In 2007, two hundred and ninety three selected Forex traders entered my “black ops” Forex training program. The recruits received specialized intensive training in technical analysis, highly profitable trading systems, trading money management and “ninja” trading tactical techniques. They had every tool at their disposal to literally outperform 99% of top traders. There was no reason for any single trader not to make extreme profits on their money. I’m talking 100%...500%...even 2000% returns.
Twelve months into their Forex training ops, I subjected all 293 traders to an intensive de-briefing - a probing reveal into their results. I looked at their triumphs and failures. I looked at their trade logs. I asked about their mental and psychological well-being. Above all, I looked at their trading account balances.
Trading psychology has become so widely discussed and promoted through books and consultants that it has become a very convenient rationalization and excuse for losing. Why take the responsibility for a lack of work ethic and trading without any concept of plan, an honest assessment which would be a ‘hit’ on the trader’s self-esteem – when you can just blame it on trading psychology instead?
Trading psychology is ‘something’ that a trader creates from existing personality traits that are not initially related to trading, but surface from trading without method understanding. The outcome of course is fear, but wouldn’t this be the case when doing anything that was perceived as ‘dangerous’, and which was being done without the necessary understanding and skills? Trading, with its inherent characteristic of accepting financial risk while participating in unknown outcomes, is certainly ‘dangerous’, and thus the more preparation and understanding that is needed.
- The Trading Psychology Viewpoint
- No discussion about trading, or the consideration to begin trading, can be done without a harsh realization - the vast majority of all traders lose.
It is said that the reason that most traders lose is because they are not psychologically prepared to trade, that is they are not prepared to accept financial risk for something of which they have no control over the outcome. Trading is much more of a psychological problem then a methodological one, only the traders who have first accepted this have a chance of being consistently successful traders. Without an understanding of trading psychology and the various issues that circumvent method, there will be virtually no chance to overcome the fear, confusion, and despair that can be inherent in trading. Ultimately, after a series of consecutive losses, method becomes replaced with a feeling that it is impossible to do anything right; if for no other reason than this situation, trading psychology is more critical than trading method
- The Trading Method Viewpoint
- It is said that trading is 90% psychological and 10% methodological. Does this then imply that regardless of trading method, a trader that has control over their emotional issues will thus be a profitable trader, or will it be impossible to ever control emotions without the proficient implementation of method? The trading method viewpoint will suggest that not only are these statistics not the case - trading psychology does not exist. Trading method will be the determinant of profitability, and this will be done through: (1) the ability to understand the method's inherent strengths and weaknesses (2) the ability to maximize these strengths and minimize the weaknesses.
Trading psychology has become so widely discussed and promoted through books and consultants that it has become a very convenient rationalization and excuse for losing.
Why take the responsibility for a lack of work ethic and trading without any concept of plan, an honest assessment which would be a ‘hit’ on the trader’s self-esteem – when you can just blame it on trading psychology instead?
Trading psychology is ‘something’ that a trader creates from existing personality traits that are not initially related to trading, but surface from trading without method understanding. The outcome of course is fear, but wouldn’t this be the case when doing anything that was perceived as ‘dangerous’, and which was being done without the necessary understanding and skills? Trading, with its inherent characteristic of accepting financial risk while participating in unknown outcomes, is certainly ‘dangerous’, and thus the more preparation and understanding that is needed
- Trading Psychology - Consecutive Loses AND The Trading Psychology Spiral
- You go long and the market immediately goes down - you go short and the market immediately goes up. That's 2 consecutive losses AND you are getting a little 'anxious' so you don't take the 'next' trade and it of course works. BUT to make the situation worse you then 'chase' the entry and it immediately reverses - another loss AND this is 3 in a row. Ok 1 more try - this can't happen on every trade can it - pray mode?
This time though you will be real clever. You have at least noticed that the market is in a range AND it's the bounce from the low/retrace from the high that is causing all the problems. So this time the next trade you take will be a range extreme fade AND the hell with your trading method. The market is at the range low AND per your new ‘on the fly’ plan you go long AND the range immediately breaks out giving you consecutive loser #4 - trading against a method trade that is going far enough to pay for the previous 3 losers and make you net ahead.
Now what are you supposed to do – QUIT? AND to be sure that there is no more temptation – your throw your computer out the window and dive out right behind it. You are in a trading psychology spiral.
- Trading Psychology Plan
- We continue to discuss the importance of trading AND planning saying that: (1) you can't trade without a plan that first defines a trading methodology (2) the plan should then further defines the components of the trading methodology that can be turned into trading setups (3) the specific setups and trade quantity needs to 'match' the trader's personality. The objective is to have created a plan that includes core repetitive setups with a positive expectancy that you can recognize realtime AND that you have accepted the implications of in terms of related risk reward - BUT this might not be enough - there still may be issues as related to emotion AND fear that circumvent the implementation of the plan.
So what about a trading psychology plan? A plan that includes a series of steps that start where method implementation 'hangs-up'. The objective of this plan would be to take the trader's action - give an honest assessment/understanding of the action - define a 'setup' for replacing the action.
Kunjungan Balik+Follow+clik on your ad$ :D
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