Entering The Zone

I'm still trying to put into words what happened last Friday while trading the Canadian dollar. As I near as I can tell, I had what's known as a peak experience or a breakthrough . . . I entered the Zone.

By far, the most challenging book in my trading library has been Trading To Win by Ari Kiev. Ari spent 5 years coaching traders at Steve Cohen's SAC Capital Management, and helped take them from $20 million AUM to $500 million. Now they're at $16 billion. I'd say his ideas have some merit.

Many of the concepts in Trading To Win are from Eastern philosophy and were exceedingly difficult to put into practice when it came to trading. In many ways, Ari Kiev was ahead of the curve. Now much of it has gone mainstream, The Power Of Now being a prime example.

In my own words, Trading To Win is about trying to expand your consciousness by setting a goal and forcing yourself to fully commit to it by stepping into the gap between your current reality and your future reality that the goal represents.

In Ari's words, "to become a master trader means to harness the power of consciousness. You can then change your thoughts, set new objectives and strategies designed for realizing them, and become an observer of your own thinking. You can master all the internal obstacles that arise when you start moving to new levels of performance. By inventing new perspectives, the master trader begins to see the market from new angles.

"Once you block out automatic beliefs, once you enter the next moment without regard for what you or others think and feel, you tap into a new dimension of power within yourself. You are more present with regard to the events of your trading. You are in the moment.

"Gradually this process will evolve into an increased capacity to tune into yourself and the market during a trade as you learn to trade through the lens of your consciously chosen objective.

"When you are totally committed, you are likely to experience the exhilaration of 'the zone,' where everything flows effortlessly."

Friday I was totally committed. I've really been pushing myself to trade bigger when I have the most conviction for a trade. Friday was the day where everything flowed.

And ironically I was dread wrong.

I've been building a USDCAD position, which means that I'm short the Canadian dollar. I fully realize that I may be early in this trade, so I've been trading against the position, hedging it with long Canadian dollar futures (symbol 6C).

My current USDCAD position is losing a little, but I've made multiples of this loss with the 6C. Gradually, I'm building a bigger USDCAD position and bringing down my average. And the bigger the position gets, the bigger I trade the 6C.

Friday I hedged with 6C a little after 2 pm. (I'm not using any indicators as I trade it, only reading price with Fibonacci retracements.) It quickly blew through all the Fib levels I was waiting for and I was in a bad trade.

I bought more and sold 75% on the next bounce. I did this a couple more times as it kept falling.

Then a strange thing occurred. A calmness came over me. I felt relaxed as if I were meditating. My breathing was deep and slow. I felt no fear, nor did I feel like I was fighting the market. I rechecked the charts from every angle. My conviction in the trade became immense. I added more contracts, and kept adding at each new Fib level lower. (Never ever do this if unhedged.) There were no more bounces. But as the losses mounted, so did my conviction.

I reached the maximum number of contracts that I could hold and calmly waited. I felt like I had all the time in the world. It was just me and the chart.

I knew I was wrong and simply got in too early for the hedge. Something also told me that the market would bounce to relieve the selling pressure. There was no doubt in my mind. All I had to do was stay calm and focused and relaxed as I waited.

After some waiting, the 6C indeed started to bounce. It bounced just short of my average price and then paused. I kept waiting. Then it gathered steam and bounced even more, well above my average price. I scaled out calmly, the huge loss turning into a nice gain. I went flat. It was over.

I stayed calm. I did not jump up and down and shout. Instead, I realized what had happened and thought about Ari Kiev. After the the close, I opened Trading To Win and read in the sun for a while. I'd had a breakthrough. I wanted to learn as much as I could from it.

For one thing, it was not what I expected. It was better. Ari was right. It was effortless.