Trading in the Zone and Staying There

How to Attain a Calm and Confident Trading Attitude

trading in the zone
jpa 1999/Getty Images

Ever had a trading day where it felt like you could do no wrong? Your decisions were decisive and calculated. You felt like you were in a flow with the market, which meant you could make trading decisions without internal conflict. The profits rolled into the account, but you almost weren't even aware of it because you were simply focused on continuing to make good trading decisions.

Whether you have experienced this feeling or not, traders often describe it as "trading in the zone." It's a positive mind frame that traders seek out and try to replicate on a daily basis.

While it isn't possible to be in the positive and productive mind frame all the time, we can do things to help foster and keep us in the zone much of the time. 

Trading in the Zone Characteristics

In order to trade in the zone, we need to know what trading in the zone feels like, and the characteristics that it entails. 

While in the zone trades are spotted with ease, without boredom between trades or anxiety about when the next trade will or won't occur. The mind is calm and confident, not racing or pre-occupied with things other than watching the charts and taking trades when appropriate. The trading plan is followed, without temptation or thoughts to deviate. This is key because following a plan means less stress in our trading. When we don't follow our plan and strategies there is more stress and our decisions are often emotional instead of logical and calculated, making it hard to get into or stay in the zone.

The confidence is exemplified by an attitude of "Today is a winning day." It is not an expectation nor a want, rather it is an unshakable belief. Most of us have had this feeling at some point in our life, whether it was before we played a sporting event, made a speech, went into a job or interview, or took a test we were well prepared for.

The same feeling is created by great day traders; they simply know they will be successful. This confident attitude, but not arrogant, leads to better trading results than a doubtful or anxious attitude. 

To maintain a confident attitude, traders in the zone have positive self-talk. That is, the words that go through their mind are positive and encouraging, as opposed to doubtful or loss-centric. Interestingly, the positive thoughts are not specifically focused on winning. Rather, the trader's thoughts and words to themselves are more about the work they have put into developing a profitable strategy, that the strategy is trustworthy, and they are good at following this strategy. Notice that it is the strategy that creates the profits, so the in the zone trader is focused on executing the strategy without hesitation or doubt. The amateur trader focuses too much on winning, and is not focused on following a profitable strategy.

The overarching theme is that to be in the zone traders need to trust fully in their trading plan. Trust comes from practice and knowing how a strategy performs. The more we know about the strategies we are using, the less stress there is, and thus the easier it is to enter the zone.

If you knew without a doubt that if you take 10 trades with a particular strategy you will have a profit at the end, would you execute those trades without hesitation? Compare that to a trader who doesn't know for sure the 10 trades will result in a profit. These two traders could be using the exact same strategy, but the first trader is more likely to take the 10 trades and receive the profit. The second trader is more likely to second-guess herself, taking more or less trades and thus ruining the profitability of the strategy. Confidence and trust in one's trading plan matters. Without it, trading in the zone is impossible. 

How to Get Back Into the Zone

Maybe you have experienced being in the zone, or want to get there for the first time. In either case, follow these guidelines to get back into the zone.

 

As discussed above, you must trust your strategies. If you don't trust your strategies, you will have doubt. With doubt in your mind you won't be trading in the zone. To gain trust in a strategy practice it over and over again. Document the results and take screenshots of trades. This helps solidify the viability of the method in the mind. 

If you have a method you trust, but can't seem to get in the zone, then consider some of the issues that may be preventing you from realizing your full potential. 

  • It is possible that a trader may be trading for excitement as opposed to following a plan. Great traders follow a well laid out plan, knowing that success will come if the plan is followed. Excitement-traders are after thrills, and to them following a plan is boring. If your trading is high stress, possibly you are seeking thrills instead of success. Thrills are created by venturing into the unknown and don't untested things. This is at odds with successful trading. Save the thrill-seeking for a demo account, and test out strategies there instead of with real capital. In trading, thrill seekers usually never get into the zone or realize lasing success. 
  • Humans are good at lying to each other, but we are even better at lying to ourselves. Go through each one of your trades and really look to see if you are actually following the trading plan. Sometimes we tell ourselves we are, but really aren't. If you feel a lot of uncertainty about whether to take a trade, how to manage it, or how to get out of it, chances are the trading plan is not being followed or it is not detailed enough. Create and follow a plan that allows you to get in and out of trades with confidence because you know the plan works. 
  • Trouble following the plan, even though you know you should? Sometimes this results from thinking about past or futures trades. The only trade that matters is the one right now. Focus on placing the correct entry for the plan, and then focus on exiting according to the plan. Nothing else matters except this trade. Doing the right thing, one trade a time, is the only way to follow a plan. 
  • If you are following your plan but losing, either the plan is faulty or market conditions are not ideal for trading. If the trades are good, but the market is not cooperating, then consider including in your trading plan what conditions are favorable for your strategy and which aren't. If you use a trending strategy, and the market is ranging, don't use the trending strategy. Trying to use a strategy in the wrong market environment will shatter your confidence making it much harder to get into and stay in the zone. Part of being in the zone is being in the flow of market and seeing when opportunities are there and when they aren't. When they aren't, don't trade.
  • If you find your stress levels are high while trading, and none of the above issues apply, another possibility is that too much is being risked on each trade. Reduce position size until you can trade without anxiety. Risk too much and nerves will prevent us from making the best decisions. When we are calm and comfortable, good decisions come much easier.
  • Finally, practice positive self-talk. Some traders never get into the zone nor achieve their best results because they constantly doubt or berate themselves. Losing trades happen. Even great traders have lots of losing trades. The difference is the great trader keeps making good decisions and following their plan, even after a few losses. This allows them to make the money back. Amateur traders typically get angry, try to force a trade to happen, or skip the next great opportunity because they lack confidence. 

Trading in the zone means more profitable trade results. Therefore, traders should strive to be in the zone as much as possible. Get back to trading in the zone by addressing the issues above when you are struggling.