The Power of Focus

There are three major ways to shift your emotional state. (See Shift Emotion.) You can alter how you feel by changing your focus, changing your beliefs, or changing your physiology. This column is about focus.

What you focus on as you trade becomes not just your focal reality but your understanding of the actual reality; and therefore effects your interpretation of events and, of course, your emotional state. This in turn effects your behavior. Decisions have an emotional component.

What are you looking at? Are you looking at the possibility of loss? Are you looking at the probability of profit?

Those who look only at the possibility of loss will either hesitate too long in getting into a trade or completely miss the trade. If they do get into the trade, they will grab their profits too soon.

Those who look only at the probability of profit may not protect themselves against loss, and managing loss is what trading is all about.

Have you told yourself a story about this trade? Have you told yourself a story about trading in general? Your story will effect your focus. You will be looking for evidence of the truth of your story. You will tend to discount or overlook all contradictory evidence.

A particularly effective way to direct your focus is through the use of questions. I'll be writing about the significance of questions in future columns. When you ask a question, you set up a gestault that demands an answer and assumes the truth of the question.

Do you ask, "What if I lose? What if I'm wrong? What if this trade doesn't work out?" Now look at where your imagination has to go. It has to go to the consequences of losing. You're going to feel bad. You'll lose courage. You'll hesitate.

Do you ask, "What if this trade is a big winner? What if this trade actually goes to my target? What if the market does what I think it will do?" You'll be putting on the trade, and feeling confident.

But here is the caveat: just thinking about winning is not enough. You may overtrade. You may fail to put in protective stops. Instead you need to focus on probabilities. Ask yourself, "What are the probabilities? What do my methods tell me to do?" This will keep you from jumping the gun. This will keep you from stalling.

Trading is a matter of balance. We need to focus on profit and loss, and balance the prospects. We need to focus on the probabilities of our methods. We need to focus on the information the market is giving us. And the only thoroughly reliable information we get is the price action.

And yet, having said all this, it's really important to look optimistically to the future even as we accept the current reality of news and market action. What if you could learn to control your focus so that your emotional state supported your trading actions?