself leaving the office and feeling good. It is important to practice feeling good when we leave every day, no matter what, so that we de-sensitize ourselves to losing days and so that we do not become overly exuberant on big winning days. Also, we need to keep up the optimism and drive in order to keep coming to work and giving it 100%. Practice the feeling and state of being happy, content, satisfied, eager to face the next day.

Wrapping Up

As we have just been through, you can significantly enhance your visualizations of trading success two ways: changing the brightness, intensity and other aspects of the image itself; and adding in sounds, feelings, and other sensory information that enhances the overall experience. Through dedicated practice and a little imagination, you can take your visualizations of trading success to the next level, to the point where they are literally mental practice of how you would like an ideal trading day to proceed.

Why Am I Always Watching Myself But Not Participating?

If you noticed, I was always writing to “watch yourself” doing something. It seems a bit strange at first—why watch yourself when you can just imagine yourself being in the very midst of it? Well, there is a very good reason. We have two viewing positions for any visualization: associated (i.e. experiencing it as if from our own eyes) and dissociated (i.e. watching ourselves at a distance).

Dissociated images have less emotional impact than associated. Imagine your high school graduation—you can recall receiving your diploma and being supper happy about it, I’m sure? Now imagine if you were just a spectator—the feelings dissipate somewhat. That’s the case with visualization exercises as well. The reason we chose dissociated is two-fold—one, by watching yourself trade, you get a much better idea of everything you are doing when you’re trading, so it’s actually better for mental practice; two, trading is supposed to be dispassionate, and you are reinforcing that.

There is one reason of this visualization where you can use associated imagery, i.e. experiencing it as if you were in your own body: at the very end of the day. Of all the things you would want to associate into and really feel more passionately about, it’s the good, enthusiastic feelings that come from having worked hard for a day.

It’s a good idea to watch yourself going through the trading day and then as you’re prepared to leave the office, step into the image and really feel all of the good feelings that you would want to feel: good, positive, happy, enthusiastic, a little self-congratulatory. Take a few moments to imagine how that would feel—a lightness in your head? Butterflies in your stomach? Maybe a smile ear-to-ear? Only you know what works for you.

In general, associated images are good for visualizing the state of having reached your goal and reveling in that. They are not good for visualizing the nitty-gritty “how” necessary for getting there. Thus, when you think about goal states—walking out after a successful trading day, reviewing a successful and profitable year of trading, receiving a gold medal in the Olympics—do it in the associated state.

In the next part we are going to take the visualization tools that we have established and use them in new creative ways to help your trading. This includes doing more with goal-setting; getting over bad trading decisions or a losing period; and overcoming some deeper-seated psychological blocks.

By Bruce Bower | www.howoftrading.com | Twitter: @HowOfTrading