The Mental Strategies of Top Traders: The Psychological Determinants of Trading Success

Chapter 5. Separating Emotions and Decisions: The Ability to Be Self-Aware

In the late 1970s, I was invited to join the U.S. Olympic Sports Medicine Committee, which opened up to me the amazing world of high-performance athletic competition. In my work with a wide variety of Olympic athletes, I learned about the power of explicit goal-setting and techniques of visualization, relaxation, and meditation for enhancing gold medal performance.

During my Olympic committee work, I learned that those who made the Olympic team, and especially those who made it to Olympic gold, had been visualizing these achievements for years. They allowed the vision and commitment to the result and faith in their eventual success to support their efforts through many years of hard work, failure, and challenge. In particular, a proactive strategy gave these athletes the confidence to embrace their fears and associated emotional responses to the stress of high performance, thereby converting the anxiety of the fight-or-flight stress response into a positive, adaptive approach to the situations they faced.

While teaching these principles to others in intensive weekend Life Strategy Workshops during the 1980s, one participant sought out my advice about applying these techniques to the trading arena. As I told him then, and have since reiterated countless times in my books and training seminars, the key to trading success is to promise or commit to a stretch target over a specified time horizon and then construct ...