© TradeYourEdge · 2015. 1. 16. · out (1) what is the right track and (2) what is the wrong...

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Transcript of © TradeYourEdge · 2015. 1. 16. · out (1) what is the right track and (2) what is the wrong...

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Getting on the Right Track

Reading this now, it probably means that you want to kick start or create a

BETTER trading career. Some of you want it because you have heard of

successful and flamboyant Traders (either in the past or recently), and others

might just want a fresh start in your personal life, a new direction in your

career or both.

If that’s you, then CONGRATULATIONS for picking a Great career

choice!

Hello,

My name is Alwin Ng and I’m the owner of TradeYourEdge.com.

Thank you for reading this compilation of thoughts and beliefs that I have

about trading. While some of you would at least enjoy the read, I hope many

you would truly GET ON THE RIGHT TRACK in trading.

Just to be clear, this guide is for anyone who has been trading for 5 days or

even 5 years. As long as you’re looking for help or support in your mindset

development, this is for you.

Of course, some of you just want to learn more and that’s great too. But for

simplicity, I’m going to assume you are still in your development stage and

you are still looking for help.

With that, I would like to invite you to take a BIG step back and take some

time to think about what I am about to share.

Because working hard is only a small part of the equation. Like many things

in life, when you get your trading on the right track, the entire process

becomes EASIER.

And that’s the objective of this guide.

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Why Mental Frames?

If you agreed to get your trading journey on the right track, you have also

unconsciously agreed that it is the right thing to do, and you have already

created a simple Mental Frame inside you.

That’s because, when you believe that getting on the right track is important,

you unconsciously accepted that belief, and beliefs are what leads you to

taking relevant actions.

Do you get what I saying? If yes, do you also realise how incredibly fast our

mind works?

You see, accepting the mental frame goes beyond just understanding and

acknowledging it. When you accept it, it also means you have started to

embrace the mental frame too.

For some, your mind is already working in the background trying to figure

out (1) what is the right track and (2) what is the wrong track in trading.

While you might not have the answers immediately, the fact that your mind

is already “working” on it is in itself truly amazing.

And that’s how powerful mental frames work.

Just to let you know, mental frames are constantly working in the

background of our mind and, as I said, these are unconscious processes as

you don’t usually realise it happening.

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Let’s look at an example below.

As coach using Neuro Linguistic Programming (NLP), we believe in

modelling successful people. By that, I mean, if there are any successful

traders out there who have been and/or are still trading for a living, it means

that anyone of you reading this now can become successful too.

That’s right.

In other words, because these successful traders EXIST, that also means that

trading successfully is absolutely possible.

Can you see that we are dealing with possibilities here? And this is a good

starting position to be in, is it not?

But before we get ahead of ourselves, let’s be clear, I’m neither here to raise

your expectation nor am I here to discourage you. Mainly because I’m only

stating a true FACT, and this is only a simple reminder that, YES, YOU

CAN make a living from trading too, and whether you are successful (or not)

yet is irrelevant for now.

Anyway, let’s get back to the main point.

If you took a step back to think about it, you should realise that the mental

frame (that trading for a living is possible) is a powerful tool. In fact, it can

bring you closer to success.

For example, on days that you fall, it will lift you up again. On days where

you worry if this is the right career, it gives you certainty and courage again.

On days where you make mistakes, that mental frame reminds you that, if

other traders can be successful, you can do it too (and you just need to learn

how to).

Does that make more sense? If yes, can you see the importance of having a

good Mental Frame today now?

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So How is this Related to Trading Psychology?

Before I answer you, I believe I should clarify this.

Many people have different interpretations of trading psychology – some

traders relate it to trading emotions and others talk about discipline or habits,

and that’s absolutely fine. On TradeYourEdge.com, I share my views on the

power of the mind too.

Essentially, from a coaching’s perspective, this relates to the thought process

of our mind. That means, there are mental programs or patterns that are

constantly running on the back that affects what you do and how you do it.

Here’s an example, for you to feel an emotion, a certain mental process

needs to happen.

So, if I were to talk about, say Birthdays… many of you would have had a

picture or sounds in your mind that reminds you the happy moments in the

past. And that usually leads to positive emotions. I said “usually” because,

for some, birthdays are sad moments – and that’s another emotion too.

And that’s the mental program that I’m referring to. That’s also the same

program that leads you to positive (or negative) trading emotions.

On the other hand, some traders have mental programs that cause them to be

more discipline than others. And the list goes on.

Hope the point on trading psychology is that is clearer now.

Ok, now that you understand a bit more about mental programs, here’s

something for you to ponder:

Our Mental Programs are often INITIATED by our Mental Frames.

(Please pause for a moment and think about what it means.)

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If you believe that getting on the right track is important, you will

automatically switch your thought process to focus on what you think is

RIGHT, and then narrowing the list down those things that you can apply in

your trading.

While not everyone applies the same thought process, there certainly is a

thought process running.

So, if mental program and trading psychology are the same thing, it would

also mean that good trading psychology relies on us having the right mental

frames to work successfully too.

And don’t get confuse here. I’m not saying that you MUST HAVE these

mental frames, but all I’m saying is that when you apply the mental frames

below, it becomes much EASIER to initiate a positive mental program or

positive trading psychology.

Does that make sense? If yes, you can see the strong relationship now, can

you not?

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The 7 UNDERRATED Mental Frames

As much as I love these mental frames, I just want to make this clear from

the start – while these are underrated, they are not uncommon mental frames.

In fact, you will soon realise that I’m going to be using frames that are very

common and that’s because they work.

Either way, whether you have seen them before or not, make sure to take

time to think about HOW you can and how you want to approach trading

from here onwards.

Think about how these mental frames can support your growth and

development.

Remember that this is not about the mental frames but about how you can

use them to get on the right track towards a successful trading career.

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#1. Positive Attitude is a Choice

Let’s start with the most basic mental frame that we know of.

A trader’s attitude (mindset, mentality or what ever you may call it) is the

back bone of your trading psychology. And this is because a trader’s attitude

can determine a person’s success or not.

Why is attitude important?

Well, think about it, your attitude determines the very first impression that

you hold at your sub-conscious level.

Think of it as a type of energy. And that energy can be built before (or even

within the first few seconds of) meeting a person, meeting a challenge or

overcoming a problem. And it usually continues to linger around for awhile

until it subsides or gets replaced.

Remember the last time you met someone and you felt uncomfortable with

him/her? But you can’t pin point exactly why you feel like that.

You can relate to that, can’t you?

Well, for discussion sake, let’s call this the “dislike” energy. Again, this

energy was probably created within the first few seconds of meeting that

person (another example of how fast our mind works).

Because it was a “dislike” energy, the chances are high that you had no

motivation to approach that person, right? And unless you were forced to,

you would prefer to part your own way instead.

On the other hand, if you had a good first impression (some call this a good

vibe), you would have had a positive energy, and that creates positive

motivation too. From that point on, the chances are much higher that you

would unconsciously work towards a follow up with that person.

Has that happened to you before? Even if you haven’t, you know what I’m

talking about, do you not?

I’m sure you can.

Nonetheless, make sure to remember this too: You CAN have the same type

of positive energy in trading too BUT if your first energy is a “dislike”

energy, this could become a challenging ride for you.

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If you want to have positive energies in trading too, then make sure to kick

start your trading career with a flow of positive attitudes, and things will

definitely smoothen dramatically.

Perspective Here’s an example to help you think about ATTITUDEs.

The analogy I’m using here is about half a glass of water. You start by

asking if the cup is Half-full or Half-empty.

Some of you would have heard of this analogy but do take a deep breath in

and think about it in more detail.

This is a rather straight forward question but, if

you think about it enough, essentially both of

them gives the same answers. The only real

difference is the DIFFERENCE IN

PERSPECTIVE.

And that’s my point here.

Everyone has a view but most people have a

different view, and that’s because they have a

different perspective.

But here’s a secret.

While the above is true, what many do not realise that they can CHANGE

their perspective and still provide the same answer. Sometimes, it’s only a

matter of changing the words you use. This also means we have a choice of

which perspective we choose.

That is great, is it not?

And you can even apply this to any situation, any problem or any process

and get the same outcome too. That’s because the facts have not changed –

the cup is still only half filled with water.

You see, when coaching traders, one of my interests is to see if he/she

approaches the problem with a positive attitude or has he/she already given

up right at the start?

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The interesting thing about this is that a person’s true colour is usually only

surfaces when under pressure.

For example, it is difficult to tell if a trader has a positive attitude or a

“dislike” attitude after 3 losing trades. On the other hand, we can easily

access a person’s attitude if he has had 6 months of loses (assuming he is a

day trade) or even more for a longer term trader.

How about you? What is your situation? Are you a cup Half-full or Half-

empty person?

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#2. Commitment to Succeed

Every successful trader, in the past and present, would have, in one way or

another, committed themselves to achieving success.

May be not everyone starts out with a full blown commitment but it would

have to had happened at one point.

Having a full commitment to succeed is a crucial for mental frame to have.

Once traders are committed, the commitment comes not just in the form of

Time and Money, above and beyond that, they also come in the form of

Energy, Emotions and Creativity.

Would you agree with me on this?

I’m sure you can agree to this because the “commitment” that you hold gives

you the strength to make things work and to find resources that traders would

not normally realise exist.

Let’s bring this one notch higher.

Commitment is indeed a powerful mental frame to have. While it is not

difficult to obtain, it needs to come from within – from your desire and your

dreams.

And this is where most people get confused. You see, to be whole heartedly

committed to something (as opposed to verbal commitment only), you need

to find the DEEP ROOTED and TRUE reason(s) for your actions.

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Once you find those reasons, the level of commitment you have towards

trading will just go off the roof.

Thus, this is the mental frame that you want to have from the very start of

your trading career, and once you lock in that mental frame, the Energy,

Emotions and Creativity will propel you forward constantly, again, and again,

and again until you reach your goals.

Anyway, here’s an inspirational quote from Will Smith:

“The only thing that I see that is distinctly different about me is that I’m not

afraid to DIE on a treadmill. You might have more talent than me, you might

be smarter than me, but if we get on a treadmill together, there are two

things:

1- You’re getting off first

OR

2- I’m gonna DIE

It’s really that simple”

An excellent quote from Will Smith and a good example of how committed

he is in what he wants to achieve.

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#3. Start With Emotional Awareness

Source: Link

According to Wikipedia, there are 6 main types of Emotions. Within them,

there are sub-types as well. To be honest, the list is endless and, hence, we

will not explore in too much detail for now.

Like it or not, human emotions are part and

parcel of our DNA. More often than not,

these emotions are ingrained into us through

the experiences we had in the past. Thus,

those emotions can distort our views and

prevent us from making rational decisions.

While emotions can be a Trader’s worst

Nightmare, one can learn to leverage on your own emotions too.

In other words, the idea here is not to ignore or avoid emotions. Instead,

traders should learn to embrace and manage it. But before any of that can

happen, the next mental frame you need to learn is to be AWARE of your

emotions – this is especially useful before, during and after a trading session.

Essentially, traders should nip the problem in the butt before emotions

become a threat. But one should realise that having full control of your own

emotions takes time. Hence, it is only wise to have the right mental frame to

ensure successful trading.

Human Emotions are part and parcel of life.

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#4. Build Positive Beliefs

A person’s Belief is the core reason why one would be comfortable in taking

action to achieve specific goals. For example, if you belief that a car works,

you accept it and you’ll drive it.

The bigger the Belief, the bigger the action will be.

Another important thing to note is that your

initial Belief comes from gaining knowledge

and experience.

Hence, believing in the capabilities of the car

manufacturer (which equates to trust) is only

one part of the equation. The other part is that

the driver needs to learn to operate the car

and drive it in a safe manner. And there’s no other way except through

Education.

Once you’ve established the initial Belief, you grow it through the Belief

Cycle. This is discussed further in the “Routine” section.

Now, if you acknowledge that Beliefs works, then you should also learn

about Limiting Beliefs. That’s because this is one of the reasons many

traders fail to execute their plans. They fail to take action no matter how big

their positive beliefs are.

You see, the stronger mind always wins. If your limiting belief is strong,

then what ever positive beliefs you have in trading will not work.

Does that make sense so far?

I hope it does because once you understand it, you should start building

useful positive beliefs as soon as possible. This is especially in the following

areas:

The bigger the Belief, the bigger the action will be.

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Market Beliefs

All financial market behaves differently and most of them have their own

Personality. Sure, some of them are co-related but, nonetheless, there are

unique characteristics that make it what they are.

For example, the S&P is fairly related to FTSE 100 but both of these markets

are driven by different speculators and governed by different regulations.

So, before you trade the market, you would have established a certain pattern

in the market and you would probably have taken a position based on that

pattern. That pattern, which you have established, is essentially your Market

Belief.

System Beliefs

Your trading system is a methodological approach of taking and closing a

position in the market. This system has specific risk profiles, trade criteria,

exit criteria and requires specific market conditions.

Base on a specific set of enter criteria, the system produces specific trading

results too which includes trading frequency, Reward:Risk Ratio,

Expectancy, expected drawdown and so on.

In case you’re not aware, your risk profile and money management are both

heavily influenced by your beliefs too.

Think about it.

If you believe in cutting your losses as soon as possible, then, you would

likely implement a rigid stop loss management rule, right?

Can you see how your belief is affecting how you trade?

In short, a system is a mechanical approach to trading and it should have

incorporated your risk management and money management requirements.

Hence, in order to kick start a successful trading career, new traders need to

mentally frame and understand the importance of having a mechanical

system.

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Self Belief

This is one of the most crucial parts of trading

psychology. I would argue that this is even

more important than learning about the market.

That’s because you, the trader, are positioned

between the Market and the Trading System.

It is pointless to belief in the market and/or the

trading system when the trader fails to take

trades.

Above and beyond that, Self Belief is about you, your values and your ability

to eliminate the doubts (or limiting beliefs) within you and make a difference

in trading (or in life in general).

Remember that “Nobody can make you feel inferior without your consent.”

The opposite is also true; having Positive Self Belief is a choice.

It might be a challenge but it’s absolutely possible to change if you’re

currently in the negative zone. In fact, this is easy as changing a code.

Having Positive Self Belief is a choice…

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#5. Have Clear Money Relationship(s)

Money is a unique asset but, more

importantly, this asset can make or break

you. As money is such a personal matter,

everyone sees it differently – some people

LOVE money, some NEED money and

some see it as a MEANS TO AN END.

Essentially, what you really need to know

is this:

“What is YOUR Relationship with Money?”

The biggest problem with this is that many traders THINK they understand

money. Unfortunately, this is not a typical question and many traders have

not thought about it thoroughly.

The following is an example of how traders can get confused.

Case 1 – Trader A is a successful trader. He took a personal loan to

top up his trading account a few years ago and he has now repaid all

his debt. He believes that to make sufficient returns, you need more

capital.

Case 2 – Trader B is also a successful trader. He believes that the

quickest way of making money from taking is by trading leveraged

financial products only. For example: trading stocks and equities are

less attractive compared to trading stock options or futures.

Now, I’m not here to debate which one is a better money manager, nor do I

here to comment about their money beliefs. In fact, in my view, both these

traders are doing exactly the same thing – they are both trading on leveraged

finances.

However, if Trader A did what Trader B

had done (and vice versa), the results of

both cases might have been completely

different. Trader A might not be able

comfortable with the P&L fluctuations of a

leverage financial product. And Trader B

might have sleepless nights due to the

liability in his personal account.

“What is YOUR Relationship with

Money?”

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Again, remember the idea of a cup Half-full or Half-empty? Well, the same

principle is applied here. In other words, we are looking at the same thing but

from a different perspective. In fact, this is a nice but more subtle example.

You get the picture, don’t you?

I hope you do. Because traders need to dig deep to understand how money

affects them and how these mental frames can be vary from the conventional

view.

Once you’ve established that, you can then decide if money is a friend or a

foe in your trading. That means you can now take appropriate actions

moving forward.

Again, ask yourself this:

“What is YOUR Relationship with Money?”

Before we proceed to the next frame, I thought it would be useful to share

something important here.

While having the right mental frame is important, I would like you to

seriously consider reducing any pressure in trading by deprioritising your

monetary goals in trading. Once you have done that, it does help you to focus

better.

Note: This section is about mental frame only and it’s not intended to

introduce change work. In case you are interested, I do discuss extensively

on how to set financial trading goals in my 30 day transformation program.

For now, I want you to consider why your profits should be secondary.

Understand that you priority should be to learn the market, your system and

yourself. Because once you get that sorted, your finances will sort itself out

too.

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#6. Be Flexible

Before I dive into the details, just to let you know that, not only is this mental

frame underrated, more often than not, is confuses traders too.

And what do I mean by that?

You see, everyone is different and everyone has different beliefs running

inside their mental programs. Hence, when you start to learn the financial

market, you will realise that there is no such thing as a one-size-fits-all

education system or even coaching methodology.

Thus, be flexible in your approach.

This is why, as an educator and writer, I tend to write more and more

because each book or course caters to a specific group of traders only. Hence,

I always encourage traders to create personal space to develop and explore

what works and what does not work.

And that should be the mental frame that YOU USE too.

But here’s the key, make sure to remain flexible in your learning and be

discipline in your process.

By that, I mean that you should be OPEN to learning new things and trying

new tools but in a structured manner. If one approach does not work (and

you can only be certain of it after a sufficient sample size), try something

else.

Remember that there is ALWAYS feedback and there’s always something to

learn (as discussed later).

In case you are wondering, this does apply to trading systems too. For

example, if your market analysis is correct, your system (a method to enter

and exit) can vary pending on the timeframe or patterns that you use.

This is why I make it very clear that you should focus on the Mind, Market

and Method independently.

So if you want to conquer the market, be flexible when learning. Remember

that there are too many ways to make money. And once you are flexible

enough to find that ONE way that you like, all you need is that one method

to remain profitable.

And that’s what I call a Trading Edge.

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#7. Trading is a Business

This mental frame is going to be a good summary to all the mental frames

above but presented in a different perspective. More importantly, this is for

the serious traders.

IF YOU ARE SERIOUS ABOUT LEARNING TO TRADE, THEN READ

THIS CAREFULLY.

If you are new to trading or you are having difficulties in achieving

consistency in trading success, then you must understand that trading is not a

game and Trade Your Edge was not designed for those who think of it as one.

Learning to trade will require time, hard work, education, commitment and

support. More importantly, it requires the right attitude. With that, please

remember the following:

Trading is a business, so treat it like

one. Even doctors spend several years

in medical school before they start

their houseman/registra training. And

that’s just the starting point long

before they can see their six figure

salary. Any one who thinks you can

become a successful trader within a

few months will most definitely head

down the road for a rude awakening.

This is not a game and it’s not a get rich quick scheme. You will find

the occasional stories of traders who made X amount of money in a day

or week. This is certainly possible once you become a full time market

trader but what those traders don’t tell you is that they’ve had their fair

share of sweat and toil before getting there.

There is no Holy Grail and there is no short cut. However, like every

other business, if you have a sound business plan and you follow it

diligently, you are assured success. Be patient in your development, be

humble in your achievements and you will be achieve long term success.

A good trader will not knock anything that has a view – even contrary

to their own. Good traders continue to adapt their internal mental

environment – they continue to learn – and take advantage of whatever or

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whoever has something to give of value. They open their minds to the

opportunities that the external environment offers.

Work hard, don’t ever give up and one day your find complete peace

and harmony with trading.

Protect your money. Understand that money is hard earned and many

people around the world do not even have enough to live through the day

with a decent meal. Don’t take money for granted and always start with a

demo account. Be wary if anyone insists

that you must have a funded account

before learning to trade.

Be sensible and be responsible. It is

fine to be ambitious and to have big

goals. In fact, I applaud those who do. I

only want to remind you to remain

sensible and be responsible in your approach. Serious traders invest time

in creating a well thought-out business plan and they follow it through

with hard work and dedication. You have no one to blame apart from

yourself if you lose all your money. However, if you follow the courses

and stick to the plan, you will realise that you can afford to lose once in a

while and still have plenty.

Be Sensible and

Be Responsible

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#8. BONUS

I hope you like the mental frames mentioned above. While I did start off

planning to only share 7 mental frames, I felt something was incomplete.

After pondering for awhile, I realised that there is one frame that I personally

use on a daily basis. I use it so often that I even forgot I that I do.

With that, the final and bonus mental frame that I want to share with you is:

There is ONLY Feedback If you truly want to embrace in a Positive Attitude and Build Positive Beliefs,

here is a mental frame that can be applied in almost ALL scenarios in our

trading.

The idea here is that you there is ALWAYS something to LEARN from

every trade and every activity that we do. I know I’m using the word “every”

very lightly but I meant what I say here.

Think about it for a second.

Every action leads to a result (belief cycle). In every result, there are multiple

perspectives of how you view the results (a cup Half-full or Half-empty?). If

that is true, then, surely you can almost always choose the cup half full and

always pick on the things that you can learn, right?

Because you are reading this now, you should be aware that this is a

CHOICE that you make when you pick the cup Half-full.

As Oprah Winfrey puts it, “Turn your wounds into wisdom”, pick the right

mental frame and you can continuously find positive things to learn and to

enhance your attitude and beliefs.

However, to really achieve that, you must first lock in the mental frame

“There is only feedback” and everything else is going to be easier.

The Reboot Mental Frame

I’ve left this mental frame till the end because this is what I call the all

almighty mental frame. Just to be clear, this frame (there is only feedback)

isn’t the greatest of them all but it’s the one that is most underrated.

Another reason this is the last of my suggested frames is because this frame

can be used as a REBOOT button. Every time you feel like you are not

moving in the right direction, just ask yourself:

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“What is the feedback and the lesson here?”

As soon as you ask this, it automatically brings you back to the ground and

force yourself to evaluate what’s going on. And you need to do this before

you take any further actions (what ever the context may be).

You can see how powerful this frame is, can you not?

In case you can’t, here’s another thing to ponder. Remember what I said in

the introduction of this guide?

Our Mental Programs are often INITIATED by our Mental Frames.

Now, if the first mental frame that you have is one that will ALWAYS lead

to positive mental programs, isn’t that great? Because after that, all the

mental programs that run on the background are always positive ones.

And whenever you sense any signs of negativity, just press the reboot button,

and find the feedback from what exactly happened before it went the wrong

way.

And walah… you have another lesson that can make you a better

trader/person.

Life is going to be great.

Of course, this can only happen if you decide to embrace this mental frame.

Well, I think you already know which mental frame you want to use, and the

choice is yours to take today.

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What’s Next?

The 7 (or 8) mental frames are actually pretty straight forward and many of

you reading this now would agree that they are simple to use. Nonetheless,

while they are simple, many traders are still struggling.

But that’s ok because you have all the feedback that you can learn positively

learning from your past, right?

As you can see, I want you to start using these mental frames immediately.

The more you use it, the quicker it becomes a habit. And that’s exactly what

I want you to do, start building good trading habits because those mental

frames can help you a long way.

Once you have these mental frames installed inside you, you can consider

looking out for tools and resources to learn.

If you are interested, make sure to check out the learning materials at TYE or

in Market Apprentice. Again, remember to be flexible even if you decide to

visit the sites later rather than sooner.

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Thank You

I hope you’ve enjoyed the guide as much as I’ve enjoyed writing it. I can’t

thank you enough for taking time to reading this and for your support in my

work.

Please leave a comment at the bottom of my page, or if you rather contact me

directly, use the Contact form on the web page.

And if you haven’t already, please follow me on TYE’s Facebook page, on

Twitter or LinkedIn.

Thanks again and I wish you nothing less than success!

Yours Truly,

Alwin Ng

Trader and Transformation Coach

Phone: +6012 2873572

Email: [email protected]

Excellence Through Success Coaching

Certified Master Coach and Practitioner of Neuro-Linguistic Programming

(ABNLP)

Certified Master Practitioner of Hypnotherapy (ABH)

Certified Master Practitioner of Timeline Therapy Techniques (TM)

Certified Practitioner of Language and Behaviour (LAB) Profile for Coaching

Certified member of the International Association of Counsellors & Therapist

(IACT)

“Investment in Knowledge Pays the Best Interest”

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About Author

Hello, my name is Alwin Ng and I am the owner of

TradeYourEdge.com, a website to help Traders

improve their Trading Psychology.

Trading is a journey and I’ve got a long way to

becoming a Market Wizard. Nonetheless, I love

what I do and I truly believe that anyone can trade

profitably – provided they have the right Education,

Support and Commitment.

If you like what I write, please share my website

with your friend and family (oh, and while you’re there, please “Like” my

page as well, Cheers!) and feel free to check out my work on my website.

NOTE: If you would like to share this guide, please direct people to the link

below, so they have a chance to join the newsletter as well. Thank you.

http://www.tradeyouredge.com/subscribe/

Yours Truly,

Alwin Ng

Trader and Transformation Coach