The Importance of Mental States for Trading Success

In my last article for Your Trading Edge, we talked about mental strategies and their importance for accomplishing the tasks for trading success. You learned that even a simple strategy like executing a trade is psychological in nature and can get messed up easily. In this issue, I want to talk about the third ingredient necessary to model successful trading — mental states.

Have you ever been angry or scared and executed a trade? Instead, maybe you did not make the trade you were supposed to make because you were angry or scared. As you have probably experienced, anger and fear affect your trading results – as does alertness, calmness, and readiness. These are all examples of mental states – the third ingredient for completing tasks in my model for trading success.

Modeling success in trading or in any field requires that you determine the common tasks that successful people perform well. Trading tasks might include making trades, developing a trading system that fits you, or developing a position sizing strategy that will help you achieve your objectives. Once you define the key tasks for doing something well, you need to then find the three ingredients for each of those tasks. Those ingredients are the beliefs that support the task, the mental strategy to perform the task, and the mental state(s) necessary to perform the task at an optimal level.

What is a mental state? It’s your state of mind or mental condition. Every task has an optimal mental state associated with it. If you are in the optimal mental state, you will probably perform the task well. If you are in a sub-optimal state, then you will not perform as well.

As an example unrelated to trading, let’s look at one of the biggest fears that most people have – public speaking. Most people fear public speaking because they get themselves into a mental state in which their primary focus is one of worrying about the impression they are making on the audience. Do I look good? Am I making sense? Does the audience like what I’m saying? Do they like me? Unfortunately, if any of those questions are running through your mind while speaking, your mental state is probably fear and you will not perform well. Many people experience this in varying degrees, all the way up to what is called “stage fright”.

In 1983, I was speaking at a Futures Conference in Chicago. There were going to be nearly 1,000 people in the audience. I had never spoken before an audience anywhere near that size. So, what did I do? Before the conference, I went into the convention room and I looked out at where the audience would be. I imagined that I expanded my mental energy out from my body and at the point where I filled up the entire room, I felt like I owned the room. Later, when the audience was actually there and I was getting ready to make my presentation, it was easy for me to do the same thing. I filled up the entire room with my mental energy and then I started to speak. I knew my topic, I had no fear, and the talk went extremely well.

In our Peak Performance 101 Workshop, we actually teach students how to expand their space like I just described, and also at least 15 other ways to change their mental state. Why so many? Students get to try each method and discover several methods that are very impactful for them in changing their mental state.

Here are some of the methods that we teach that only require a little bit of explanation on how to perform them…

Van K. Tharp, Ph.D., has written 11 books, each one making profound advances in the understanding of what creates trading success. His research and modeling work with successful traders has made his training programs among the most well-respected in the world. His Super Trader program offers the most advanced material at the Van Tharp Institute. Take the short quiz he developed to learn your trading personality type and if you have the characteristics of a great trader. Go to, or visit

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