8 min read

Mental Edge Building Blocks in DayTrading: An Interview with Créde

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As traders, there are so many facets of our lives that can affect how we perform. In fact, if you didn’t already know, trading is just that, a performance sport. It’s akin to professional gaming in a lot of ways. To that point, a lot of your performance rests upon your mental edge and how well you cultivate it.

The Mental Edge in Trading

There are many aspects to building a strong mental edge in trading. In fact, there are many that you probably haven’t even considered.

Building Blocks of the Mental Edge slide from Créde Sheehy-Kelly
Building Blocks of the Mental Edge slide from Créde Sheehy-Kelly

To help us visualize this, our friend Créde Sheehy-Kelly from Créde Performance has created a number of resources in her practice to help traders build their mental edge. She was kind enough to share one of her slides with us. Not only that, but she’s made time for us to discuss some of the inner workings of this important performance piece in the trader’s process.

Créde Sheehy Kelly

Créde is a Chartered High Performance Psychologist who has worked with professional athletes, singers, fighter pilots, and traders throughout her career. She regularly works with trading prop firms and other organizations to bring value through performance coaching to floor traders and driven retail traders.

She is highly qualified to speak on the subject. Be sure to check her out at CrédePerformance.com. Also, if you want to learn more about performance coaching with Créde, be sure to check out our recent podcast with her.

So without further adieu, we welcome Créde and her wisdom on the topic of “building the mental edge” today.

Building Blocks of the Mental Edge Interview with Créde

TradingSim

Hi Créde! Great to speak with you again. How are things going with you? How’s the baby doing?

Créde

Hi John, it’s always a pleasure to chat with you! Everything is going great thanks. Kaia has figured out how to stand but not how to sleep through the night yet so I’m hoping that’s the next thing she masters lol

TradingSim

Ahhh! Gotta love those early years! That’s great to hear and glad everything is going well for you! Thanks for making time for us.

We’d like to start with a more general question about the building blocks and their importance in trading. As a performance coach, why is this piece so relevant to trading — after all, we’re just pushing buttons, right?

Créde

I guess if trading was just about pushing buttons there would be many more millionaires in the world! The real challenge in trading, especially in retail day trading, is being able to master yourself. Learning the technical aspects of trading takes a while but this can be perfected with time and practice. Mastering yourself however is not guaranteed, even over decades

Most traders will reach a point in their journey where they know exactly what they should be doing from a technical perspective, but in the heat of the trade they just don’t follow the plan. This is a prime example of someone’s psychology tripping them up.

It takes conscious and deliberate focus to understand how your mind and emotions are impacting your trading and to cultivate the mindset that will support you in achieving your trading goals. It’s not something that just happens on its own.

Créde sheehy-Kelly

The best way to approach this is to systematically level up each aspect of your mental edge piece by piece. This is why representing your mental edge as a jigsaw puzzle or a series of building blocks makes a lot of sense. Your mental edge is the outcome of having perfected all these individual skills and techniques on the psychology side of your trading.

TradingSim

Alright, so we were definitely playing devil’s advocate there. But your point is well taken.

You do raise an interesting thought, though, that proper mindset doesn’t just happen on its own and can even take many years to develop.

In your years as a performance psychologist, what are the most common building blocks that seem to be the peskiest to overcome in your athletes, traders, etc.? Is it a varied gamut or do you find more condensed patterns in people?

Créde

That’s a really great question!

I can definitely say that confidence is something that nearly all of the people I have worked with have wanted to improve. So the flip side of that is that people are experiencing feelings on inferiority or self doubt at every level of performance.

But in terms of being the peskiest to overcome? I think that would be the skill of focusing on the process rather than the outcome. Whether someone is a professional athlete or a day trader, everyone is invested in the end result.

cultivating a process focus mental edge building block

Unfortunately when people are focused on the outcome while actually trying to perform, it really heaps on the pressure and ultimately causes people to deviate from their plan. It seems like a simple skill to build – “focusing on the process” – but in reality it is one of the hardest skills to actually perfect.

Tradingsim

That’s really interesting, Créde. I’ve heard this before from a famous football coach, Nick Saban. He’s known for preaching “the process.” And in recalling some of his old speeches, he often talks about players needing to “buy in” to the process and the coaching.

That being said, how do you, as a performance coach, get your clients and traders to “buy in” to the process instead of focusing on the outcomes, the intangibles. Are there other building blocks of the mental edge that help cultivate process focus?

Créde

To answer your question properly it might be helpful to clarify exactly what I mean by the “process” versus “the outcome”.

The process refers to all of the things that you need to do well in order to produce the outcome that you want. The outcome is usually a very concrete and incontestable thing. In football so, the process would be accurate passes, maintaining discipline in a match, having a clear understanding of the plays etc. And the outcome is just the score.

Process Focus for Mental Edge

In trading, process refers to things like entering trades at the right time, only taking trades that match your A+ setup, only exiting a trade when you have hit your target or have a technical reason to do so, etc. The outcome is the P&L.

As you correctly suggested, there is no one way of getting a trader to focus on the process. It really depends on the specific challenges that the trader is experiencing and also, the root causes why they are experiencing these challenges.

Mental Edge Building Blocks associated with process
Mental Edge Building Blocks associated with process

That being said, there are a number of building blocks of the mental edge that can be really helpful to assist with this. From the diagram above, the most useful building blocks to put in place if you are trying to cultivate a process-focus in your trading would be:

  • Practising getting into the flow state
  • Cultivating self-compassion
  • Seeking only internal validation
  • Effective short term and long term goals
  • Self-awareness
  • Having a mental preparation routine
  • Conducting a daily review
  • Understanding how emotions impact trading

If I had to boil it down to a few key building blocks, the key ones to focus on would be:

  • Self-awareness (this is basically the foundation of the mental edge)
  • Effective short term and long term goals (these help you to hold yourself accountable to aspects of your trading other than the P&L)

TradingSim

That’s really eye-opening. And it all makes sense. The more you focus on the here and now like practicing awareness, being present in the flow state, not worrying about external validation (success theatre), etc., the more you become process-centered and less concerned with outcomes.

I think that’s really important for new and struggling traders to hear.

And to build on that, taking the two most important mental edge building blocks that you’ve mentioned — self-awareness and effective short/long-term goals, what advice would you give to someone struggling with these two?

Maybe this trader has an “idea” of wanting to be financially free someday, but lacks concretely structured goals. Or maybe another trader has great goals, but struggles to be aware in the moment that he’s sabotaging his efforts.

Créde

That’s exactly it. The struggle with seeking external validation is a significant one for most people. 

Mental Edge Self Awareness

Self awareness as part of the mental edge process

In terms of self-awareness, I would say that even people who are not necessarily struggling in this area can benefit from understanding themselves to a deeper level. There is no end to the amount of benefits this can bring to your trading.

Self-awareness is really just about gaining a greater understanding of how your own beliefs and thoughts are influencing your emotions, and how your emotions are influencing your actions.

So, any technique that helps you to understand this pathway better in any aspect of your trading could be considered a technique that helps to build your self-awareness.

Some great examples of practical ways to do this would be journalling bullet points about what you were thinking or feeling after you complete a trade. Or even just starting out your trading session by rating your physical, mental, and emotional state out of 10.

This helps you become aware of what mindset and energy levels you are bringing to your trading on any given day.

Mental Edge Goal Setting

Goal setting

Goal-setting is absolutely crucial for every trader too.

Without clear short, medium and long-term goals you are trading in a vacuum. You have no way of knowing whether you are on track with your overall vision. So this lends itself to having very harsh or unrealistic expectations of yourself and also to trading from your emotions as opposed to from your trading plan.

To start off with, just try to nail down some concrete targets that you know you want to achieve in your trading. Then, try mapping them against a realistic timeframe. And lastly, make sure that the targets are concrete and measurable.

The trader in your example would start by first defining what “financially free” actually means to them. Is it replacing a salary of X dollars? Or paying off X amount of debts?

The more specific the target, the easier it is to achieve it.

Mental Edge Performance Goals

For the other trader with great medium and long term goals, who struggles in the moment.

This trader would benefit from setting some key “performance” goals (for example 90% or more of all trades taken fit my A+ setup criteria). Then, tracking their performance against these targets every single trading day.

With this level of awareness, most likely the trader will start to see patterns as to when they tend to deviate more from their trading plan. As in, what additional factors influence their discipline.

When they have a greater understanding of the context within which they tend to break their rules more, it’s much easier to start to isolate the root causes of the self sabotage.

TradingSim

That’s incredible insight, Créde. Really love how you create tangible building blocks to foster effective processes in trading.

So often, as traders, we are wont to simply jump in and fly by the seat of our pants. This really emphasizes the need to slow down, think about what we’re actually doing, and put structure to often overlooked variables of ourselves and our performance.

With that, we really appreciate you taking the time to share a small portion of your wisdom and framework for helping traders. If we can end with one more question, what would you say is the amount of time it takes for a budding trader to develop these habits, and judging from your experience, who are the traders most likely to succeed at this?

Créde

Great question! By putting in focused effort to building your mental edge you can really accelerate the learning curve.

Cultivating your mental edge is a two part process as I see it.

  • First you need to learn a system for actually working on your mindset and emotions. By this, I mean having a framework to apply to cultivating your mental edge and actually learning the techniques that can help you shift your mindset and transform limiting beliefs and habits. It is possible to get a good foundation in this in as little as 2-3 months.
  • The second part is where you actually consistently implement your mental training routine and these techniques in your day to day life. This is a process that never ends, as it is an integral part of your trading process. Typically in my experience, traders do see tangible results in terms of their trading stats within weeks of introducing this aspect to their trading. Obviously the longer you work on your mental edge the more impact the techniques will have on your performance.

I can definitely pinpoint the traders who see the greatest results from this. It’s those traders who are willing to really face themselves, be brutally honest, and to put their ego aside in order to level up who will ultimately succeed to the level of their true potential. 

TradingSim

That’s awesome. It’s encouraging to know that these pesky habits can be overcome with diligent work.

Thanks again for stopping in and sharing with us, Créde!

Créde

My pleasure!


Practicing Your Mental Edge Building Blocks

Here at TradingSim, we believe in a holistic approach to training for the markets. For technical analysis, screen time, and simulation, we hope you find value in our application. However, there are obvious mindset issues that a simulator might not uncover.

We hope this conversation has benefitted you. Be sure to reach out to Créde and put forth the effort you need to build out your trading process, uncover hidden setbacks, and be the trader you want to be.

For more great articles based on Créde’s work, check out our blogs on the lifestyle and physical habits you should cultivate. And don’t miss our article on mitigating stress and anxiety in trading.

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