When traders talk about trading psychology, they are usually talking about Trading Discipline. But they are not the same thing.
It’s a BIG difference between trading psychology and trading discipline. Discipline is all about following rules and staying within set boundaries. In psychology, you are dealing with the underlying reasons you react in a certain way. When you remove the underlying causes of your reaction, you have the power to change your behavior and improve your outcome.
Trading Discipline
Of course, it’s essential to follow the rules we set when we trade because that’s how we make a profit. But what about the over 92% of all traders blow their trading account within the first few years. They leave the floor defeated and broke because they are not following the rules they set, even though the rules are there to help them make a profit.
Why are traders not able to follow the rules they make?
This suggests that there must be more to trading than staying disciplined and follow the rules.
It’s easy to stay disciplined in a perfect world, where everything goes as planned. It’s a lot harder to stay disciplined when things are moving in the wrong direction. And since money is such a charged topic for most of us, emotions can cause you to act and react in ways that may harm or even destroy your trading capital. Human emotions like hope, fear, or greed can cause you to make bad trading decisions, decisions that will hurt you and your trading account more than you would ever like to admit.
My Biggest Mistake in Trading
When I started trading, I made the same mistake as most new traders; I didn’t consider my emotions. After figuring out a trading system that worked, I started trading in virtual account to practice, and when I finally felt confident, I went “live,” dealing with real money. No one had prepared me for the shock I got; Trading with real money was utterly different than trading in a “Paper-account.” I went from being calm and focused to being jittery and full of nerves. It was hard to follow my trading system, and I couldn’t understand why. I thought, Well, it’s probably just because this is my first trade.
Now, rules and discipline are essential in trading, but what do you do when you can’t stick to your own rules?
…this is where trading psychology comes in.
Trading Psychology
Psychology is often an overlooked topic for most traders, probably because you don’t want to be considered to be weak. But to stay profitable as a trader, it’s essential to deal with what goes on in mind and the triggers that cause us to behave in a certain way. This is the only way we can change our behavior and finally achieve the results we want.
Over 92% of all traders blow their accounts within the first couple of years.
It’s time for this to change.
The Most Important Psychological Triggers in Trading
There are many ways we cause havoc to our trading account, but the most important psychological triggers that hurt our trading are attached to our emotions. Emotions like hope, greed, and fear flow under the surface and are often not detected by our conscious mind. And these emotions will cause the unconscious programming you have around money, wealth, and success to cause disaster in your trading.
I’ve found myself reacting to the market more often than I am willing to. Trading would be so much easier if we could trade like robots. But as humans our we have to consider our emotions. And when you throw money, pride, the desire to be correct, the fear of failing, the unwillingness to accept defeat into the game, all these emotions (and more) will easily make you disastrously deviate from your action plan.
Trading is one of the most challenging professions in the world. It may seem easy from the outside, but it’s quite complex because we have to deal with uncertainty, adversity, and deep-seated emotions.
The BIG Trigger for Traders
One of the BIG reasons we get triggered by our emotions when trading has to do with our beliefs about money and how hard we have to work for money. And since money is the very essence of trading for most people, losing money on trade can cause a host of undesirable emotions.
As soon as I put real money into the market, something within me changed and triggered a host of emotions that sabotaged my trades. ¨
- I’ve felt the greed of wanting more out of a trade, so I stayed in too long, only to see my profit dwindle.
- I’ve felt the fear of losing out, losing money, fear of not being in control.
- Many times, I’ve hoped and prayed that the trade would turn, not willing to take a loss, accept defeat and failure.
I struggled for years, through sleepless nights, through days of worries, living in a constant state of agitation, trying to make my trading work. At a certain point, I had enough. I was tired of sitting glued to the charts, scared to move because of what might happen. I had tried it all, and I felt defeated and depleted, and I realized that there was something within me that needed to change for me to achieve my goal of becoming a profitable trader. So, I started looking for answers outside of the trading world. It took months of research before I hit gold and found the answer.
I found myself a coach that helped me see what I couldn’t see.
You know; We can’t see the wood for the trees.
Ways to Improve Your Trading
As human beings, it can be hard to see where we go wrong and change it. We see the world through our own eyes, and that’s the reality we know.
An excellent way to start:
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Journal
Every day, after your trading day, write about what triggered you to deviate from your trading plan and how it made you feel. Don’t forget to read through your journal regularly. That’s the best way to spot patterns that need to be addressed to improve your trading result.
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5 Minute Daily Concentration
Spend 5 Minutes daily to allow yourself to feel the emotions that come up when you think about your trades. Suppressing and ignoring a problem will not make it go away; it will just amplify it and make it worse over the long run.
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Trading Personality
Always trade according to your Trading Personality and what feels comfortable to you. Be yourself and don’t copy what others do. Your trading style should be based on what feels comfortable for you, not on what some guru says.
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Hire a Trading Coach
Just as Roger Federer has a coach to help he improve his game, a trader who is determined to succeed should also consider investing in a coach. A coach will probably cost you money, but if a trading coach will help you become a profitable trader, the money is well spent.
In other challenging professions, people are proud to work with a coach. It shows that the person is taking the profession seriously and is willing to do whatever it takes to excel.
Why is that not the case for most traders? Many traders are stubbornly trying to make it work independently, instead of having someone walk by their side, helping them deal with the situations that come up in a positive, constructive way, rather than swallow it down and think it’s normal. So, check for a good trading coach, but make sure that your coach is willing to go deeper than just working on their trading system and staying disciplined and focused.
Conclusion
To summarize; To improve the trading results, you need to do whatever it takes to resolve the underlying issues that keep you stuck. A sound trading system and forced discipline are often not enough to secure your success as a trader. Be willing to go the extra mile, be ready to go deep, be strong, but still; be soft enough to know when it’s time to look further for external help. It might make all the difference.
Start here; Discover 51 Ways Traders Blow Their Trading Account. See where others have gone wrong so that you don’t have to make the same mistakes yourself. And if you have any questions about how to deal with the emotional programming that causes your trading to suffer, you can contact me here.
