Achieving the ideal setup to conquer the market
You’ve setup your trading room or office and crafted a powerful strategy you can rely on. Next you went out and set yourself up with a live trading account.
Now, it’s time to take money from the market.
But before you dive in head first, ask yourself what will be your bread and butter way to take money from the market. Whatever the solution, it will be applying this strategy over and over again.
To consistently execute a good strategy, you need to always be in the same state of mind, aka your trading comfort zone.
The Trading Comfort Zone
Psychologically, a trader should always be fully aware when they’re in the comfort zone.
Being aware that you’re in the right setup for optimal, effortless performance, is a necessary setup for traders who are performing at optimal levels.
However, some traders who are in the comfort zone might find themselves repeatedly making the same errors over and over again. In this case, the comfort zone needs to be broken.
In both scenarios, the awareness of being in the comfort zone is vital in order to extract more and more success from your trading portfolio.
What Does It All Mean?
The comfort zone is the sweet place where everything works smoothly, letting you take decisions in a natural, efficient, stress free way. We know trading can be a very stressful environment, so you should always be looking for the limits of your comfort zone.
For example, what trade size will be a little bit too much for you take on? When you lose money with a specific position size, you need to be able to take the loss happily, or without feeling complete distress and regret.
On the other hand, if you’re taking sizes that are too low, you might have the feeling that you’re not giving enough potential for the amount of work you’re putting in. Essentially feeling that it won’t be profitable enough for all of the hard labor that went into it.
Defining the size you’re comfortable with on both edges, is very important for you to define.
Trading Strategy Comfort Zone
Your trading strategy is a fundamental component of the comfort zone.
Fully understanding the logic behind your strategy, fully agreeing with all of its elements, and being able to recognize patterns that are vital to your analysis and strategy, quick and easily all goes into the comfort zone.
If you’re operating with the feeling that you don’t have all of these elements in your trading strategy, i.e. if you don’t fully understand why one setup works, you should be aware that you’re not in the comfort zone.
To fix this, you need to do more back testing and practicing in order to better forecast your actions in regards to patterns used to feed your strategy.
Pattern Recognition Comfort Zone
When you have a fast and reliable pattern recognition scheme for whatever you do, this means you’re in the comfort zone in regards to pattern recognition.
If you still need to do a lot of plotting in order to see and extract insights from your analysis, then you’re not fluent and not in the pattern recognition comfort zone.
To get there, practice pattern recognition and learn more about the conditions that will help you see what you need to see. Also, take more decisions in the market and practice a lot of screen time.
The Physical Comfort Zone
Trading time and location are also things that will fall into your complete comfort zone.
The time you trade, the volatility you’re willing to work with, and the time you’re most awake, sharp and efficient. All of these factors combined and considered will be your setup comfort zone.
Putting it all Together
Combining all of the elements outlined above will give you a comfort and set instructions for where you’re the most efficient and sharp during your trading times. This means that whatever situation you’re in, the entry, exit or management will be clear because you’ve built a fully functional comfort ecosystem around you.
If you have all of these things together, whenever something slips out of order, you’ll be able to recognize it quickly and stop your trading session.
If you don’t have these defined borders, the market will tell you but it will likely cost you and bring losses before you’re fully aware that you weren’t in the comfort zone.
Be Open About the Comfort Zone
Being very positive, talking about how to find your comfort zone, will give you an easier time to reach it.
Be smart with your comfort zone and always leave a little room for changes. Allow space to get out of the comfort zone but only once you’re completely aware of the comfort zone.
Challenging yourself to get out of the zone should leave you enough margin to experiment and try things that could potentially enhance your results. But if and when something goes wrong, you’ll still have the tools to fall back into your comfort zone. Comfort zones gives you the best infrastructure to learn, improve and develop new methods for success.
In regards to experimenting, it should be given no more than 20% of your effort. If that works out, you can increase the portion and eventually embed it into your routine until it’s a fully assimilated part of the comfort zone.
When you define your comfort zone, always leave a little bit of space to be better and more perfect.
Photo by Nick Hillier